Sales at infant formula maker Bubs just jumped more than 500pc
Food & Agriculture
Food & Agriculture
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Organic infant formula maker Bubs Australia lifted gross sales by 531 per cent to $8.9 million in the fourth quarter as demand takes off in China.
Compared to the previous quarter, sales were 63 per cent higher.
“During the quarter, we saw a strong growth trend with material uplift in infant formula and overall sales to China delivering our highest quarterly revenues,” says Bubs Australia Founder and Managing Director Kristy Carr.
The stock climbed 7 per cent to an intraday high of 78c before cooling to 73.5c at 10.50AM AEST. The business is valued at about $290 million.
China-focused infant formula stocks have been a consistently strong theme among ASX small caps over the past year.
The sector got another boost last week with the successful listing of Keytone Dairy (ASX:KTD) which is trading at a 65 per cent premium to its issue price.
Bubs put its strong sale performance down to “a 99 per cent year-on-year increase in Bubs infant formula and the additional sales from the NuLac Foods portfolio.
“Our China route-to-market strategy advanced significantly with several new cross-border trading partnerships.”
Fourth quarter export sales to China grew 644 per cent to $1.9 million, accounting for 22 per cent of the group’s total quarterly gross revenue.
Bubs last month closed a $40 million equity placement to professional and sophisticated investors.
“Recent capital raising will provide the necessary working capital and inventory management to support growth in market development, supply chain, brand marketing and product innovation,” says Carr.
“The new capital is expected to support the next stage of growth and take the company to profitability.”
The company also announced last month a Merchant Service Agreement with Alibaba, the largest e-commerce platform in China, for a Flagship Store on Tmall Global.
Mother and Baby products are the second largest category on Alibaba, spearheaded by infant formula.
Infant nutrition cross-border sales increased 8.8 per cent last year on the platform, with the strongest growth drivers coming from organics, specialised formula and goat milk products.