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Infant formula exporter Clover Corp has invested in a “spray dryer” technology that converts large volumes of liquid milk into powder.

Clover Corp (ASX:CLV) makes oils and powders that can be added to foods, including milk powder. The company recently pointed to China’s enthusiasm for infant formula as a reason for a doubling of profit.

Clover has today taken a 35 per cent stake in a new New Zealand company Melody Dairies — giving it access to a multi-million dollar spray industrial spray dryer that can convert large volumes of liquid into dried forms for ease of use, transport and storage.

Clover shares were flat on the news.

Infant formula has been one of the ASX’s hottest small cap themes over the past year, with stocks on average doubling in value as China have introduced more regulation to deal with the influx of exporters.

Clover Corp shares (ASX:CLV) this past year.

Melody Dairies is based at the Waikato Innovation Park in Hamilton, New Zealand and the 35 per cent stake is an extension of Clover’s partnership with New Zealand Food Innovation Waikato, which Clover first entered into in 2014, when it invested in the first spray dryer built in the area.

This second dryer, the company says, “will augment the capacity of Clover to manufacture its range of specialty micro-encapsulated powders which serve the infant formula, pharmaceutical, nutraceutical and functional food markets”.

“The acquisition of a significant share in Melody Dairies is part of the company’s strategy to vertically integrate into its supply chain,” chief Peter Davey said.

“It will reduce the risk of disruption for both customers and the company to produce supply which could result from problems of availability or quality at other facilities.”