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Bubs share price rockets higher on China deal

The Bubs Australia Ltd (ASX: BUB) share price has been a strong performer on the Australian share market on Thursday.

At the time of writing the baby food and infant formula company’s shares have rocketed 18% higher to $1.10.

This means that Bubs’ shares have now gained a massive 139% since the start of the year.

Why is the Bubs share price charging higher?

This morning Bubs announced a strategic channel partnership with Kidswant, which is the first major project of the Bubs-Beingmate Joint Venture.

According to the release, an official signing ceremony and launch event was held at the Kidswant headquarters in Nanjing to formalise the agreement.

The partnership means the Bubs Organic food products are now ranged in 275 Kidswant stores in key shopping areas across 123 cities throughout China. Management believes the annual retail sales performance of Bubs products through Kidswant will reach RMB30 million (~A$6.25 million) in FY 2020.

Bubs chief executive officer, Kristy Carr, said: “We are delighted to establish this strategic partnership with Kidswant, the No.1 baby store chain in China. Kidswant’s store footprint and full-service integrated membership model provides us with immediate access to our core potential customers in a trusted ecosystem.”

What is Kidswant?

The release explains that Kidswant is an innovative data and consumer relations based omni-channel family service provider focused on retailing maternal and baby goods and value-added services. It is the market leader in infant and child retail with the largest market share in China.

It operates large physical stores, online shopping malls, a mobile terminal APP, and other shopping channels. Kidswant also provides a parenting and purchasing consulting service with in-store and on-line professional childcare consultants which aim to provide consumers with differentiated goods and services.

Over the last 10 years it has grown to 275 large-scale physical stores, reaching nearly 60% of the cities in China with a population of more than 500,000. Its annual turnover currently stands at over RMB10 billion (A$2 billion).

Elsewhere in the industry today, A2 Milk Company Ltd (ASX: A2M) and Bellamy’s Australia Ltd (ASX: BAL) shares are trading roughly flat in early trade.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Bellamy's Australia and BUBS AUST FPO. 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.

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