Oracle Investment Management portfolio manager Luke Winchester runs the fund's emerging companies portfolio. In an interview with Stockhead, he commented that "the fund has been happy to side on the sidelines of the ecommerce theme."

However, in the context of ecommerce, Winchester thinks there are still businesses who are benefitting from the pandemic, even if their share prices don't reflect that. Jumbo Interactive Ltd (ASX: JIN) is one of the names his fund considers a hidden COVID-19 winner.

Winchester points to the fact the online lottery ticket reseller enjoyed a tailwind amid COVID-19, with the pandemic acting as a customer acquisition tool given brick-and-mortar stores were shuttered.

"They have now kept a big chunk of customers who were forced to use their services," Winchester commented.

How did Jumbo perform in FY20?

Jumbo recorded total sales of $349 million in FY20. The company also booked a 9.1% increase in revenue to $71 million for FY20. Earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 7.7% to $43.2 million.

The company attributes this growth to the launch of Ozlotteries.com and its "Powered by Jumbo" software as a service (SaaS) business.

Online platforms open up UK market

Oz Lotteries is an accredited retailer of Australian lottery tickets while the "Powered by Jumbo" SaaS business is an online platform that provides lottery and gambling services to consumers.

Upon the launch of the new platforms, Jumbo successfully secured a licence from the United Kingdom (UK) Gambling Commission to operate in the UK charities market in November.

According to the UK Gambling Commission, there are 168,168 registered charities in England and Wales, with a target addressable market in the UK worth £775.62 million (as of September 2020).

Partnership with Lotterywest

Jumbo also announced a lucrative agreement with the WA Government-owned and operated Lotterywest in November. Under the terms of the deal, the digital lottery retailer will provide its online software platform for up to 10 years.

Commenting on the agreement, Jumbo Interactive CEO Mike Veverka said: "This is a major achievement for Jumbo Interactive securing our first government client setting up a solid long-term partnership and providing strategic opportunities for Jumbo."

Based on the terms of the partnership, Jumbo Interactive will receive a 9.5% service fee for every transaction through a white label platform.

Lotterywest will oversee the marketing strategy, while Jumbo Interactor will manage the platform, taking care of customer on-boarding, customer service and after-sale support.

Jumbo share price summary

At the time of writing, the Jumbo share price is up 1.24% for the day at $13.92 per share. However, despite the pandemic tailwinds, Jumbo shares remain 7% down year to date.

On current prices, Jumbo has a market cap of $858 million.

The post Is Jumbo Interactive (ASX:JIN) a hidden COVID-19 winner? appeared first on The Motley Fool Australia.

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Miles Wu has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

"Obviously China is a big market but no one in their right mind would be selling to them and putting new business into that market because of what is happening with barley and other agricultural commodities," Brett Donoghue, export manager of New South Wales-based grain marketer Agracom, told Reuters.

According to the Reuters article, a Chinese buyer who declined to be identified said China usually buys Australian wheat in the fourth quarter for shipment in January. But Chinese officials gave early warning the country would strengthen inspections on Australian wheat shipments, raising concerns of grain exports being rejected or stranded in China.

China's demand for Australian wheat continues to increase

As highlighted in the Reuters report, although China is the world's top wheat producer, it does not produce enough high quality low-gluten wheat to meet demand. Therefore China turns to Australian wheat to produce the flour used in the white, fluffy cakes that have become popular with the country's middle-class community.

The Australian Bureau of Agricultural and Resource Economics and Sciences — the research arm of the Australian Government Department of Agriculture, Water and the Environment — released its Agricultural forecasts and outlook report in December. Chinese grain consumption is expected to increase by 2% to 302 million tonnes in 2021, according to the report.

Graincorp Ltd (ASX: GNC) steady amid trade tension

ASX-listed grain handler Graincorp is an agribusiness operating in more than 30 countries. It reports that its exports to China have not been disrupted by recent tensions between Australia and China. 

Graincorp CEO Robert Spurway told the Sydney Morning Herald (SMH) the company had very close ties with its Chinese customers and its grain was competitively priced in most markets, which acted as a natural hedge against volatility in the Chinese or any other export market.

With Graincorp seeing a good demand across the globe for wheat and other grain products, the company has implemented a global diversification strategy to mitigate geopolitical risks. Graincorp has almost doubled the number of its export markets to more than 50 over the past year.

"The company has moved from somewhere in the order of 30 markets 12 months ago, to more than 50 as we sit here today, and over 340 high quality customers. We have done a good job at broadening the number of markets we trade with and the size of our customer base," said Robert Spurway (as quoted by SMH).

The Graincorp share price has increased by 17.2% to $4.43, year-to-date.

The post Australian wheat exporters retreat amid trade dispute with China appeared first on The Motley Fool Australia.

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Motley Fool contributor Miles Wu has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This year the COVID-19 pandemic delivered a blow to many retailers across Australia. Brick-and-mortar retailers have been under pressure from lockdown restrictions, cautious consumer spending and intense competition from online retailing.

However, there are signs of a turnaround. Roy Morgan, an Australian market research company, conducted a retail sales forecast with the Australian Retailers Association (ARA) in November. They predict Australians will spend over $54.3 billion across retail stores during the Christmas period, which is an increase of 2.8% on the 2019 Christmas period.

Because of the impact of spending patterns caused by COVID-19, the Roy Morgan retail sales forecast also suggested that online retailing is predicted to grow by 6.6% compared to 2019.

Here are two ASX retail shares with both brick-and-mortar and online stores.

Myer Holdings Ltd (ASX: MYR)

The Australian Financial Review (AFR) reports that department stores are expecting the online shopping boom to stick around, post-pandemic. The AFR article quotes former Myer chief executive Richard Umbers as saying "So many people have now shopped online for the first time as a result of COVID, and they like the experience."

Myer's group online sales grew by 61.1% to $422.5 million in FY20, which made up 16.7% of total sales in FY20. Overall in FY20, Myer reported a total sales of $2,519.40 million, which is a decline of 15.8% from $2991.8 in FY19. It reported earnings before interest and tax (EBIT) of $78.5 million, which went up 34% from FY19.

During 2020 Myer has received COVID-related rent concessions from its landlords and is negotiating what its future store footprint might look like as it focuses growing on its online offering. The department store reduced its coverage by 14,000 square metres in 2018–19 and 26,000 square metres in 2019–20.

The Myer share price is currently trading at 30 cents, down 37% from 49 cents in January.

Accent Group Ltd (ASX: AX1)

Accent Group is a leading retail and distribution footwear company, with brands including the Athlete's Foot, Hype DC, Platypus Shoes, Vans, Dr. Martens, Timberland and Palladium etc. It operates across Australia and New Zealand.

With sales growing by 15.70% in the past five months (excluding the impact of Victoria and Auckland's lockdowns), Inside Retail reports that CEO Daniel Agostinelli is pleased with Accent Group's strong trade to date and with the performance of the company's new stores. 

Accent Group has an integrated omni-channel business model, which is a marketing strategy to unite user experiences from brick-and-mortar to mobile/digital shopping. According to the company, the model allowed it to grow its online orders from an average of $200,000 per day to $800,000–$1 million per day from April to June 2020.

Additionally, in the fourth quarter of FY20, more than 50% of digital shoppers were new customers to Accent Group.

This company has a market capitalisation of $1.20 billion, trading at $2.18 per share, which is above its pre-COVID price level.

The post ASX retail shares gear up for Christmas boom appeared first on The Motley Fool Australia.

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Motley Fool contributor MWUaus has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The proposal by Treasury Wine Estates Ltd (ASX: TWE) to spin off its Penfolds business was put on hold recently to allow the company to focus on responding to China's trade tariff and the ongoing anti-dumping probe by China into imports of Australian wine.

As tensions between Australia and China escalated, Treasury Wines responded to the tariff at the end of November. The Treasury Wine share price then tumbled to a near 5-year low, trading at $8.40 as of 1 December.

Response to trade tariff

 Treasury Wine's response plan included the following key items:

• reallocation of Penfolds Bin and Icon range from China – which represent 25% of the company's annual global Penfolds allocation volumes – to other key luxury growth markets including Asian markets outside of China, Australia, the US and the Europe.
• reallocation of luxury grape sourcing to other premium Australian portfolio brands, which have been significantly
  supply constrained over recent years.
• acceleration of its multi-country of origin portfolio growth strategy, with a focus on growing sourcing from its existing asset base in France and potentially from China.

In the week or so following the release of its response, the Treasury Wine share price has risen by 9.5% to $9.20.

International support 

More than 200 parliamentarians from 19 countries have formed an alliance called the Inter-Parliamentary Alliance on China Policy (IPAC). This is led by global legislators who are senior politicians aiming to maintain a free, open and rules-based international trade order.

The alliance recently demonstrated its support for the Australian wine industry in response to this wave of Australia–China trade tension, via a global campaign calling for people to drink Australian red wine in December.

Treasury to diversify away from China

A research report out of Bell Potter estimated that the tariffs from China will impact Treasury Wine's earnings in the near term, and thus the broker lowered the company's target share price to $8.20.

In response to the collapse in demand, Treasury CEO Tim Ford said (as quoted by Business Times): "We are moving on with a plan…to build the markets outside of China, and that's what we'll continue to do."

Bank of America analyst David Errington also noted that Treasury Wine will now be focusing on other markets (as quoted by Business Times): "Treasury Wine will most likely divert about 1.5 million cases a year from China to other markets by 2023, and China's earnings contribution to the company would almost halve by then."

About the Treasury Wine share price

The Treasury Wine share price currently sits at $9.20 as of 9 December, up 9.4% from its 1 December low. Treasury Wine shares are down 43% in the year to date, leaving the company with a market capitalisation of $6.67 billion.

The post What does the future hold for Treasury Wine (ASX:TWE) after China's tariff? appeared first on The Motley Fool Australia.

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Motley Fool contributor MWUaus has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The reliance of Australian exports to the Chinese market has been put under the spotlight, with China imposing fresh trade restrictions across industries such as coal, wine, barley and timber.

However, a number of resource industry experts believe the country will be unable to shake off its reliance on Australia's iron ore industry, in the short-term at least.

Demand for iron ore remains strong

In a recent ABC article, iron ore research analyst Philip Kirchlechner said despite the hostility, China's coronavirus stimulus packages have seen the country's demand for iron ore surge as it targets steel-intensive projects like rail, airports bridges and ports. Given the fact that Australia is currently China's most reliable source of steel, Kirchlechner believes there is no need to panic.

Former Australian ambassador to China Geoff Raby also commented on China's need for steel (as quoted by the Australian Financial Review):

China's big agenda is the Belt and Road. This is China's grand plan to provide the hard and soft infrastructure to facilitate trade between Europe and Asia. Steel is central to it.

In the same AFR article, Sydney-based iron ore analyst Andrew Gadd also pointed to the fact the domestic iron ore industry in China is shrinking. China's current supply of iron ore only meets 20% of that required by its steel plants. For this reason, Gadd does not predict any decline in Australian export volumes to China in the near future.

Reliability and quality

There were also signs last week that Brazilian miner Vale will take longer than expected to solve the challenges curbing its iron ore output, which means China will need to continue to look elsewhere to meet its demand.

As reported by the ABC, BIS Oxford Economics chief economist Sarah Hunter is optimistic there would be no significant disruptions to iron ore exports to China over the next few years:

…Australia is very well placed as a reliable, high quality, big supplier into the Chinese market, and Chinese demand for iron ore isn't going to diminish, as they don't really have a good viable alternative.

While their share prices are all down slightly today, ASX iron ore shares Fortescue Metals Group Limited (ASX: FMG), BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) all enjoyed solid gains over the past week as the iron ore price continues to surge.

The post Iron ore exports unlikely to slow down amid Australia–China trade tension: experts appeared first on The Motley Fool Australia.

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Motley Fool contributor MWUaus has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

In its 2019 annual report, the Principles for Responsible Investment (PRI) organisation pointed to Australia as one of the fastest growing countries with a commitment to responsible investment.

And, according to Nuveen's head of engagement Peter Reali, the COVID-19 pandemic will lead to environmental, social and governance (ESG) factors being even more important for investors.

In light of this, we take a closer look at 3 ASX real estate investment trusts (REITs) that have low ESG risk ratings.

Vicinity Centres (ASX: VCX)

As Australia's second largest shopping centre landlord, this $7.60 billion company has assets skewed to large shopping malls.

Sustainalytics (a provider of ESG and corporate governance research and ratings to investors) has given this REIT a very low ESG risk score, ranking it first among its real estate industry peers when it comes to ESG. The rating service provider said Vicinity Centres is at negligible risk of experiencing material financial impacts from ESG factors, due to its low exposure to, and strong management of, material ESG issues.

At the time of writing, the Vicinity Centres share price is $1.68 per share, up 17% year to date.

Dexus Property Group (ASX: DXS)

Dexus is one of Australia's largest office and industrial REITs and has a market capitalisation of around $10.70 billion.

It has a similar low ESG risk rating to that of Vicinity Centres, with a slightly riskier score under "governance risk". Sustainalytics ranks Dexus as number 2 within its industry group, just behind Vicinity.

In its recent annual general meeting address, Dexus management highlighted its belief that as Australia opens up after lockdowns, office markets will continue to benefit from urbanisation and growth in capital cities, and that investors should expect a revival in the Australian property market.

At the time of writing, the Dexus share price $9.68, up 6% year to date.

Stockland Corporation Ltd (ASX: SGP)

Stockland Corp is another REIT with low ESG risk, according to its Sustainalytics score. Stockland has a market capitalisation of around $10.90 billion, and operates a diversified portfolio of residential, retail and logistics assets.

Sustainalytics has given Stockland Corp a low ESG risk score, recognising that the company is focusing on strengthening its ability to endure material risks by implementing organisation-wide sustainability programs. According to Stockland Corp's governance and risk report, this program involves the development of environmental management systems and a cyber risk management plan.

The Stockland Corp share price has enjoyed an upward rally since April, and at $4.49 per share at the time of writing it has almost returned to its pre-Covid price level of $4.60.

The post 3 ASX REITs with notable ESG scores appeared first on The Motley Fool Australia.

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Motley Fool contributor Miles Wu has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

What does Youfoodz do?

Founded in 2015, the Brisbane-based company makes and sells fresh, pre-prepared meals and healthy snacks and drinks that are delivered to customers' doors. In addition, the business begun selling grocery essentials and fruit and vegetable boxes for home delivery amid high demand during the COVID-19 pandemic.

Growth goals

In the Youfoodz investment prospectus, chief marketing officer Simon Jarvis highlights the company's plan to double the size of its business.

Jarvis himself spent 10 years in the agency space before working as a business-to-consumer marketer with Telstra Corporation Ltd (ASX: TLS), TAB New Zealand and TheScore Inc. Youfoodz points to Jarvis' extensive cross-border marketing experiences as a tool to ensure the company can rapidly drive new customer acquisition, retain existing customers more effectively and maximise returns on marketing investment.

In the prospectus, the company outlined it is focused on executing five key growth initiatives:

• capturing underlying market and category growth
• growing segment market share and Average Order Value through new offerings
• customer retention with a subscription model and loyalty program
• manufacturing automation and other efficiencies from a new purpose-built manufacturing facility
• selectively targeting new geographies.

Youfoodz is also working to understand customer segments through data-driven customer relationship management communications.

In a recent interview, Jarvis highlighted that Youfoodz has an audience profile that skews 70% female and around 25 years of age who are single or live with a partner, adding "[b]ecause our product is about convenience, time saving and healthy meals made easy, it tends to appeal to… people commuting to work with less time to cook and prepare meals." 

He commented that data shows that 4.9 million of Australia's 14.8 million main grocery buyers fit into this time-poor category.

Details of the offer

According to Youfoodz management, the IPO proceeds will be used for the following purposes:

• 21% to help fund new manufacturing facilities
• 35% for general corporate purposes
• 36% for repaying shareholder loan to a major shareholder RGT Capital (which provided debt financing of $25 million, pre-IPO).

Youfoodz shares are expected to start trading on 8 December.

The post Marley Spoon (ASX:MMM) rival set to list on the ASX appeared first on The Motley Fool Australia.

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Motley Fool contributor Miles Wu has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

The company aims to raise $102 million with an issue price of $0.80 per share. This is upsized from the company's original plans to raise $75 million.

Doctor Care Anywhere advises that the majority of the funds raised by the IPO will be used to support investments in marketing and engagement functions, investment in new products and building international business development capabilities.

What is Doctor Care Anywhere?

Doctor Care Anywhere is a London-based telehealth company founded by Doctor Bayu Thakar, a qualified medical doctor and a McKinsey alumnus. 

The company's business model is to recruit its own clinicians to provide patients with virtual GP consultations in the form of video or phone consultations with GPs who are directly employed by Doctor Care Anywhere. It also provides diagnostic referrals and specialist reviews across the key clinical specialties.

The company has grown rapidly since its inception in 2014, providing services to more than 1,500 corporate and SME clients through its major channel relationships.

The digital health market

The global telehealth market was estimated to be $7.30 billion in 2019 and is forecast to reach $20.50 billion in 2024, growing at a compound annual growth rate of 23.10%.

Doctor Care Anywhere currently focuses on the UK private healthcare market but advises it is looking to accelerate its business expansion to capture this growing telehealth market. 

According to its prospectus, Doctor Care Anywhere has chosen to list in Australia because it is a developed market with investors who understand healthtech and are keen to invest in digital healthcare. 

Doctor Care Anywhere chair Jonathan Baines said:

The impact of COVID-19 on all our lives has demonstrated the vital role that technology can and must play in the future of healthcare. We see DOC at the forefront of this revolution and we have a clear and ambitious growth strategy that aims to create real value for investors in the rapidly growing digital health market.

The post UK's Doctor Care Anywhere to dial in to ASX telehealth ranks appeared first on The Motley Fool Australia.

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Motley Fool contributor Miles Wu has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

The S&P/ASX 200 Index (ASX: XJO) has risen by 4.67% since last Friday's close (6 November) to 6,466 points. Global investors have snapped up pandemic-hit shares after Pfizer Inc. (NYSE: PFE) indicated that its COVID-19 vaccine had proved more than 90% effective in its trial.

A breakthrough COVID-19 vaccine

On Monday, the American drug maker Pfizer and its German partner BioNTech SE (NASDAQ: BNTX) released positive results from the clinical trial of their COVID-19 vaccine, BNT162b2. Pfizer's chair and CEO Dr. Albert Bourla commented:

Today is a great day for science and humanity. The first set of results from our Phase 3 COVID-19 vaccine trial provides the initial evidence of our vaccine's ability to prevent COVID-19.

Acting Victorian chief health officer Professor Allan Cheng commented that while the Pfizer vaccine was good news, there was "very little detail about what the results actually are," as they have not been published in a peer-reviewed medical journal (as quoted by The Guardian).

Despite the lack of detail, investors are starting to look at the healthcare sector again. Here are 2 ASX healthcare shares that have gained traction since the anouncement.

Mayne Pharma Group (ASX: MYX)

Mayne Pharma is a specialty pharmaceutical company focused on applying its expertise in drug delivery to commercialise pharmaceutical products. The company's flagship product TOLSURA is used for the treatment of infectious pulmonary and extrapulmonary diseases.

In its FY20 results presentation in August, Mayne Pharma reported revenue of $457 million and underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $95 million, including a non-cash intangible asset impairment of $99 million.

Meanwhile, the company reported that TOLSURA sales  grew by 460% in the fourth quarter year over year, due to the COVID-19 pandemic. Mayne expects the sales of TOLSURA to accelerate in FY21.

The Mayne share price has gone up 6.66% since last Friday's close, valuing the company at a market capitalisation of $537 million. 

Medical Developments International Ltd (ASX: MVP)

This Australian healthcare company manufactures and distributes pharmaceutical drugs and medical equipment and has a market capitalisation of $419 million. The Medical Developments share price has risen by 14% since last Friday.

According to its FY20 report, Medical Development International grew sales by 61%, an all-time record, with Australian sales up by 43% and North American sales up by 88%. 

Finally, the company's management team has also indicated their intention to replicate the success of the respiratory business internationally. This is achieved by buying back the European distribution rights to its Penthrox methoxyflurane inhaler from Mundipharma for 3 million euros.

Penthrox is the company's pain relief product and is approved throughout Europe, with 568 European Union organisations buying the product. The company has indicated it is focused on taking a more direct role in the commercialisation of Penthrox by building a direct in-market presence in Europe.

The post 2 ASX healthcare shares that have risen since Pfizer's vaccine news appeared first on The Motley Fool Australia.

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MWUaus has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Medical Developments International Limited. The Motley Fool Australia has recommended Medical Developments International Limited. 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.

East 33 Limited (ASX: E33) is an aquaculture company specialising in oyster production and supply. The company is aiming to get listed on the ASX (indicative date 3 December 2020) and opened its IPO on 23 October. It is setting out to raise $32 million through the issue of 160 million new shares at 20 cents per share.

A closer look at East 33

East 33 was formed to acquire and operate a portfolio of long-existing oyster farms and distributors, with the goal of creating Australia's largest vertically integrated group of Sydney rock oyster producers, suppliers and exporters. According to East 33's prospectus, it will control approximately 9% of Sydney rock oyster production and 25% of industry distribution.

There are two stages to East 33's acquisition strategy. The first stage was completed in December 2019, with 4 assets acquired. The second stage is the acquisition of another 6 assets, which will be carried out as a condition to the company listing on the ASX.

A key feature of its acquisition model is the continued participation of the oysterfarm operators in the new company. Many of these operators are families that have been involved in the industry for generations.

It also aims to create an 'iconic' Australian export by taking the Sydney rock oyster to the world. In a press release announcing the IPO, East 33's co-founder and executive chair James Garton said:

We are proud to be part of the transformation of the Sydney Rock Oyster industry. This unique oyster has been enjoyed in Australia for more than 150 years and we look forward to deploying the skills of our farmers to showcase it to the world. The Sydney Rock Oyster should be our native version of French Champagne or Beluga Caviar.

East 33's financial performance

Let's look at East 33's profit as of June 2020: 

Table: author's own. Data Source: East 33 Prospectus

East 33's cost of sales dropped 8.9% in 2020. Management attributes this cost reduction to the aggregation of oyster farms, which has reduced production and transportation costs.

At the same time, East 33 is looking to increase its sales. Amongst all sales channels, distributing to local restaurants and international exports (to Japan, China and Singapore) took up 15% of the company's profit in 2020. The two segments also had the highest mark up price of 376% and 3.25%, respectively, compared to other parts of the value chain, according to the company's prospectus.

East 33's financing strategy

In conjunction with the equity raised, East 33 will receive debt financing to a value of $10 million. The company has advised the proceeds will be used for the following:

• $27.1 million to fund the cash component of the consideration for acquisitions
• $4.4 million to fund its growth capital expenditure
• $1.6 million to fund its marketing and branding activities
• $5.7 million to fund its administrative costs and working capital
• $3.2 million to pay costs and expenses arising in connection with the offer and the other related transaction costs

East 33 will use more than 60% of the funds raised to fund acquisitions of oyster farms and distributors.

In addition to the funding strategy, East 33 will appoint two directors who have international brand experience gained through luxury goods group LVMH and China's largest privately-owned integrated aquatic port. The company expects these new hires to help increase East 33's capability to penetrate the high-end consumer market in Asia. 

East 33's IPO is due to close on 16 November, in view of a 3 December listing under the ticker E33.

The post Oyster supplier East 33 (ASX:E33) sets out to make a splash on ASX debut appeared first on The Motley Fool Australia.

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Motley Fool contributor MWUaus has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

Coca-Cola Amatil operates as an authorised bottler and distributor of the US Coca-Cola Company. As part of its recent investor presentation the Australian arm released unaudited third quarter results, with group revenue and volume down 4.2% and 5.4% on the prior corresponding period – a result that is relatively unsurprising given the impact of the coronavirus pandemic. What is surprising is that it has also received a $9.3 billion takeover offer from Coca-Cola European Partners (NYSE: CCEP).

The deal has been labelled as opportunistic by Coca-Cola Amatil shareholders, who think the bid offer does not take into account the bottler's third quarter recovery (compared to the first half). Independent shareholders will receive $12.75 per share in cash, less final 2H20 dividends paid, subject to approval from shareholders and regulators.

The Coca Cola Amatil share price jumped more than 16% after the announcement. Let's look at the reasons for the takeover bid and Coca-Cola Amatil's future prospects, assuming the deal is approved.

The refranchising strategy of The Coca-Cola Company

The Coca-Cola Company announced its plan to refranchise bottling operations in 2016 to focus on building brands and developing products.

The Coca-Cola Company holds a nearly 31% stake in Coca-Cola Amatil and a 19% stake in Coca-Cola European Partners. Coca Cola European Partners was formed in 2016 by 3 European companies with a market capitalisation of $17.4 billion. If the takeover proceeds, the Coca-Cola Company will hand over its shares in Coca-Cola Amatil to Coca-Cola European Partners.  

Under the proposed takeover, Coca-Cola Amatil will shed expensive, global bottling operations to become a more nimble, less capital intensive and more profitable beverage business.

Premium brands with higher profit margin

The Coca-Cola Company has been developing a new business model of higher prices, smaller packages and premium brands to deliver modest volume growth but greater profitability. One way this can be achieved is by bringing together 2 Coca-Cola bottlers.

The takeover will provide access to a broader and more balanced geographic footprint for consumer reach, especially the company's non-alcoholic ready to drink (NARTD) products (including Coca-Cola no sugar, energy drinks and juices).

National NARTD volume in Australia grew 1.9% in the first 3 weeks of October compared to the declining sales in alcohol and coffee products, according to the company's recent investor briefing. I think this space is the growth driver for the company, as consumers are becoming more health conscious amid the pandemic.

Foolish takeaway

From a business perspective, I can see the strategic rationale of a takeover to deliver value to Coca-Cola Amatil's shareholders.

The COVID-19 pandemic presents a perfect time for Coca-Cola European Partners to go ahead with this transaction, which creates a cross-border platform for accelerated growth and returns.

The post The rationale behind the Coca-Cola Amatil (ASX:CCL) takeover bid appeared first on The Motley Fool Australia.

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Motley Fool contributor Miles Wu has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the shares mentioned. 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

The COVID-19 pandemic has upended the airline industry, halting international and domestic travel. Despite this, one aviation services stock has increased in value by more than 200% since March.

Alliance Aviation Services Ltd (ASX: AQZ) generates income by providing contract, charter and allied aviation services to the mining, energy, tourism and government sectors, both locally and internationally. It is one of the few aviation companies that delivered a profit before tax of $47.7 million in FY20 (+24.1% compared to the previous year).

In recent weeks, the airline industry has been in survival mode. Listed companies such as Air New Zealand Limited (ASX: AIZ) and Cathay Pacific Airways Ltd are being placed under scrutiny. However, while the aviation industry faces unprecedented challenges, long-term investors have enjoyed a 5-year investment return of more than 470% in the Alliance Aviation share price.

Let's take a closer look at Alliance Aviation.

Strong return on capital employed

Return on capital employed (ROCE) is one of the most popular metrics used to assess how well a capital intensive company is generating profit from its capital. The formula for ROCE is:

Earnings before interest and tax (EBIT) divided by capital employed = ROCE.

(Capital employed is the difference between total assets and current liabilities)

Using this formula, Alliance's ROCE is $43.4 million/($435.9 million − $70.8 million) = 11.9 cents (based on its FY20 results presentation). This means for every $1 of worth of capital deployed by Alliance Aviation, the company was able to earn 11.9 cents in profit as of June 2020.

On the other hand, Cathay Pacific has a ROCE of −HKD10,913 million (equivalent to −A$1,978 million) /HKD143,455 million (equivalent to A$26,001 million) = −7.6 cents (data sourced from the Hong Kong Stock Exchange as of 22 Oct 2020)

Air New Zealand's ROCE is −$87 million/($391 million − $44 million) = −25.1 cents (data sourced from FY20 annual financial results).

So, Alliance Aviation's ROCE is 11.9 cents per capital dollar, versus −7.6 cents per capital dollar for Cathay Pacific, and −25.1 cents per capital dollar for Air New Zealand.  

The calculations above show that Cathay Pacific and Air New Zealand are larger businesses than Alliance Aviation in terms of EBIT. However, when using the ROCE metric, investors can see that Alliance Aviation is generating profit more efficiently from its capital than the other two. 

Reliance on the commodities industry

In addition to the ROCE, Alliance Aviation's total FY20 revenue grew to $298.2 million, (+7.8% compared to FY19). It also recorded a strong cash flow of $98.8 million (+929.2% compared to FY19). The growth is due to an increase in additional flights from its clients and the equity raising for fleet expansion.

Unlike other aviation and airport businesses, Alliance Aviation has provided aviation services to mainly iron ore, gold, copper and uranium sectors, with the commodities industry representing 53% of its total contract value in FY20. 

I think the earnings outlook of Alliance Aviation remains positive in the near term. Based on data released by the Department of Industry, Science, Energy and Resources (DISER) in March, Australia has a resources and energy export market of $299 billion in 2020, which I think Alliance Aviation looks to be well positioned to benefit from. 

Foolish takeaway

From a financial perspective, Alliance Aviation has a relatively strong industry ROCE. It means that the company has been utilising its capital well amid the pandemic.

Even though the aviation industry is currently facing acute danger, I'd argue that Alliance's most valuable assets are its strong business fundamentals, which have contributed to the Alliance Aviation's impressive share price return over the past 5 years.

The post Why investors should keep an eye on Alliance Aviation (ASX:AQZ) shares appeared first on The Motley Fool Australia.

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The financial breakdown in 2008 left an indelible mark on the banking system and left global investment banks with tighter regulatory requirements.

The shortcomings exposed during the GFC included inadequacies in corporate governance and risk management practices for investment banking activities. Multinational banking group Macquarie Group Ltd (ASX: MQG) survived the financial crisis, but it was forced to look at its business model in view of stricter regulations globally in the years after the GFC. 

A shift to annuity style business

With a market capitalisation of around $49 billion, Macquarie Group is Australia's fifth largest bank. It has a minuscule market share in the retail bank sector compared to the big four banks – Australia and New Zealand Banking GrpLtd (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd. (ASX: NAB), and Westpac Banking Corp (ASX: WBC).

The bulk of Macquarie's earnings traditionally came from its trading desks and advisory fees – in FY14, they made up 68% of the group's revenue – but from 2015, Macquarie began scaling up its annuity style businesses amid changing market conditions. Annuity style businesses refer to businesses that generate steady income with low risk. In Macquarie's case, these are its asset management, asset finance and retail banking services, which produce recurring revenue year in, year out.

These annuity style businesses contributed less than 30% to the group earnings 10 years ago, but made up 63% of its net profit in FY20. The transformation to a more predictable earnings stream is one of the main reasons why Macquarie's share price is much higher today (+300%) compared to October 2010.

As the group successfully navigated COVID-19 relatively unscathed, the Macquarie share price has returned to its pre-COVID levels of around $135. The banking group has proven its ability to grow its asset management business, which makes up 40% of its net profit according to Macquarie's annual general meeting result in 2020.

The rise of renewable energy and infrastructure

Macquarie has focused on its less volatile asset management business to free up capital, protect its balance sheet and to comply with stricter regulatory requirements. This has changed the group's business model from investment banking to a more balanced one.

In the asset management space, infrastructure and renewable energy are Macquarie's 2 main growth drivers. In the near term, the annuity style businesses are expected to be hit by the timing in asset realisation due to the pandemic. This will impose some impediments on the asset sale process.

However, as a leading asset manager, the banking group's asset management business has proven more defensive. Low interest rates support real asset values such as infrastructure, property, asset finance and commodities. The Reserve Bank of Australia (RBA) has kept the official interest rate at a record low of 0.25% since March. It continues to keep the discount rate low, resulting in an increase in the asset prices of Macquarie's holdings.

What's next

While investors may stay positive on the banking group's medium-term prospects, Macquarie will not emerge completely scar free from COVID-19.

However, I think the banking group has made the right decision to focus on annuity style businesses and invest in the infrastructure and renewable energy sectors. As different countries recover from the pandemic-induced shutdown, Macquarie is well positioned to benefit from a more stable income stream while maintaining a healthy balance sheet.

The post How annuity style businesses will drive Macquarie (ASX:MQG)'s future in a post COVID-19 economy appeared first on The Motley Fool Australia.

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Motley Fool contributor Miles Wu has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. 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.

Infrastructure assets such as Sydney Airport Holdings Pty Ltd (ASX: SYD) have historically delivered excellent returns. Since its inception, Sydney Airport shares have returned more than 300% in 20 years. But in 2020 the airport has underperformed the broader market, with the Sydney Airport share price falling by 27% over the last 12 months.

Let's look at the way COVID-19 has changed the game for Sydney Airport, and why I am slightly concerned about whether it can return to its former strength.

The nature of infrastructure assets

Pre-COVID, infrastructure assets were considered 'fortress assets' due to their strong market positions and high asset quality. These assets are available for use by the public and they usually generate great long-term returns. 

However, the pandemic may prove investors wrong in terms of asset quality when we look at the Sydney Airport share price. Its performance has weakened over the past few months amid the pandemic-fuelled economic carnage. 

Focusing on the fundamentals 

Two important metrics when looking at Sydney Airport's valuation are its cash flow and the volume of air traffic.

Looking at Sydney Airport's financial position, it is clear that the management team has piled up some cash in FY20. The net cash flow of the airport as of June 2020 increased by 300% compared with June 2019, according to Sydney Airport's interim financial report for the half year ended 30 June 2020.

In the same period, the airport's overall cash position looked positive, but the cash flow cover ratio (an indicator of the ability of a company to pay interest and principal amounts when they become due) went down 33% to 2.4x. This means that its interest expenses went up as the company used extra debt financing to protect its balance sheet.

In addition, since late February, passenger traffic through Sydney Airport has been severely impacted due to the lockdown. In its 2020 half-year result Sydney Airport reported its international and domestic passenger traffic went down 57.3% and 56.1%, respectively, compared to the prior corresponding period.

Foolish takeaway

Amid the looming economic challenges, I have some concerns about the long-term investment return of Sydney Airport in the post-COVID era. Although the lifting of travel restrictions and recovery of business activities may help the Sydney Airport share price in the short run, in my view it has a long road to full recovery.

The post How has COVID-19 shaken up the Sydney Airport share price? appeared first on The Motley Fool Australia.

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Motley Fool contributor Miles Wu has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

While SEEK Limited (ASX: SEK) was not immune from the impact of the COVID-19 pandemic, the Seek share price has recently returned to its pre-COVID level of around $23 per share.

The online job seeking platform announced a loss of $414.9 million (-9%) in earnings before tax from June 2019 to June 2020. However, its diversified business model is the reason why I think Seek is a diamond in the rough, despite its underperformance in FY20.

Diversified markets and products

As an Australian employment marketplace that matches jobseekers and employers, Seek's main revenue stream comes from job advertisements.

Accordingly, the jump in the national unemployment rate from 5.2% in March to 6.2% in April led to a dip in Seek's share price. The company's second quarter billing dropped by 65% compared to the same period in FY19.

However, Australia is showing signs of recovery. The Australian Bureau of Statistics revealed a rebound on payroll numbers by almost 5% since June. Despite the signs of a pickup from April's lows amid the national lockdown, the prospects for Seek.com and the domestic employment market in general are still uncertain. We are battling with the virus until a vaccine is ready.

The local Australian market may not be at its best for Seek, as evidenced by its negative revenue growth of 12% in FY20. The company has been relying on its investment in Zhaopin, a Chinese online recruitment web platform (which posted revenue growth of 16% in FY20) and early stage ventures (with revenue growth of 18% in FY20) to diversify downside risks.

The company also operates in Asian countries such as Hong Kong, Malaysia, Singapore, Philippines, Thailand, Indonesia and Vietnam using different brand names. In addition, it has scaled up its investment in early stage ventures such as Coursera (an online open course provider) and Go1 (a digital learning library) in 2020. As such, I think Seek can capture a large market opportunity globally and generate a sustainable return on investment given the increasing need of home learning.

Investing in the future of work

There is no doubt that COVID-19 has highlighted existing workforce challenges in Australia. As the Australian Federal Budget 2020–21 was focused on the future of work, jobs and reskilling local workers, I see an opportunity for Seek to build on this momentum in the human capital market.  

For example, the company has made a long-term future investment plan to tap into 3 niche segments (online education, human resources software as a service, and contingent labor) with a target return rate of 15–20% over the next 5 years. 

This year the company delivered strong results in these 3 areas. Additionally, its growth strategy is a complement to the Government's plan to look at the future of work. Seek's share price has revived steadily to the pre-COVID level with good business potential. 

Foolish takeaway

Based on the company's growth plan, I believe that the value of its international assets and early stage ventures will become an important driver of the Seek share price in 2021.

At the current time, it appears the domestic job advertisement recovery is already being factored in. I think the Seek share price could be appealing to long-term investors – investors should pay attention to Seek's offshore growth and its ability to unlock the full potential of its ventures. 

The post Are Seek (ASX: SEK) shares a good pick for long term investors? appeared first on The Motley Fool Australia.

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Motley Fool contributor Miles Wu has no position in any of the stocks mentioned. The Motley Fool Australia has recommended SEEK Limited. 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.

With all the trouble the Australian aviation industry is facing this year, namely the debt crisis, outbound travel restrictions and labor disputes, should investors consider buying Qantas shares?

Will COVID-19 permanently impact Qantas?

In Qantas' recent FY20 Chairman's report, Chairman Richard Goyder AO commented that "Aviation is all about connecting people and place, which is exactly what the public health response to COVID-19 is designed to avoid."

There is no doubt that the COVID-19 pandemic is hitting the aviation industry hard, and the current crisis is worse than the problems Qantas faced in 2019 (namely, cost of fuel and a low Australian dollar). With the restrictions on international and domestic travel, the airlines are grounded, and the significant 22% drop in passenger revenue since June 2019 has hit Qantas' balance sheet hard.

Can the business revive itself?

One of the most critical business indicators in the aviation industry is the cost of available seat kilometres (CASK). This is used to measure the unit cost expressed in cash value to operate each seat for every kilometre.

CASK has increased 11% to 8.87 since FY19 as a result of rising operational costs and less available seats due to pandemic restrictions. Qantas has a difficult time in controlling its CASK given the high revenue volatility from a range of external factors, including fluctuating exchange rate movements and higher fuel cost.

However, the Morrison Government announced a $165 million bailout plan earlier in April to keep the airline afloat. Furthermore, Qantas conducted a successful $1.9 billion capital raising via institutional investors in July, which demonstrates that investors still see equity value in Qantas. This bodes well for the airline's future.

Three-year recovery plan to keep the iron bird alive

While the economic outlook still looks skinny, Qantas has decided to focus on cost cutting given its limited opportunity to generate income in the current environment.

It is clear to me that the coronavirus pandemic is pushing Qantas into a corner, so this cost cutting is probably the best defensive strategy the national airline can do to manage further downside risks at the moment.

While Qantas turned to the private placement market to shore up its balance sheet, the airline also launched a 'flight to nowhere' program in September to maintain its cash flow and keep its pilots working. The plane takes off and lands at the same airport and has proved popular – the first of these 7-hour routes around the country saw 134 seats sold out in 10 minutes.

Foolish takeaway

It may seem attractive for short-term traders to buy Qantas as it looks like a good bargain based on its share price. However, I think it will take a substantial effort for Qantas to return to its former glory.

With the continual refusal of the Queensland and Tasmania premiers to open up state borders in the near future, I would say the negative sentiment has not been fully priced in yet, and perhaps Qantas will also need to resume its dividend payment to further restore investors' confidence in the long run. 

The post Should you consider buying Qantas (ASX:QAN) shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor MWUaus has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

Last month, US tech megastocks spearheaded a global market sell-off, following the US Federal Reserve's promise that interest rates will stay low through to 2023.

The ASX followed Wall Street's volatile technology sell-off in mid-September. But, while many technology shares were plummeting, the Nearmap Ltd (ASX: NEA) share price has increased by more than 4% in the few weeks after the news.

Let's look at how this company adds value to its clients in the Australia and New Zealand (ANZ) and North American markets, and whether the Nearmap share price could be a buy.

Unique intelligence product

This Australian-based aerial imagery technology and location data company owns highly sensitive data relating to location intelligence with customers across Australia, the US, Canada and New Zealand. Nearmap operates a subscription as a service (SaaS) business model, which means it is able to grow globally and replicate at scale.

North American market as the next growth driver

Despite the Nearmap share price reaching a 2-year low at $1.01 per share in March this year, the resilience of the company's share price was demonstrated when it rebounded to between $2.30 and $3 per share, driven in part by it reaching an annual contract value (ACV) milestone of $102 million in May.

Unfortunately, the COVID-19 pandemic and the downgrade in value of 3 Nearmap's contracts in FY20 caused a revision to its total contract value down to $102 million–$110 million, lower than its forecasted range of $116 million–$120 million. This resulted in a slowdown in Nearmap's ANZ market growth, compared to the improving North American market.

After a revamp of its sales strategy against the backdrop of macroeconomic uncertainty, Nearmap has enjoyed the tailwind of increasing roofing, insurance and government business contracts in the US – which make up 40% of its group ACV portfolio.

There are more opportunities for the business to leverage its existing licensed technology to serve roofing geometry to partners in the roofing and insurance industries in the US. This is a huge market as there is an increase in frequency of severe weather, which drives the demand of such services.

Fundraising to support growth

To support the expansion plan mentioned above, in September Nearmap completed an institutional placement and further share purchase plan to raise $72.1 million and $20 million, respectively.

While the economic outlook in 2020 looks different from 2016 – when Nearmap banked $20 million after placing 28.6 million new shares to sophisticated, professional and institutional investors at the price of $0.70 per share – Nearmap is trying to replicate its success through entering the North American markets and develop more advanced technology.

In the past, Nearmap focused on creating not only high resolution 2D and oblique imagery but also natural colour point clouds and textured 3D meshes. Now in 2020, Nearmap has a plan to accelerate growth and roll out its Hyper Camera3 System to capture more accurate vertical imagery in adverse conditions.

Is the Nearmap share price a buy?

In my view, Nearmap is still doing well in keeping a positive growth rate of 11% in average revenue per subscriber in FY20 amid COVID-19.

The business is also growing very quickly and has a competitive advantage of being able to cover not just the metropolitan areas, but also the remote suburbs for commercial usage, as opposed to Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL)'s Google Earth.

I believe the current Nearmap share price of $2.48 (at the time of writing) looks attractive, particularly given the company's growth prospects and plans to further commercialise its high tech products in the North American regions.

The post Is the Nearmap share price a buy after the tech sell-off? appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Miles Wu has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Nearmap Ltd. 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.

The A2 Milk Company Ltd (ASX: A2M) share price has been largely COVID-proof, thanks to strong overseas demand for its formula and milk products.

Even with the company being included on the 'unreliable entity list' by the Chinese Ministry of Commerce on 19 September – which means A2 Milk could potentially get banned from trading with China in the near future – its milk products are still popular in Asia. The company posted a 33% jump in revenue for FY20, and analysts from UBS are bullish on A2 Milk, giving it a 'Buy' rating at NZ$22 per share.

A2 Milk's relationship with China

A2 Milk's sales data shows that its China sales in infant nutrition products more than doubled to NZ$337.7 million in 2020. While the UK market is struggling, the company is also playing its cards well in the US market, with a revenue growth of 91.2% to US$42.95 million in FY20.

With China clearly the biggest market for the dairy exporter, Australian consumer goods may be vulnerable to the ongoing trade war if China perceives Australia to be a US ally.

COVID-19 has cost exporters huge sums of money to get through the regulatory burdens imposed as a result of the pandemic, but A2 Milk signed a strategic agreement in 2018 with China State Farm Holding Shanghai Co. Ltd. (CSFA Shanghai). This agreement means CSFA Shanghai is A2's exclusive import agent and regulatory consultant, which has enabled A2 to continue its distribution of products to China amid the pandemic.

A2 Milk's bet on China and Asia

As one of the largest agribusinesses by market capitalisation in 2020, A2 Milk's main success comes from its huge sales growth in China and other Asian nations.

While A2's recent results announcement fell slightly short of analysts' projections, the 'Daigou' (cross-border exporting in Chinese) retail and other e-commerce channels in China and other Asian countries brought in 37.9% of total annual revenue in 1H20.  

Can A2 Milk keep up its winning streak after Babidge's retirement?

Since 2014, A2 Milk's CEO Geoff Babidge has led a successful restructuring and transformed the business into a brand-focused, leading omni-channel retailer with strong wholesale partnerships. He has now announced his retirement and HanesBrands executive David Bortolussi will take up the CEO role as Babidge's successor.

Given Bortolussi's strong supply chain experience in the apparel industry, I believe his exposure in sourcing and brand distribution in Asia will be of use. But with economic and political uncertainty looking set to continue, whether Bortolussi can keep A2's winning streak running when he takes over in 2021 is anyone's guess.

Foolish takeaway

In light of its positive sales figures, I remain bullish on the A2 Milk share price for the near future and believe the company is well placed to capitalise on the Chinese infant formula market.

In my opinion, investors should be comfortable with A2 Milk's decision to leave the UK market and focus on the Chinese and the other Asian markets. I think the popularity of foreign infant formula brands in Asia and the untapped market of Asian consumers who just want the highest quality brands for their babies will become an important shield for the A2 Milk share price against any political fallout from trade disputes.

The post How vulnerable is the A2 Milk share price amid the trade stoush? appeared first on The Motley Fool Australia.

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Motley Fool contributor Miles Wu has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk. 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.