Insights

Why the a2 Milk Company (ASX:A2M) share price is in a trading halt

The A2 Milk Company Ltd (ASX:A2M) share price was placed in a trading halt this morning as it looks closer at its FY 2021 guidance…
The post Why the a2 Milk Company (ASX:A2M) share price is in a trading halt appeared first on The Motley Fool Australia. –

The A2 Milk Company Ltd (ASX: A2M) share price won’t be going anywhere today after being placed in a trading halt before the market open.

Why is the a2 Milk Company share price in a trading halt?

This morning a2 Milk Company requested an immediate trading halt after it became aware of information that could have an impact on the guidance it provided in late September.

Management explained: “We have become aware of information which may require us to release an announcement to revise our previously issued guidance to the market. We are requesting a trading halt to provide us with additional time to properly consider the current information and to consider new information as it becomes available, and inform the market.”

No other details were provided in relation to what this “information” is.

What is a2 Milk Company’s current guidance?

In late September A2 Milk Company provided guidance for first half revenue in the region of NZ$725 million to NZ$775 million and full year revenue in the region of NZ$1.8 billion to NZ$1.9 billion.

This represents a 3.9% to 10.1% decline for the first half and then a 4% to 9.8% increase for the full year.

Management is also forecasting an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 31%. This would result in EBITDA of NZ$558 million to NZ$589 million for FY 2021, up 1.5% to 7.1% from NZ$549.7 million a year earlier.

Is a2 Milk Company going to downgrade its guidance?

At this stage it is unclear whether a2 Milk Company is going to be downgrading or upgrading its guidance.

However, the request for a trading halt is reasonably ominous and appears to be hinting at a downgrade.

Particularly given the unpredictable trading conditions the company has been facing due to pantry destocking and weakness in the daigou channel.

When giving its guidance in September, management commented: “This disruption in the daigou channel is impacting our September sales and it is currently anticipated that this will continue for the remainder of the first half of FY21. Sales in the daigou channel represent a significant proportion of infant formula sales in our Australia & New Zealand (ANZ) business and, as such, we now expect ANZ revenue to be materially below plan for the first half.”

An update is likely to be released to the market on Friday morning.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the a2 Milk Company (ASX:A2M) share price is in a trading halt appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!