The Freedom Foods Group Ltd (ASX: FNP) share price has pushed higher this morning after providing an update on the progress of the development of its Nutritional Ingredients Business Platform.
At the time of writing the diversified food company's shares are up over 1% to $5.40.
What was in the update?
According to the release, Freedom Foods has entered into a long-term supply agreement for Lactoferrin with a major global pharmaceutical company.
Whilst further details remain confidential at this stage, the company revealed that the supply agreement will utilise a significant component of current and planned capacity for Lactoferrin at its Nutritional ingredients facility in Shepparton, Victoria.
What is Lactoferrin?
Lactoferrin is a naturally occurring iron-binding protein found in milk and is known for its anti-microbial, anti-inflammatory and immunological properties.
It is a high value and functional ingredient which is currently being used globally in a range of consumer health and nutritional food products including medicinal products and infant formula products such as those sold by A2 Milk Company Ltd (ASX: A2M).
Strong demand for all Nutritionals.
But it isn't just Lactoferrin that is experiencing strong customer demand. The company also advised that it has commitments for the sale of all its available capacity in FY 2020 for native whey protein isolate, micellar casein and Lactoferrin.
Pricing for these key ingredients has been achieved at or above initial business plan assumptions.
Pleasingly, the company's recent $130 million equity raising will mean the company can increase capacity for these products in both FY 2021 and FY 2022, allowing it to capitalise on the strong customer demand.
It is partly because of this that analysts at UBS recently retained their buy rating on the company's shares and lifted the price target on them to $7.10. This price target implies potential upside of over 31%.
