Got Milk: Dairy formula stocks largely stable as big stocks lead recovery
Food & Agriculture
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A 14 per cent recovery for dairy giant A2 Milk (ASX:A2M) during July saved the ASX’s dairy formula sector from another down month, while fellow big stocks Bellamy’s (ASX:BAL) and Synlait Milk (ASX:SM1) also gained.
The sector has been slow of late, as Stockhead noted last month. Ten companies lost ground in June amid a number of capital raises as the market continued to assess Chinese demand. The country is showing signs it wants to boost domestic production of dairy formula products and lessen its reliance on imports.
Both A2 Milk and Bellamy’s had very quiet months news-wise, though each recovered from June drops: A2 by 14 per cent to $15.98 and Bellamy’s by 9 per cent to $9.
Clover Corp (ASX:CLV), which has had no news out since April, gained 13 per cent to $2.09 over the period, while Synlait recovered 6 per cent. It and A2 and Bellamy’s, comfortably the three biggest stocks in the sector, lost ground following the release of a Chinese government report in early June.
Bubs Australia (ASX:BUB), which in the past year has seen its value grow 86 per cent, had a small 4 per cent gain. It released a bumper quarterly report in late July that revealed the company’s highest ever recorded quarterly revenue.
The biggest fall was Beston Global Food (ASX:BFC), down 19 per cent and down 52 per cent in the past year. Its CEO Jonathan Hicks outlined a number of operational changes in a letter to shareholders in late June, noting there had been some redundancies as a result of the company’s decision to focus on its “dairy and meat” strategy.
Wattle Health (ASX:WHA) and Bioxyne (ASX:BXN) also had falls of 17 and 10 per cent respectively.
Here’s the list of ASX small cap stocks with dairy operations that have exposure to China: