MENU

Bubs Australia Ltd (ASX:BUB) announces mega China deal to double revenue

Bubs Australia Ltd (ASX: BUB), the vertically integrated producer of goat milk infant formula and the largest producer of goat dairy products in Australia, has announced a mega long term supply agreement with a China-based company called New Times Asia. New Times Asia is a supply chain and service provider.

Under the agreement, New Times Asia has committed to purchasing minimum volumes of Bubs and CapriLac products with a $17 million sales commitment for FY 19. This represents at least a 100% increase to total business sales revenue for Bubs Australia.

The long term supply agreement will open up a new channel for Bubs Australia to supply Bubs and CapriLac products to up to 20 e-commerce platforms in China as well as enhance existing supply agreements with JD.com, Kaola.com, VIP.com, and RED.

Confirming that the company’s focus on China was starting to pay off, Mrs Kristy Carr, Founder and Managing Director of Bubs Australia said, “The agreement with New Times Asia is a major step forward in our China expansion strategy, and shows the investment we have been making and continue to make in building our China presence is bearing fruit.”

Shares in Bubs Australia were up over 10% in early morning trade following the announcement.

The Kids Are Alright

If you have kids (or even if you don’t), you will know how your baby’s nutrition comes first. When you add in the health benefits of goat’s milk that Bubs offers then this gives it a strong platform to compete with top companies such as A2 Milk Company Ltd (ASX: A2M) and Bellamy’s Australia Ltd (ASX: BAL).

When you then consider the popularity of Australian made healthy food products in China as demonstrated by this agreement, then you have a potentially exciting growth story.

Risks

Whilst the story of Australian exports to China is mostly exciting, there are potential risks with changes in regulation or trade wars that could complicate such supply agreements. Investors should carefully consider the experience that Blackmores Limited (ASX: BKL) went through.

Looking for more exciting growth stories? Start here to learn about these new ideas.

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We're living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That's why at The Motley Fool we've been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Cochlear or REA Group.

We've found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor Kevin Gandiya owns shares of JD.com. He has no position in any of the other stocks mentioned.

You can follow Kevin on Twitter @KevinGandiya.

The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.