The Bubs Australia Ltd (ASX: BUB) share price is in focus this morning after announcing the sale of non-core assets acquired as part of its 2017 acquisition of NuLac Foods Pty Ltd.
What did Bubs Australia announce?
Bubs has entered into an agreement to sell the Coach House Dairy brand to The Remarkable Milk Company Pty Ltd and management said the company does not consider the brand core to its business strategy of infant nutrition and goat dairy products.
The assets include the business conducted under the Coach House Dairy brand for the production and sale of flavoured cow's milk products, including the Australian registered trademarks, recipes, website and social URLs.
The company expects to complete the sale on 30 June 2019 and receive consideration of $500,000.
Is Bubs Australia the best infant dairy stock on the market?
The Bubs Australia share price has rocketed 69.6% higher on strong earnings and general tailwinds for Aussie dairy infant formula companies primarily from China.
The biggest player in the market, The A2 Milk Company Ltd (ASX: A2M) has seen its share price climb 44.1% higher year-to-date (YTD) while Bellamy's Australia Ltd (ASX: BAL) is up 21.1% this year.
I think Bubs is a good option for those that think they've missed the stratospheric growth train on both Bellamy's and A2 Milk.
So far this year, fellow upstart Wattle Health Australia Ltd (ASX: WHA) is down 16.5% which shows that investing in infant formula requires careful analysis of each company's business model and future growth prospects.
I'm not personally bullish on the sector at the moment given the significant regulatory risk that exists with these companies waiting for approval from the Chinese State Administration for Market Regulation.
A2 Milk is definitely the incumbent and I think represents the most mature company of the group, but I still think there will be further share price volatility as long as Chinese regulatory concerns remain.
For those who are similarly bearish on infant formula companies, this top-rated stock could boost portfolio gains as looks to seize a sizeable part of a growing $22 billion industry.
