In a large stock pot add milk, cream, half of the sugar, and half of the coconut.
Bring the milk mixture to a steep and let sit off heat for an hour. (this process is to infuse the flavors, like you would tea)
Whip together the egg yolk and the other half of the sugar in a stainless steel bowl.
After the milk mixture has steeped for an hour bring the temperature back up and slowly pour half of it over the egg yolk while constantly whisking them. This tempers the egg yolk and helps to not curdle the egg.
Pour the tempered mixture back to the rest of the milk and bring up to 140 degrees or until the sauce thickens.
Strain the mixture through a fine mesh strainer and chill on ice until cool to stop the cooking process.
With the other half of the coconut lay out on a sheet tray and bake at 350 until nice and golden brown stirring every ten minutes until evenly browned (about 20-30 min)
Turn the chilled gelato in an ice cream maker and add the toasted coconut as it is turning.