However, the Jatcorp share price has since lost much of that ground and is up 3.7% trading at 2.8 cents at the time of writing.
Jatcorp share price higher on Chinese approval
Jatcorp has been busy making a pivot into new lines of business alongside its traditional infant formula segment. This is in response to a new COVID-19 environment that has seen minimal sales through daigou channels and a lack of international tourism.
On Wednesday, the company announced that its first product, Poupin Silky Brighten Revitalising Serum, has been approved by the Chinese Government authority, CFDA, for sale in China through off-line channels, including local department stores and specialty cosmetics stores. Jatcorp also intends on selling its products through major online platforms, including the most popular social media web influencer sales channels.
In today’s announcement, Jatcorp also notes that its subsidiary, Sunnya Ltd, has successfully opened its Neurio milk powder range to the Singapore market. The sale of products will now occur in Singapore’s local pharmacies and through online platforms in Indonesia, Malaysia and Philippines.
Falling Chinese sales drive pivot
Jatcorp follows a similar narrative as the A2 Milk Company Ltd (ASX: A2M) with COVID affecting its core infant formula business.
In the company’s 1H21 results, its revenues slumped from $30.6 million in 1H20 to $13.5 million in 1H21. Its decreased revenue was caused by lockdown measures, closed daigou stores and the paused flow of Chinese students and tourists into Australia. Despite its revenues falling by more than 50%, its loss after tax was relatively stable at $2.5 million compared to the $2 million in 1H20.
Today’s announcement reiterates the company’s strategic decision to diversify its business and seek new opportunities to increase revenues. Jatcorp managing director Wilton Yao commented on the COVID-19 headwinds saying:
To meet this challenge, and considering the negative effect of tensions between Australia and China, the board has taken necessary actions to manage under the difficult situation.
JAT has moved part of its plant-based meat operation into China, appointed new contract manufacturing in New Zealand and other countries and signed agreements with Chinese state-owned companies and large private enterprises to improve the stability of the business operation.
Meanwhile the board is continuing to seek new business opportunities to increase the operational scale and sales revenues.