Got Milk: December was a better month for infant formula stocks; but the standout was in goat milk
Food & Agriculture
Food & Agriculture
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The Infant formula sector on the ASX struggled for much of 2019 with increased competition and the threat of new regulations, but December was a positive month.
Six stocks notched gains, including Bellamys (ASX:BAL) which was acquired by Mengniu during the month.
But the top gainer was the newest stock on the block, Nuchev (ASX:NUC) — which sits 39 per cent higher than when it first listed.
ASX welcomes Nuchev Limited! Established in 2013, $NUC produces, markets and sells a range of premium goat formula products into the Australian and Asia markets, with plans to expand into other health and nutrition products in the future. https://t.co/PLX5D6ySyE pic.twitter.com/L458fT9dVr
— ASX 🏛 The heart of Australia's financial markets (@ASX) December 9, 2019
Nuchev specialises in Goat’s milk which contains more vitamins than cow’s milk including 46 per cent more vitamin C. Medical experts claim that it is easier for babies’ to digest.
Nuchev says the goat milk infant formula market in China will grow 18.8 per cent from 2018 to 2023. It is expected to account for nearly 13 per cent of the total infant formula market.
However local firms are seeking to enter the market too, one being China’s largest dairy maker Yili. Last month Yili launched its first goat milk infant formula.
Vice president Zhao Xin said Yili’s goat infant formula had good growth prospects and that it would help revive the domestic sector.
Even with reports that China would seek to subsidise local companies at the expense of foreign entrants, locals have not forgotten the 2008 tainted milk scandal.
This crisis killed four children and hospitalised 54,000 more – reportedly affecting some children to this very day. But Xin believes this fear can finally be overcome with a product intrinsically healthier and safer.
Also having a solid December was AuMake (ASX:AU8), which is a daigou-focused retailer that sells infant formula among other goods. The main catalyst was a strong trading update in the December quarter where it reported its best financial performance since listing.
Beston Global Food Corporation (ASX:BFC) and Jatenergy (ASX:JAT) also recorded solid gains in December, although much of the focus on the latter is because of its venture into plant-based meat.
On a 12-month basis the best performer is Bubs Australia (ASX:BUB), although it is well off its all time highs.
It finished the year raising over $35m and is looking to explore other Asian markets such as Vietnam.
|Code||Name||Price (I)||1 Year % Return||1 Month % Return||Market Cap|
|AU8||AUMAKE INTERNATIONAL LTD||0.13||-47||30||$41.6M|
|BFC||BESTON GLOBAL FOOD CO LTD||0.098||-32||21||$41.2M|
|AHF||AUSTRALIAN DAIRY NUTRITIONAL||0.1||-20||2||$39.0M|
|BAL||BELLAMY'S AUSTRALIA LTD||13.23||84||0||$1.5B|
|HRL||HRL HOLDINGS LTD||0.11||22||0||$59.2M|
|LON||LONGTABLE GROUP LTD||0.16||-55||0||$34.2M|
|KTD||KEYTONE DAIRY CORP LTD||0.39||1||-1||$82.8M|
|SM1||SYNLAIT MILK LTD||8.7||0||-3||$1.6B|
|A2M||A2 MILK CO LTD||14.04||40||-3||$10.3B|
|BUB||BUBS AUSTRALIA LTD||0.975||106||-4||$546.3M|
|CLV||CLOVER CORP LTD||2.66||99||-4||$436.0M|
|WHA||WATTLE HEALTH AUSTRALIA LTD||0.4722||-42||0||$98.2M|