The A2 Milk Company Ltd (ASX: A2M) share price soared in August amid reporting season, jumping more than 18%, as the chart below shows.
Investors clearly liked what the business reported, which we'll get to in a moment.
The company is a leading producer of dairy products that are made with a2 beta-casein protein across infant formula, liquid milk, and other types of powdered milk products.
A2 Milk was one of the positions in the portfolio of WAM Capital Ltd (ASX: WAM), a listed investment company (LIC) focused on the most compelling undervalued growth opportunities in the Australian market.
Let's take a look to see whether the ASX share is an opportunity or not, according to WAM.
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Expert views on the A2 Milk share price
The fund manager noted that the company reported record revenue in the FY25 result, an increase of 13.5% year over year.
WAM highlighted that A2 Milk's operating profit (EBITDA) climbed by 17.1% to $274.3 million, and net profit after tax (NPAT) rose by 21.1% to $202.9 million.
The investment team pointed out that the growth was driven by English-label infant formula sales, which were up 17.2% year over year. There was also a strong uplift in US liquid milk sales, which increased by 22.1% year over year.
Despite the shrinking of the Chinese infant formula market, it delivered impressive performance in the country, with its achievement of a record market share. WAM said A2 Milk is reinforcing its brand strength with "exit rates in the second half of FY25 providing a strong indication of momentum into FY26."
Another noteworthy piece of news was that the company is reshaping its supply chain by acquiring a New Zealand nutritional facility and divesting its stake in Mataura Valley Milk. This move reportedly improves integration and flexibility and has significant margin upside over the coming years.
Outlook for the dairy company
Outlining its views on A2 Milk shares, WAM said:
The company remains well placed to capitalise on structural demand for premium dairy products worldwide.
For its continuing operations, in FY26, the company is expecting revenue growth of "high single-digit percent" compared to FY25. The operating profit (EBITDA) margin is projected to be approximately 15% to 16%.
The net profit in FY26 is expected to be similar to the reported net profit of FY25.
A2 Milk is focused on "capturing its full potential in the China market, while expanding into adjacent categories and new markets." It intends to declare a $300 million special dividend, subject to receiving regulatory approvals in connection with the two existing China label registrations and completion of the Mataura Valley Milk divestment.
The company is certainly on a positive trajectory.
