Frothy A2 Milk extends gain as investors find faith in daigou

The S&P/NZX 50 Index rose 48.32 points, or 0.4%, to 13,114.24, with A2 Milk accounting for $21.2 million of today’s $151.5m turnover on the wider market.

The milk marketing firm continued its recovery from its $5.53 trough in September, rising 6.2% today to $7.68. A2 fell out of favour after multiple earnings downgrades when the covid-19 pandemic shut down travel, effectively shutting down the profitable daigou channel.

An upbeat outlook by smaller rival Bubs Australia last week helped unwind that pessimism about A2 ahead of next month’s annual meeting. That spilled over into A2 supplier Synlait Milk, which rose 2.1% to $3.82.

“A2’s gain is on the back of this daigou channel that’s starting to show growth,” said Peter McIntyre, an investment adviser at Craigs Investment Partners. “There’s been a couple of positive commentaries out of Australia, particularly from research firms, saying A2 may be oversold.”
Contact Energy rose 1.4% to $8.13 and Meridian Energy was unchanged at $4.87 after Meridian’s operating statistics showed increased hydro storage in its South Island catchments.