It has been a big few weeks for A2 Milk Company Ltd (ASX: A2M) shares, and Tuesday is bringing more good news for investors.
At the time of writing, the A2 Milk share price is up 3.63% to $7.99.
That means the ASX infant formula stock is now up 54% over the past month.
The latest move comes after the company provided investors with an update on its China supply issues, along with better-than-expected preliminary FY26 results.
So, what changed today?
Image source: Getty Images
China supply issues ease
According to the release, A2 Milk said the supply chain problems that hit its China label infant milk formula business have now been mostly sorted out.
The issue came through in the fourth quarter, when the company struggled to keep enough product available.
A2 Milk said this was caused by a few things, including strong demand in the previous quarter, freight challenges, production backlogs, longer release times, and extra customs clearance requirements.
As a result, some customers moved to other brands. Others switched across to A2 Milk's English label products.
However, things now look to be improving.
The company said product flows to distributors and retailers have materially improved across both its China label and English label products, with stock levels returning to target.
A2 Milk is now trying to win back previous China label users, while also speeding up new customer recruitment with its retail and distribution partners.
Full-year result holds up
The preliminary FY26 result also gave the market something to work with.
A2 Milk expects revenue of approximately NZ$1.97 billion, up more than 12% on FY25. That is slightly ahead of the guidance it gave in April, which was for low to mid-double-digit growth.
The company also expects its EBITDA margin to land at the high end of its 14% to 14.5% guidance range.
Reported net profit after tax (NPAT) is tipped to be slightly higher than FY25, while cash conversion is expected to be around 70%. That's well ahead of the 50% cash conversion guidance given in April.
There was also decent growth outside the China label business. A2 Milk said English label infant formula, Other Nutritionals, and Liquid Milk all performed well and finished significantly higher than FY25.
Can the rally keep going?
A2 Milk has had plenty go its way over the past few weeks.
Last month, it received approval from China's State Administration for Market Regulation to transition its China label infant formula product registrations to a2 branded products.
It also declared a NZ$300 million special dividend, equal to 41.362 cents per share. That dividend is due to trade ex-dividend on 8 July.
After a 54% gain in a month, A2 Milk is no longer flying under the radar.
The next major test will be the company's audited FY26 result and FY27 outlook commentary on 17 August.
