Here’s why the A2 Milk share price is storming higher today

The A2 Milk Company Ltd (ASX: A2M) share price is on the move on Monday morning.

At the time of writing, the infant formula company’s shares are up 3% to $5.56.

Why is the A2 Milk share price rising?

Investors have been bidding the A2 Milk share price higher this morning following the release of an update on the company’s Chinese operations.

According to the release, the company has renewed its exclusive import and distribution arrangements with China State Farm Agribusiness Holding Shanghai (CSFA) for a term of five years from 1 October 2022.

CSFA has been A2 Milk’s strategic distribution partner in China since 2013 and is the exclusive import agent for its China label products.

The release also notes that CSFA is a wholly owned subsidiary of China National Agriculture Development Group Co (CNADC), which is the parent company of China Animal Husbandry Group (CAHG). The latter holds a 25% interest alongside A2 Milk’s 75% interest in Mataura Valley Milk (MVM) located in New Zealand.

Management commentary

A2 Milk’s managing director and CEO, David Bortolussi, commented:

We are pleased that our long-standing arrangements with China State Farm have been renewed for a term of five years through to the end of September 2027. The extension of arrangements with China State Farm confirms the strength of our relationship with key partners in China and our shared confidence in the future We are grateful for China State Farm’s ongoing support and our relationship with CNADC group which will be critical to our joint success in China going forward.

This sentiment was echoed by the chairman of CSFA, Mr Zhang Lei. He said:

The a2 Milk Company has been an important strategic partner of ours for many years. We are delighted and honoured to continue our relationship and partnership with a Company that has achieved such unique success, as the pioneer of A2 protein products in the China market, with a strong brand and ultra-premium products. This renewal signals the strength of our long-term partnership and we look forward to the future with great excitement.

The post Here’s why the A2 Milk share price is storming higher today appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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