Shares of NZ milk processors Synlait Milk and A2 Milk rose to a record highs yesterday following the news that Synlait and its partner a2 Milk had gained registration in China.
Synlait shares jumped 9.1% to $5.87 on the ASX. That took the gains so far this year to more than 95%! A2 Milk shares though hit a high of $6.40 in trading, but ended the day steady on $5.995. The $6.40 was an all time high. The shares are up 193% so far this year.
Synlait said it had gained manufacturer registration for a2 Milk’s Chinese label infant formula, meaning the products will continue to have market access in 2018 when China tightens its rules.
"We view this registration as another milestone in our long-term partnership with a2 Milk," said Synlait chief executive John Penno said in a statement.
"CFDA registration is a major step in getting a license to operate through formal China label channels and helps de-risk the future beyond 1 January 2018," said Oyvinn Rimer, a director and research analyst at Harbour Asset Management.
"Because it is China regulation and the outcome is binary, the market will appreciate that this is no longer an overhanging uncertainty."
Fonterra has also gained registration with its partner Beingmate Baby & Child Food for 15 recipes, it said this week.
From January 1, 2018, all infant formula to be sold in China must be manufactured by a facility accredited by the CNCA, and each facility can only register up to three brands.
“Having successfully navigated the process, in conjunction with a2 Milk, we are now in a stronger position for future applications of other Synlait customers,” Synlait’s John Penno said yesterday.
Synlait and a2 began their partnership in 2010, with Synlait manufacturing the infant formula made from milk containing only the A2 beta-casein protein type rather than the more prevalent A1 protein type
“We look forward to the continued expansion of our business in China following this announcement,” a2 managing director Geoffrey Babidge said yesterday.
A2 owns 8.2% of Synlait, which in turn owns 25% of Sichuan-based New Hope Nutritionals, another applicant for CFDA registration.
