The 14 stocks that make up Stockhead’s infant formula list are coming off another slow month in June, as markets continue to assess the outlook for Chinese demand.

The bigger names in the sector — A2 Milk (ASX: A2M), Bellamy’s (ASX: BAL) and Bubs Australia (ASX:BUB) took a hit following the release of a Chinese government report on June 3. All three stocks finished slightly lower for the month.

What caught the market’s attention was the broader goal of Chinese regulators to increase the amount of infant formula produced in China to around 60 per cent, from current levels in the mid-40s. However, they put no timetable on when the shift needs to be implemented by.

Amid that backdrop, just two companies in Stockhead’s “baby bottle crew” posted a gain in the month of June, with two others flat while 10 lost ground.

One of the key themes in the month of June was capital raisings, as the three worst performers on the list all raised money to help fund strategic acquisitions.

Leading the laggards was Australian Dairy Nutritional (ASX:AHF), which posted a monthly decline of 27 per cent. Some monthly volatility is in play, because AHF topped the previous edition of Got Milk as the sector’s best performer in May.

That increase was driven by market enthusiasm for the acquisition and reassembly of a local infant formula plant in Victoria; part of AHF’s vision to become a vertically integrated dairy supply company.

On June 21 AHF said it had completed an oversubscribed share placement, raising $12m from institutional and sophisticated investors to help fund the acquisition.

The placement was done at an issue price of 12c per share, down from the company’s closing price on May 30 of 19c.

Wattle Health Australia (ASX:WHA) continued to struggle for momentum in June, losing a further 18 per cent to 54c — well down from its 12-month high of $1.55 reached last July.

The company has just signed a non-binding agreement for a revised $85m debt facility with US lender Gramercy Funds Management. The money will be used to help complete WHA’s purchase of Blend and Pack, the largest dairy packaging business in Australia.

Also raising capital was Keytone Dairy (ASX:KTD), which announced on June 19 it had received binding commitments to raise $8m at 43c per share from existing shareholders and institutional investors.

In the week prior to the raising, KTD’s share price fell from a mid-June high above 55c. The money will be used to partially fund the acquisition of Omniblend Pty Ltd.

On the other side of the ledger, minnow probiotics company Bioxyne Ltd (ASX:BXN) — which has a market cap of just $8.5m — posted a gain of 19 per cent in June to 1.9c.

The move looked to be mainly the result of market reactions as the company released no key updates in the month. Shares in BXN are still down by 42 per cent year-to-date.

Here’s the list of ASX small cap stocks with dairy operations that have exposure to China:

CodeNamePrice (2 July 2.30pm)Market Cap1 Month ReturnYTD Return
AHFAUSTRALIAN DAIRY NUTRITIONAL0.135 $29,984,414.49 -27%13%
WHAWATTLE HEALTH AUSTRALIA LTD0.545 $68,864,907.29 -18%-44%
KTDKEYTONE DAIRY CORP LTD0.49 $51,530,849.40 -15%41%
JATJATENERGY LTD0.053 $26,311,477.83 -13%-23%
HRLHRL HOLDINGS LTD0.11 $39,781,327.77 -12%16%
CLVCLOVER CORP LTD1.945 $223,511,148.52 -9%41%
AU8AUMAKE INTERNATIONAL LTD0.135 $30,631,821.44 -7%-45%
A2MA2 MILK CO LTD14.065 $7,136,025,363.23 -6%34%
BUBBUBS AUSTRALIA LTD1.19 $401,932,795.41 -2%158%
BALBELLAMY'S AUSTRALIA LTD8.51 $660,499,683.89 -1%15%
BFCBESTON GLOBAL FOOD CO LTD0.115 $37,297,050.06 0%-23%
LONLONGTABLE GROUP LTD0.21 $30,499,237.82 0%-42%
SM1SYNLAIT MILK LTD9.01 $1,120,827,131.27 9%7%
BXNBIOXYNE LTD0.019 $8,527,313.04 19%-42%