The a2 Milk Co. (A2M.AX): FX to drive modest upgrades, cautious on 1H27 margins. New products / insourcing on track; Buy

A2 will likely provide an update at its AGM on 19 November. We update our numbers to reflect the depreciation of the NZD versus the AUD, USD and RMB since A2 reported in August (about 2.5%, 5% and 6.6%), which drives revenue upgrades of 3%/2%/2%/2% in 1H27E/FY27E/FY28E/FY29E, but more modest EBITDA upgrades of about 1% given foreign-denominated costs (e.g. marketing, about 30% of COGS in USD) and rolling hedging. We are now about 4% ahead of consensus 1H27 sales expectations but about 8% below on EBITDA, and expect a roughly 63% 2H27 EBITDA skew. 1H27 EBITDA will likely be impacted by a much higher marketing-to-sales ratio than usual as A2 rebuilds its China label business (GSe about 20% vs 16.9% in 1H26). A2's new product and insourcing initiatives appear on track, with both new China label products and the new A2 Platinum formula now launched. We continue to see FY28E as a strong year of earnings growth (GSe +29% EBITDA and +30% EPS). We lift our 12-month price targets from A$7.40/NZ