A2M stock rises on the back of a special dividend and new regulatory approval in China

The a2 Milk Company has regained momentum after announcing a special dividend and securing a significant regulatory approval in China which is an important milestone that strengthens its long-term growth strategy and outlook.

The a2 Milk Company Limited (ASX: A2M) 

The a2 Milk Company Limited (ASX: A2M) on 25 June 2026 announced a fully franked special dividend of NZ$300 million and few days ago it also announced that it achieved a major regulatory milestone in China.

The company at the time of writing has a market capitalisation of $5.14 billion while it is trading at a Price/Earnings ratio of about 23 and the share price has risen 25% over the past month. The stock is still down 23% year-to-date even after this strong rally and this means that there may still be meaningful upside if management successfully executes its strategy.

The special dividend came after one of the most important developments in the company's recent history. Chinese regulators approved the transfer of two China-label infant milk formula registrations acquired through the a2 Pokeno facility to a2 branded products.

Management described this approval as a major milestone because it supports its China growth strategy while improving manufacturing efficiency and increase long-term profitability.

Strong Demand Across Core Markets

The company on 13 April 2026 released a trading update which showed that demand for the a2 brand was strong across almost every product category and region despite temporary supply chain disruptions.

China label infant milk formula recorded robust demand because of better customer acquisition and successful marketing campaigns. English-label products also achieved healthy growth through cross-border e-commerce channels.

The company stated that temporary freight constraints along with inventory shortages and manufacturing disruptions would affect the timing of fourth-quarter sales rather than underlying consumer demand.

Management updated FY26 guidance to revenue growth in the low to mid double-digit % range and EBITDA margins are expected to be about 14.0% to 14.5%.

Management also made it clear that these issues are mainly timing related and one-off in nature. The delayed sales are expected to move into FY27 rather than being permanently lost.

Recent Developments Strengthen the Investment Case

The company on 4 May 2026 voluntarily recalled a small quantity of infant formula sold only in the United States after additional testing.
The affected product accounted for only about 0.1% of first-half FY26 sales. No confirmed illnesses were reported and management said the recall is not expected to have any material financial impact on the business. The market reacted too negatively which caused the share price to fall and left the stock trading at a much more attractive valuation.

The supply chain transformation at the a2 Pokeno facility is also on track. Manufacturing capability improvements and China registration processes are working out as planned ahead of the expected production ramp-up during the first half of FY27.

The newly approved China product registrations should allow the company to launch new products later this calendar year. They are also expected to improve margins because of higher vertical integration and greater control over manufacturing.

These initiatives should further improve the company's competitive position in one of the world's largest infant nutrition markets.

Outlook

a2 Milk is well placed to benefit from better product availability along with higher production capacity and high consumer demand for premium nutritional products.
The company has no debt and follows disciplined capital allocation while the special dividend has an ex-dividend date of 8 July 2026 and will be paid on 24 July 2026. 

China is the company's biggest long-term growth opportunity and the successful completion of the regulatory approvals significantly lowers execution risk and creates opportunities for additional revenue and profit growth.

(Source: Company Announcements)