The Wattle Health Australia Ltd (ASX: WHA) share price could fall in early trade after the baby formula company provided its latest quarterly update this morning.
What did Wattle Health announce this morning?
Wattle Health today provided its quarterly update, which was largely a rundown of its quarterly highlights rather than any quantitative insight into the group.
Wattle Health's share price has halved since the start of the year, despite the company making significant strides in its journey towards becoming a serious player in the Aussie baby formula industry.
On 15 April 2019, Wattle Health announced the proposed acquisition of leading Chinese-accredited manufacturing facility, Blend and Pack (B&P).
The company also said that the Corio Bay Dairy Group (CBDG) has continued the construction of Australia's first dedicated organic nutritional spray dryer in Geelong, Victoria.
Planned completion of the spray dryer is anticipated in the first half of 2020 with Wattle Health having the first right to all certified organic nutritional powder for use across its nutritional dairy product ranges.
In a pleasing development for Wattle Health, CBDG has received numerous enquiries from domestic and international brands looking to secure potential off takes for certified organic nutritional powder and ingredients.
During the June 2019 quarter, Wattle Health also secured a 5% holding in Remarkable Milk Company (RMCO), a company which is broadly focused on retail for the Asia-Pacific region.
Another big development for the company during the quarter was its development of the Uganic brand, which management said will be distributing fresh organic milk and organic A2 fresh milk in the first quarter of 2020.
As announced on 25 March 2019, the company has secured the only available commercial quantity of organic A2 fresh milk to be used across Wattle Health's nutritional dairy range and fresh milk sales through its CBDG affiliation.
The first delivery of organic A2 fresh milk is expected to be received in the first quarter of 2020 with volumes for FY20 expected to be circa 2.5 million litres, increasing to circa 7.5 million litres in FY21 and growing each following year.
It wasn't all good news for Wattle Health
Despite noting several strong development highlights, the company also noted low sales for the quarter, which it said can be primarily attributed to the transition from conventional nutritional dairy products to Wattle Health's new organic range.
Wattle Health also said cash outflows for the quarter were primarily higher due to preparations for the launch of Uganic and one-off costs associated with the proposed acquisition of B&P.
While the company remains well and truly in its development phase, I'd expect to see the company's share price fall further this morning, particularly given the recent performance of Bubs Australia Ltd (ASX: BUB), which rocketed on its latest quarterly update.
