Jatenergy shares are plunging after a milk powder supplier fell into receivership
China dairy exporter Jatenergy is down heavily today after one of its infant formula suppliers was placed into receivership.
Jatenergy owns 51 per cent of Golden Koala Group, which uses Nutritional Choice Australia to produce its infant milk formula.
Nutritional Choice Australia was placed into receivership on June 1.
The stock (ASX:JAT) fell 28 per cent to an intraday low of 5.5c in early Friday trade.
Jatenergy was one of the best performing ASX stocks small caps early this year, winning ten-bagger status after it joined the infant formula export crew — propelling its shares from 2c as high as 29c.
Jat said it believed the contractor was solvent “and the receivership is as a result of an internal dispute rather than insolvency”.
It expects Nutritional Choice Australia will be able to fulfil its contract.
Jatenergy chairman Tony Crimmins says he’s had no communication from the company or the receiver that they won’t fulfil the contract.
“I’m not going to do anything if nothing is actually there,” he told Stockhead.
According to ASIC, “when a company experiences financial difficulty, a secured creditor (such as a bank) or the court may put the company into receivership”.
A receiver is appointed to take control of the company’s assets and repay out the debt, the goal being to ultimately return the company to a profitable state and avoiding bankruptcy.
Nutritional Choice Australia is one of about a dozen companies in Australia with Chinese government approval to produce milk powder for that market.
It is one of Jat’s two milk powder producers. The other is Sunnya, which makes a goat milk formula.
Meanwhile, fellow infant formula play Wattle Health (ASX:WHA), was climbing this morning after signing a deal to deliver $34 million worth of infant formula to Chinese state-owned enterprise Shandong Weihai Port International.