A2M 1.13% $6.25 the a2 milk company limited

Article in AFR this morning:Bellamy's bid highlights China...

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    Article in AFR this morning:

    Bellamy's bid highlights China potential

    Michael Smith
    China Correspondent
    Sep 18, 2019 — 10.22am

    Shanghai | The a2 Milk Company chief executive Jayne Hrdlicka has dismissed suggestions that Chinese authorities delayed approving a licence for rival Bellamy's Australia to drive down its share price.

    She said Chinese regulators had taken a "logical and sensible" approach to managing the country's infant formula market.

    Ms Hrdlicka, who is leading an investor roadshow to Shanghai this week, said she was not worried a $1.5 billion takeover offer for Bellamy's by China Mengniu Dairy Company would create a more powerful rival.

    Instead, the offer highlighted the interest in the infant milk category in China, where a2 Milk sees huge growth potential.

    "It speaks to the interest in the category which is still quite high," Ms Hrdlicka told The Australian Financial Review in Shanghai. "We think the macro factors mean this is still a very attractive category with a lot of potential in it for those players who can build strong brands.

    "We think all of the moves that have been taken by the regulator are logical and considered moves that seek to build a category consumers can rely on and trust. It is hard to argue there is anything here but normal practice."

    Ms Hrdlicka was responding to suggestions a Chinese regulator delayed approving a licence for Bellamy's to sell Chinese-labelled organic baby formula to make the company a cheaper buy for Mengniu, which is part-owned by a state-owned enterprise. Crossbench senators on Tuesday accused China of "market manipulation".

    As news of the Bellamy's bid broke this week, Ms Hrdlicka and a2 Milk's senior management team were hosting 80 investors and analysts in Shanghai over two days this week to outline their strategy for the China market.

    "We feel quite fortunate with our position in the market. We have worked hard for it. We are serving consumers in a unique way and we don't take any of that for granted.

    "We think all of the moves that have been taken by the regulator are logical and considered moves that seek to build a category consumers can rely on and trust". Asked if the interest in Bellamy's made a2 Milk a more likely takeover target, she said: "We are just very focused on delivering on the opportunity in front of us. Whatever that brings with it, we are eyes wide open."

    Strategy to boost sales in China

    a2 Milk told shareholders last month it would accelerate marketing investment in China and the United States, its two biggest growth market, while exploring opportunities in Vietnam, South Korea and Hong Kong.

    Ms Hrdlicka told investors in China this week the strategy was consumer-led and there were significant opportunities.

    She would not put a target on the potential market share in China. "What we’ve said today is imagine all possibilities."

    “Our biggest opportunity is to build a genuine China-based business that recognises the many different ways to engage with consumers."a2 Milk wants to increase sales to Chinese consumers across both online channels and physical stores."We are only reaching a small part of the market through a couple of channels," she said.
    Last edited by werdplaya58: 18/09/19
 
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