A2 Milk Company Ltd (ASX: A2M) shares are starting the week strongly.

In morning trade on Monday, the infant formula company’s shares are up 7% to $7.20.

This compares favourably to the performance of the ASX 200 index, which is down slightly at the time of writing.

Why are A2 Milk shares jumping?

Investors have been fighting to get hold of the company’s shares this morning after it made a big announcement relating to its China business.

According to the release, A2 Milk has received approval from the State Administration for Market Regulation (SAMR) to transition the two China label infant milk formula (IMF) product registrations that were acquired in connection with the a2 Pokeno facility to a2 branded products.

The company notes that this represents the final step pursuant to the terms of its acquisition of the a2 Pokeno facility for the relevant registrations to be utilised under the a2 brand.

And with regulatory approvals now obtained, it confirmed that it no longer has the right to unwind the acquisition of the a2 Pokeno facility.

In light of this, A2 Milk advised that it expects to launch the new products later this calendar year. This is within existing expectations so there has been no change to the timing or estimated financial benefits provided to the market at the time of announcing the acquisition.

‘A significant milestone’

A2 Milk’s managing director and CEO, David Bortolussi, was pleased with the news. He said:

SAMR approval marks a significant milestone in our China growth strategy and Supply Chain transformation. It supports long-term growth in our core IMF business through market access and innovation, accelerates the development of advanced nutritional manufacturing capability, and captures attractive financial returns through incremental brand contribution and vertical margin capture.

Special dividend incoming

Also giving A2 Milk shares a boost is an update on its special dividend plans.

The company notes that it previously indicated that it would look at declaring a special dividend once the required regulatory approvals were received in connection to its China label registrations.

This morning, it advised that it expects the A2 Milk Board to convene soon with the intent to declare a $300 million special dividend that will be fully franked and unimputed.

The timing of payment and other details will be confirmed in a separate announcement once the special dividend has been declared by the Board.

The post A2 Milk shares jump 7% on big China and special dividend news 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Metcash Ltd (ASX: MTS) shares are in the spotlight on Monday.

In morning trade, the wholesale distributor’s shares are down slightly to $3.16.

This follows the release of the ASX 200 stock’s FY 2026 results.

ASX 200 stock lower on results

For the 12 months ended 30 April, Metcash reported a modest 0.2% increase in revenue (excluding charge-through sales) to $17.35 billion. Including charge-throughs, revenue increased 0.7% to $19.63 billion.

Management notes that this reflects a small decline in Food revenue, which was offset by growth in Liquor and Hardware revenue.

The ASX 200 stock’s underlying EBIT was down 0.8% to $503.7 million due to weakness in the Hardware and Liquor segments.

The Food segment delivered a strong performance in FY 2026, with EBIT increasing 5.4% to $261.8 million.  It highlights that the IGA network remains a core strength, with the large store price gap narrowing to 2.1%, making the network more price competitive than ever. Foodservice & Convenience continued its rapid expansion, supported by the integration of Superior Foods and strong demand from corporate customers.

The Liquor segment posted a resilient result, with revenue increasing 1% to $5.4 billion and market share rising to 32.3%. It notes that segment EBIT was $100.1 million, slightly lower than the prior year due to softer first half trading, but the business delivered a stronger second half as shopper demand for convenience and localised offers remained robust and inflation increased.

Although Hardware & Tools delivered revenue growth of 4.3% to $3.7 billion, EBIT was down 6.3% to $177.3 million. This reflects softer trade conditions for its Hardware retail stores in Victoria and Tasmania, partially offset by continued strength in Total Tools.

On the bottom line, Metcash recorded a 2.4% decline in underlying net profit after tax to $268.8 million. This was largely in line with consensus estimates.

The ASX 200 stock’s Board declared a fully franked final FY 2026 dividend of 9.5 cents per share, which is flat on the prior corresponding period. This brings total dividends for the year to 18 cents per share fully franked, which is in line with FY 2025’s dividends.

Management commentary

Commenting on the results, Metcash’s CEO, Doug Jones, said:

Our FY26 performance demonstrates the strength and resilience of the Metcash business model. Despite mixed trading conditions across our markets, we delivered solid earnings, strong cash generation and continued progress on our long-term strategic priorities. Our scale, our national supply chain, and our deep relationships with independent retailers remain powerful competitive advantages. We now support ~105,000 customers, ~6,300 bannered stores and reach ~95% of Australians – a unique platform that continues to generate resilient, high-quality cashflows.

We are winning with independents because we combine the benefits of scale with the agility and community connection of local ownership. This combination is difficult to replicate and continues to underpin our performance across all pillars.

Outlook

The ASX 200 stock revealed that sales have made a steady start to FY 2027 and are up 1.7% during the first seven weeks. This reflects softer trading conditions in May followed by a clear improvement in June.

Management appears confident it can build on this. It stated:

Metcash enters FY27 with strong momentum across its core businesses. Foodservice & Convenience continues to scale rapidly, Liquor remains resilient with growing market share, and Hardware & Tools is positioned for margin recovery through its strategy reset and as market conditions improve. The Group expects to continue strengthening its competitive advantages, expand its digital and AI-enabled capabilities, and support independent retailers to win in their local communities.

The post ASX 200 stock drops on FY 2026 results 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Diversified industrial and energy company SGH Ltd (ASX: SGH) has announced a $500 million buyback to run for the next 12 months.

The news is likely to add more share price upside to the company, which broker Morgans already has a buy rating on, along with a bullish share price target.

I’ll get to that shortly. First, let’s look at what the company has announced.

Strong balance sheet adds options

SGH said in a statement to the ASX that it would conduct an on-market buyback, starting on about August 11, coinciding with the release of the company’s FY26 results.

The company added:

The buy-back reflects SGH’s disciplined approach to capital management. Following a sustained period of strong operating cash flow and de-leveraging, SGH’s leverage has reduced below its through-the-cycle target of 2.0x (Adjusted Net Debt to EBITDA). The buyback will not constrain SGH’s ability to continue investing in its businesses or to pursue inorganic growth at scale. The program has been sized so that SGH retains substantial balance sheet capacity and the financial flexibility to fund organic investment and to act on material growth opportunities as they arise.

SGH said the final size of the buyback would depend on several factors, including market conditions, “and any unforeseen developments or circumstances that may arise in the course of the buyback”.

Analysts like the medium-term vision

Morgans recently issued a research note to its clients following an investor day held by SGH management.

They said the company set out a medium-term strategy to deliver 10% EBIT growth along with a near doubling of market capitalisation.

They added:

These ambitions are set against a track record of growing organically, while acquiring industrial businesses, improving operational performance and cash generation. SGH takes an entrepreneurial approach to leverage, gearing up to acquire what it perceives as ‘privileged assets’, with operational improvements then driving a quick deleverage.

SGH owns Caterpillar dealer Westrac, equipment hire company Coates, construction materials company Boral, plus stakes in Beach Energy Ltd (ASX: BPT), and Southern Cross Media Group Ltd (ASX: SXL).

It also has a stake in Shell‘s Crux offshore gas project.

Morgans said the company had compounded EBIT at a compound annual growth rate of 18% for more than a decade, aided by its acquisition strategy.

The analyst team at Morgans said future catalysts for the company included first gas from Crux, expected in the first half of FY28, and the group-wide deployment of AI.

They said the company was “trading at a sub-market multiple, with above-market growth”.

Morgans has a price target of $52.75 on SGH shares compared to $43.27 currently.

The post These ASX shares were buy rated even before today’s $500m buyback. How high could they go? appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.