China-focused retailer AuMake posted increased sales and profit for the September quarter ahead of its launch into the milk formula market, expected later this year.

AuMake (ASX:AU8) hit $10.1 million in sales, up 43 per cent on the June quarter, and made gross profit of $1.8m, up 63pc on June’s $1.1m.

“This quarter demonstrates the continued maturation and growing popularity of the AuMake brand within the Chinese tourist markets,” the company said in a statement posted to the ASX.

However investors were cautious on the news, with the company’s shares dropping 9 per cent to 29c in early morning trade.

It was a busy quarter for AuMake, with the company joining the dairy formula crew as well as taking an ownership in Herbsmart Pharmaceuticals, a company that makes a valerian milk, valerian being a herb that some people swear by as an insomnia cure.

AuMake says it is making A1 and A2 milk powder formula, with the A1 range supposedly launching before Christmas and the A2 range in the second quarter next year.

A2 milk is said to be healthier than A1.

AuMake shares (ASX:AU8) over the past year.

However the company is not making infant formula, which has been one of the hottest ASX small cap themes, in the initial phase.

Keong Chan, AuMake chairman, told investors his company was the most exciting and progressive company in Australia’s Chinese market.

“The September 2018 quarter has delivered yet another period of record growth across the AuMake business with further material improvement anticipated across all financial metrics in the December quarter,” he said.

“We now expect to reach total operational breakeven earlier in the 2019 financial year than previously advised given our current financial trend.

“December quarter activities will include further marketing activities to strengthen our Australian distribution network, initial sales from our strategic partnership with China’s TV sales platform JiaJia, a further addition to our owned brand dairy product portfolio and realisation of further strategic partnerships which will provide additional growth opportunities.

“The Company continues to assess acquisition opportunities and we will advise the market at the appropriate time.”

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