A2 Milk shares rose 14 per cent after the milk marketing company raised its full-year guidance and said it is well placed to cope with changes to infant formula regulations in China.
Revenue is now forecast to be in a range of $350 million to $360 million in the year ending June 30, from a previous forecast of $335 million to $350 million, the company said today. Operating earnings before interest, tax, depreciation and amortisation are projected to be $52 million to $54 million, up from the $45 million-to-$49 million range it gave with its first-half results in February.
Shares in A2 Milk hit a record high of $2.61 in trading on Feb 17 but have since fallen back on worries about Chinese regulations. They reached $1.79 today, having soared 152 percent in the past 12 months.
Michael De Cesare, an analyst at Nikko Asset Management New Zealand, said investor concerns about the regulatory regime in China had weighed on the stock.
"The market as a whole has been struggling with what seems to be a great long-term story caveated with quite complex and ever-changing regulation coming out of China in terms of food standard specifications and how that might impact on Australasian exporters of infant formula."