Holista targets $30m in China diet noodle sales; shares jump 43pc
Food & Agriculture
Food & Agriculture
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Diet noodle maker Holista CollTech is the latest stock to join the China retail crew, signing a distribution deal aimed at shifting $30 million worth of its low-fat noodles by 2020.
The announcement sent the share price up 43 per cent to an intraday high of 11c. The stock closed Thursday at 9c.
China retail exporters have been one of the most consistent ASX small cap themes in recent times, attracting more and more market entrants.
Holista (ASX:HCT) — which last week also announced it would sell the products through Amazon in North America — today told investors it had signed a deal with Express Trading Canada to sell healthy noodles into supermarkets and restaurants across major Chinese provinces.
More than 100 billion serves of instant noodles are consumed every year — though the dish has never been regarded as healthy.
Holista hopes to change that with its low-carbohydrate noodle formula which boasts a glycaemic index (GI) of 38 — almost half that of a standard noodle.
Express Trading Canada facilitates the exports of Canadian-made goods into the Chinese market.
From October, Holista aims to sell $C15 million ($15.5 million) noodles in the first year, doubling to $C30 million in the second year.
So far $C3 million in noodle orders into China have been committed for the first three months of the deal.
However, these numbers are only targets at this stage.
Under the arrangement, Holista Colltech is entitled to an 8 per cent royalty on all China sales through the deal, as well as 40 per cent of the net profit of Holista Foods, which produces the noodles.
Holista CollTech owns 74 per cent stake in of Holista Foods.
In the March quarter, the company had just $92,000 of cash on hand and had burned $378,000.
For the three months to March, the company netted $1.5 million from customer receipts.