The outlook for China-focused baby formula stocks got a big boost today as a2 Milk reported an amazing $NZ724 million ($660 million) worth of sales of the stuff.

a2 Milk Company posted a 116 per cent jump in full-year profit to $NZ195 million as sales of its infant formula surged in China and Australia.

That’s good news for the burgeoning number of ASX-listed infant formula stocks joining the party.

China-focused baby formula has been one of the most consistent performers among all ASX themes in recent years with stocks on average up 170 per cent year-on-year.

AuMake, the retailer targeting “daigou” and Chinese tourists, joined the party earlier this month after signing up a Kiwi dairy producer to develop an inhouse range of milk powder formula products.

AuMake joined other ASX china-focused baby formula makers such as Jatenergy, Bellamy’s, Synlait, Bubs, Clover, Wattle and newly listed Keytone Dairy.

a2 Milk — which is the theme’s 800-pound gorilla at a market cap of more than $7 billion — says its share of the massive China market grew to 5.1 per cent and in Australia to almost a third (32 per cent).

a2 Milk is now distributing to 10,000 stores in China and 6000 in the US.

Total revenue was $NZ923 million — a jump of 68 per cent as its a2 Platinum infant formula sales revenue jumped 84 per cent to $NZ724 million (or $660 million).

Transformative year

CEO Jayne Hrdlicka says 2018 has been a transformative year.

“Our brand and unique approach are working across multiple products and markets and we are seeing real momentum building in China and the US,” she says.

“Significant progress has been achieved in Australia, China and the USA and important emerging market opportunities are starting to materialise.

“The company has continued to invest in brand building and advertising and in the strength of the organisation, as we build capability and capacity to deliver on growth against our core opportunities.”

a2 Milk expects further growth in revenue in nutritional products in Australia and China, and liquid milk in the US.

Dividends will not be paid.

“The board continues to consider the appropriate use of the Company’s available capital to support further value creation from the company’s growth strategy and supply chain development,” a2 Milk said.

The 2018 results:

Source: a2 Milk

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