The company won the private label tender and expects to begin producing multiple products for Coles from early next year. Those products should be hitting supermarket shelves from the second quarter of 2022.

At the time of writing, the Halo Food share price is 14.5 cents, 7.4% higher than its previous close.

Let's take a closer look at the latest news from the manufacturer and exporter of dairy, health, and wellness products.

Halo Food share price surges on contract win

Halo Food's stock is taking off after the company bagged a contract expected to produce up to $3.3 million of sales each year.

So far, the term of the contract hasn't been specified. Halo believes it will be longer than an initial 12-month period.

Thus, the company — formerly Keytone Dairy — states the contract implies a gross sales value multiples higher than the annual value.

While Halo hasn't specified what kind of products it will be making under the new contract, it did say it will be making them in various packs, flavours, and sizes.

Halo's CEO Danny Rotman commented on the win, saying:

Halo will continue to work on further new product development and increase the value and scope the company offers to Coles and all clients.

This win caps off an incredibly huge week for Halo following the successful change of name and rebrand, the US$40m strategic partnership with Theland China, and the second Coles contract win in under a year.

Indeed, Halo previously won a $5 million contract with Coles.

In July, the company updated the market on the first contract, saying it had begun ahead of both time and volume forecasts.

Right now, the Halo share price is about 40% lower than it was at the start of 2021. However, it has gained 7% over the last 30 days.

The post Halo Food (ASX:HLF) share price leaps 7% on Coles deal appeared first on The Motley Fool Australia.

Today's doldrums come as the company released its first-quarter FY22 earnings earlier today. Let's take a closer look at the results.

Quick refresher on Keytone Dairy

Keytone Dairy manufactures and exports dairy products related to health, wellness and nutrition. It derives most of its revenue from the New Zealand market.

It has expertise in formulated powders and ready-to-drink protein shakes. Its flagship brands are KeyDairy, KeyHealth and FaceClear.

Keytone Dairy has a market capitalisation of $38 million at the time of writing.

Keytone's quarterly results

For its first quarter in FY22, Keytone recognised revenue of $13.4 million, representing year-on-year growth of 17%.

Most of the contribution came from its Australian operations, where it recognised $10.3 million versus $3.1 million from its New Zealand dairy business.

Keytone said the uplift in total revenue did not reflect "new contract wins, principally the Coles contract".

Recall that Keytone recently started its $5 million contract with Coles, with the first products dispatched in "late June 2021". The company said revenue from this contract would be "realised from September onwards".

The company also realised $12.8 million in cash receipts this quarter, up 56% from the quarter prior.

Additionally, the company allocated $408,000 of capital expenditures on its "Sydney protein bar/snacking plant". However, the costs were "completely offset" by the receipt of a "manufacturing modernisation grant" of $440,000.

Additional takeouts from the report

Keytone also completed the launch of its new energy drink initiative, Tonik Energy, into Australia and New Zealand.

As a result, the first production run "was completely pre-sold to select distributors" for around $100,000.

Moreover, Keytone also secured a "competitive trade debtor facility" of $7 million for working capital and "further strategic growth initiatives" in Australia.

Keytone explains the funds will be "deployed to focus on organic growth initiatives, new contract wins and the growing sales pipeline".

Speaking on the release, Keytone CEO Danny Rotman said:

The first quarter of FY22 has seen a number of initiatives worked on through the back end of FY21 begin to come to fruition with the results starting to flow through to the operational units of Keytone.

Keytone Dairy share price snapshot

The Keytone Dairy share price has underperformed the broad index this year to date, posting a loss of 46% since January 1.

This extends the previous 12 month's loss of 39%, whereas the S&P/ASX 200 Index (ASX: XJO) has posted a return of around 23% over the same time.

Despite this, in the last 1 month, The Keytone Dairy share price has climbed 12.5% into the green.

The post What's with the Keytone Dairy (ASX:KTD) share price today? appeared first on The Motley Fool Australia.

This follows the dairy manufacturer's update on sales and purchase orders received from Walmart (China) Investment Co.

At the time of writing, the Keytone share price is swapping hands for 13.5 cents a pop, up 3.8%.

Sales accelerate

Investors are buying up positions in Keytone shares after the company recorded strong sales for 2021.

In its release, Keytone advised sales and forward orders have topped NZ$3.3 million from Walmart China. This represents a three-fold increase for the first five months of 2021 when compared to this time last year.

The company attributed the robust performance to its whole and skim milk powder for Sam's Club China. The popular product has been a hit with Chinese consumers due to the company's strategic partnerships and accredited facilities.

In addition, the company has booked NZ$1.4 million of further orders to be delivered in the third quarter of 2021.

Keytone CEO, Danny Rotman touched on the company's progress, saying:

Our international track record, strategic partnerships and growth in powdered dairy continues, underpinned by our fully licensed and accredited facilities in New Zealand. The strong growth is testament to the efficiency and quality of our facilities and team in New Zealand.

We are continually seeking new business opportunities with our existing clients, forging new relationships with others and will update the market with new material contract wins and forward orders as they come to hand.

About the Keytone share price

Today's gain will be a relief to shareholders, as the Keytone share price has halved in value over the past 12 months. Shares in the company have also fared poorly in year-to-date performance, down more than 40%.

Based on valuation grounds, Keytone presides a market capitalisation of roughly $38 million, with approximately 273 million shares on issue.

The post Why the Keytone Dairy (ASX:KTD) share price is lifting today appeared first on The Motley Fool Australia.

Let's take a closer look at the dairy manufacturer and exporter's results.

Annual revenue results

The Keytone Dairy share price is on the move today after the company released its unaudited results for the year ending 31 March 2021. The results show significant growth in Keytone Dairy's sales and business divisions.

Aside from the growth constraints caused by Australia and New Zealand's bleakest period of the COVID-19 pandemic, the company says its brands have continued to record strong growth.

The company's statutory total sales revenue was up by a whopping 125% compared to the previous period.

According to its statutory results, the year that's been has seen Keytone Dairy rake in $50.7 million in sales revenue. This is an impressive gain when compared to the previous year's $22.5 million revenue.

The company's Australian Contract Manufacturing segment also delivered robust gains. Its statutory results show it brought in $35.2 million in sales revenue, a 109% gain on the sales revenue of the prior year.

Keytone's New Zealand Dairy division earned $11.3 million in sales revenue over the year, an increase of 126% over the previous year.

Finally, the company reported that its brands – including Onmiblend, which was acquired by Keytone Dairy in August 2019 – had a combined statutory income of $4.2 million. That represents an impressive 545% revenue increase on the prior corresponding period.

Commentary from management

Keystone CEO Danny Rotman commented on the company's revenue results. He said:

The record growth across the group over the last twelve months has been extraordinary, particularly given the magnitude of disruption caused by COVID to global logistics and workplace environments. The pandemic caused significant headwinds for further penetration of our own brands and our clients' businesses. Notwithstanding these challenges, the sales growth of the business has outperformed. I am incredibly proud of the way our loyal and dedicated staff have come together to successfully navigate through this unprecedented year and the foundations that have been built as we move into FY22.

Keytone Dairy share price snapshot

Today's news has resulted in a welcome boost for the Keytone Dairy share price, which has had a rough trot on the ASX lately.

Even with today's gains, Keytone Dairy shares are down almost 23% year to date. The company's shares are also down by around 70% over the last 12 months.

Keytone Dairy has a market capitalisation of around $47 million, with approximately 273 million shares outstanding.

The post Why the Keytone Dairy (ASX:KTD) share price opened 23% higher today appeared first on The Motley Fool Australia.

Here are 3 sugary shares you can find on the ASX.

Shares for chocolate lovers 

Candy Club Holdings Ltd (ASX: CLB) 

While not necessarily a chocolate making company, Candy Club deserves its spot on this list.

To be honest, a lolly subscription service is genius. And, experts do say to invest in companies you understand. I'm sure most Australians would understand the appeal of a box of lollies arriving on your doorstep each month.  

Candy Club's selection of adorable sugary treats, some of which are indeed chocolate, may well be your next great investment.

Candy Club's share price is experiencing a sugar high. It's up more than 73% year to date, and 462.5% over the last 12 months. 

The company has a market capitalisation of around $69 million, with approximately 308 million shares outstanding. 

Keytone Dairy Corp Ltd (ASX: KTD)

Milk chocolate is a favourite for many come Easter time, and this dairy company has got you covered in more ways than just milk.

Keytone Dairy is the owner of fudging making brand, Gran's. Gran's promises delicious, handcrafted, luxury fudge. If that doesn't sound like an Easter Sunday afternoon snack, I don't know what does.

The Keytone Dairy share price has had a bit of a rough trot in March, so those who believe in chocolatey fudge may just find themselves a bargain.

Keytone Dairy has a market capitalisation of around $46 million, with approximately 273 million shares outstanding.

FFI Holdings Ltd (ASX: FFI)

FFI Holdings is possibly better known as Fresh Food Industries. The Australian owned and operated food supplier has been around since 1979. Generally a wholesaling company, you may not see too many of its chocolatey products on supermarket shelves. But, there's a strong likelihood you've enjoyed them in muffins, cookies or ice creams in eateries all around Australia.

The company's shares are up by 25% over the last 12 months.

FFI Holdings has a market capitalisation of around $64 million, with approximately 10 million shares outstanding.

The post In honour of the Easter Bunny, we take a look at 3 chocolatey ASX shares appeared first on The Motley Fool Australia.

According to trade experts, Beijing is retaliating against Australia's calls for an investigation into the origins of COVID-19, attention on human rights cases in Xinjiang and condemnation on its suppression of free speech in Hong Kong.

"China seems determined to punish Australia and make it an example to other countries," Lowy Institute senior fellow Richard McGregor told Bloomberg last month.

"They want to show there's a cost for political disagreements."

The fortunes of Treasury Wine Estates Ltd (ASX: TWE) is the most prominent example. The Chinese Ministry of Commerce last month declared that Australian wines were being dumped into the country, to justify slapping a 169.3% deposit rate.

Treasury's share price, which had already sunk when China started its anti-dumping enquiry, plummeted.

Australian barley farmers are similarly feeling the pinch as a major export market instantly disappeared.

"The tariffs and trade restrictions introduced over the past year have pulled out the rug from beneath many Australian businesses, dissuading businesses from pursuing trade with China," said IBISWorld senior industry analyst Liam Harrison.

China knows it has leverage with these trade blocks, according to Harrison. The country is Australia's largest export partner, with 35.3% of goods and services heading there.

"Australian industries have invested heavily in expanding their trade with China since the China-Australia Free Trade Agreement was signed in December 2015."

Now IBISWorld has identified 5 other sectors China could target if tensions escalate.

Any ASX shares that are involved in these commodities would need to be evaluated with these risks in mind.

Dairy

Both the milk and cream processing sector and the milk powder industry are "highly vulnerable" to hefty Chinese tariffs.

ASX-listed companies like A2 Milk Company Ltd (ASX: A2M), Bega Cheese Ltd (ASX: BGA) and Keytone Dairy Corporation Ltd (ASX: KTD) could see their stock prices sink if that happened.

Harrison said slugging dairy would mean trade hostilities have stepped up to a very severe level.

"Australian dairy products are highly popular, and there are few substitute markets for baby formula that Chinese parents are willing to trust," he said.

"Action against this market would likely cause significant backlash from Chinese consumers, and could result in weakened support for continuing trade restrictions against Australia."

Australian baby powder exports skyrocketed during the COVID-19 pandemic, to reach 18,726 tonnes year-to-date to the end of September.

Honey

Australian honey is valued in Asian countries, especially the top-notch Manuka type.

China receives more than a quarter of Australia's exports, but the industry is vulnerable to a trade ban as other honey-producing nations are readily available.

Manuka honey comes from a type of tea tree that's only seen in New Zealand and south-east Australia, according to Harrison.

"The beekeeping industry in New Zealand would stand to benefit from reduced competition if China imposes tariffs on Australian honey," he said.

"For Chinese consumers, plentiful supply of cheaper honey would likely replace the lower availability of manuka products."

Fruit

According to IBISWorld, Australia's "citrus, nut and other fruit" industry sends more than 45% of its exports into China. More than 30% of total exports for apples, pears and stone fruits also head to the giant Asian nation.

"Fruit farmers across Australia have already suffered major setbacks, including sweltering heats early in the year, severe bushfires and now a shortage of fruit-pickers due to COVID-19 travel restrictions," said Harrison.

"Losing China as an export market could be devastating to an already weakened industry."

Companies like Costa Group Holdings Ltd (ASX: CGC) are involved in this area.

Pharmaceuticals

Australian medicines and supplements are popular in China, but the moat is very narrow.

"Our largest advantage in providing to this market is our relative geographic proximity," said Harrison.

"Many industry products have a range of alternative suppliers, such as the US, Canada and various markets across Europe, leaving the Australian industry particularly vulnerable to trade restrictions."

The local pharmaceutical industry derives more than 50% of its revenue from export markets.

Brands like Blackmores Limited (ASX: BKL) and Mayne Pharma Group Ltd (ASX: MYX) are exposed to a Chinese tariff escalation on pharmaceuticals.

Mining

If you own iron ore mining shares, you would never know China was picking on Australia at the moment. Prices for the metal have soared, and so have the stock prices.

Both iron ore and bauxite are heavily reliant on Chinese exports, but fortunately Australia has a thick moat with few competitors.

"Australian iron ore is very high quality, and there are currently few markets which can produce the quality, and particularly the quantity, of resources needed to fuel China's steel manufacturing industry," Harrison said.

"A recent downgrade in production by Brazilian producer Vale has also weakened China's potential for alternative markets for iron ore."

The post Which ASX shares will China 'punish' next? appeared first on The Motley Fool Australia.

Despite this strong showing today, Keytone isn't having a great year in terms of share price performance. Keytone shares remain down 33% year to date on this pricing, and down more than 40% from the highs of 46 cents we saw back in mid-April.

So why is this dairy company seemingly in investors' good books today?

Why the Keytone share price is surging today

Today's Keytone share price performance is most likely due to an ASX release the company provided just before market open this morning. In this announcement, Keytone revealed it has inked a significant deal with major supermarket operator Coles Group Ltd (ASX: COL).

Keytone will provide private-label goods to Coles that will be sold under Coles' 'in-house' white-label brands under the agreement. The products to be provided under this arrangement are "multiple powdered SKUs [stock keeping units] in various pack formats, flavours and sizes". Keytone told the markets the deal is a result of the company's "first-class manufacturing facilities and rigorous health and safety standards, highly responsive and innovative new product development team and the growing strategic relationship between Keytone and Coles".

Production of goods under the deal is expected to commence "late in the first quarter of 2021", with the products set to appear in Coles' stores "from the second quarter of 2021". The company tells investors the "term of the arrangement has not been specified". However, Keytone "anticipates the term will be longer than an initial 12 month period, implying a gross sales value multiples higher than the annual value".

The company forecasts the deal will result in $5.2 million worth of sales per year.

Keytone CEO, Danny Rotman, had this to say on the announcement:

This is a fantastic and significant win for the business. It highlights the growing awareness of the Keytone brand of quality and our credentials across the broader health and wellness sector… The calibre of the client base is becoming increasingly robust and we look forward to supporting the growth of our diversified customer base through our state of the art facilities and first-class product development and operations teams.

The post Why the Keytone Dairy (ASX:KTD) share price is up 8% today appeared first on The Motley Fool Australia.

The company today announced record sales for the 6 months ending 30 September 2020. The Keytone Dairy share price is currently trading 6% higher at 26.5 cents at the time of writing. 

First half FY21 highlights

Keytone Dairy continued record sales growth across all divisions, with sales totalling more than $24.5 million for the first six months of FY21. This exceeds the 12-month full year FY20 result of $22.5 million. 

Keytone's proprietary product grow increased 141% to $2.3 million. Significant retail ranging was delayed due to COVID-19 and implemented only after 30 September 2020 and is not reflected in the results to date. 

The company continues to experience strong growth in its private label business with substantial increased forecasts received from existing clients for 2021 and new contract wins across Australia and New Zealand.

Along with an increase in revenue, its Australian and New Zealand operational business units all recorded underlying earnings before interest, tax, depreciation and amortisation (EBITDA) profitability. The group's consolidate normalised EBITDA loss decreased 57% to $900,000, compared with prior corresponding period loss of $2.1 million. 

Its EBITDA has been negatively impacted by initial retail rebates, promotions and marketing to establish brand awareness and achieve market penetration in key retail channels. The company expects these costs to normalise over time. 

Commenting on the results, Keytone Dairy CEO Danny Rotman said: "The company has continued to grow sales at an impressive rate, significantly reduce operational cash burn and gain important distribution in key retail channels for our proprietary brands". 

As at 30 September 2020, Keyone Dairy had a cash balance of $9.0 million, this includes a $12.5 million capital raising back in May. During the half, the company also spent $2.25 million to acquire AusConfec assets, consisting of state-of-the-art equipment for the manufacturing of protein bars with contracts with Woolworths and Coles.

The post Keytone Dairy (ASX:KTD) share price higher on record half-year results appeared first on The Motley Fool Australia.

Keytone Dairy is a manufacturer and exporter of formulated dairy products in Australia and New Zealand.

The company manufacturers its own products under its KeyDairy, KeyHealth and FaceClear brands. These products include premium milk and nutrition powders and health supplement capsules for the treatment of acne. 

Additionally, Keytone is a production partner for leading retailers and supermarket chains, undertaking contract packing operations for brands around the world.

Headquartered in the heart of New Zealand's South Island, Keytone Dairy floated on the ASX in July 2018 at an offer price of 20 cents. With a share price of 29 cents at the time of writing, the company's market capitalisation currently sits at around $74 million.

Why is the Keytone Dairy share price surging?

This morning, Keytone Dairy revealed that it has received its largest follow-on order from Chinese customer, Nouriz to date.

Nouriz is a related party of China Animal Husbandry Group, a China state-owned enterprise, that orders whole and skim milk powders from Keytone for its Nouriz private label.

The large purchase order announced today is priced at $1.39 million and is significantly higher than Nouriz's recent orders and forecasts. More specifically, this latest order is around 11.3 times and 1.6 times greater than Nouriz's first and second orders, respectively.

The order will be manufactured in Keytone's New Zealand facilities in August 2020.

Commenting on today's update, Keytone CEO Danny Rotman said:

"These significant follow-on orders from strategic clients of the business are increasing in both frequency and size. With the New Zealand second manufacturing facility online, Keytone is well equipped to service these growing orders from Nouriz and other key strategic clients of the business and will continue to work closely with these clients, growing the product offering and volumes."

Recent developments

Today's announcement follows another positive update in late May regarding a new licensing agreement. The agreement gives Keytone a distribution license for a range of Baileys ready-to-drink dairy products products in Australia, New Zealand, Hong Kong and Taiwan.

Additionally, the next day, Keytone announced its full-year financial results for the 12 months ending 31 March 2020.

Headline results include total sales revenue of $22.53 million, up 799% from $2.51 million in the prior year, and cash receipts of $24.68 million. However, the company reported a full-year statutory loss of $7.45 million, up from a loss of $3.29 million in the prior year.

The post Why the Keytone Dairy share price opened 9% higher this morning appeared first on The Motley Fool Australia.

Keytone is a manufacturer and exporter of formulated dairy products in Australia and New Zealand.

The company manufactures its own products under its KeyDairy, KeyHealth and FaceClear brands. These products include premium milk and nutrition powders and health supplement capsules for the treatment of acne. Additionally, Keytone is a production partner for leading retailers and supermarket chains, undertaking contract packing services for brands around the world.

Headquartered in the heart of New Zealand's South Island, Keytone Dairy floated on the ASX in July 2018 at an offer price of 20 cents. Its current market capitalisation stands at just over $80 million at the time of writing.

Why is the Keytone Dairy share price spiking today?

Keytone Dairy shares took off in early trade this morning after the company announced a licensing agreement for a range of Baileys iced coffee drinks. The agreement gives Keytone a distribution license for these products in Australia, New Zealand, Hong Kong and Taiwan.

The "non-alcoholic coffee flavoured ready-to-drink dairy products", which come in 3 flavours, are currently stocked nationally throughout Caltex petrol stations in Australia. A further national ranging at Beer Wine Spirits, part of the liquor division at Woolworths Group Ltd (ASX: WOW), is "expected imminently". Keytone will also look to roll-out the licensed Baileys range through its existing national distribution footprint.

As well as the iced coffee drinks, the agreement also includes premium Baileys powdered beverages which will be introduced to the market from 1 August 2020.

According to Keytone, initial indications for distribution opportunities in New Zealand, Hong Kong and Taiwan are promising, with "strong demand and upside expected over the short to medium term".

The company will pay a minimum royalty of $280,000 for the license through to the end of the initial license period on 31 December 2022. Keytone expects the sales through this period to be "magnitudes higher" than the license cost, while delivering further margin benefit to the company. The range will be manufactured in-house at Keytone's Melbourne facilities.

Commenting on today's update, CEO Danny Rotman said:

"The licensing deal with a global company such as R & A Bailey & Co. and the Baileys brand validates the credentials of Keytone, positioning the Company for further distribution channel wins for the full proprietary product suite and provides a stepping stone for licensing of further global brands. This is a valuable contract win for the sales opportunity directly attributed to the Baileys branded products, and the significant upside this brings across the Company's proprietary products."

The post Keytone Dairy share price storms 14% higher on new licensing agreement appeared first on The Motley Fool Australia.

But with the coronavirus creating tailwinds for the likes of sectors such as online retail, supermarkets, pharmacies/chemists and health/wellness consumables, could Blackmores be poised for a return to former glory? 

What the numbers say

Blackmores is attempting to turn its struggling business around as it announced a strategic shift in priorities in its 1H20 result. This holistic shift addressed all aspects of the business from its sales and regions to products and internal teams.

That said, Blackmores' 1H20 report highlighted a struggling business that saw revenue fall 5% while net profit after tax (NPAT) slid 48%. The company blamed an increase in material and packing costs and operational expenses as the main culprits for its hampered profitability. 

Looking at its regional performance, the ANZ division highlights a competitive business landscape as its revenue was down 20%. The company noted that regulatory changes in China continued to impact revenue in Australia. 

Performance from its China division was also underwhelming, reporting a 6% fall in revenues while earnings before interest and tax (EBIT) slid 58%. However, revenue across Asia (excluding China) grew 29% with strong performances in Indonesia and Malaysia. Blackmores' other Asia segment is now generating more revenue than China ($68 million vs. $62 million in 1H20). 

Where do we go from here? 

Blackmores has always had a strong foundation and base to grow from. The company is number 1 in market share for health products with 1 in 5 Australian households using Blackmores products. However, the business and management have failed to translate its strong base into meaningful growth. 

Other businesses in the health and wellness sector have gone from strength to strength, particularly in today's health-conscious climate. For instance, the A2 Milk Company Ltd (ASX: A2M) recently provided a COVID-19 update to the market. It anticipates FY20 revenue will be in the range of NZ$1,700 million to NZ$1,750 million (approximately 30-35% increase on FY19), with higher earnings before interest, tax, depreciation and amortisation (EBITDA) margin in 2H20, in part due to consumer pantry stocking.

Alternatively, even smaller companies such as Keytone Dairy Corporation Ltd (ASX: KTD) have seen significant orders from its Chinese customers. In a recent update, the company cited that "following the outbreak of COVID-19, the increased uplift and global demand Keytone is experiencing for clean, green, pristine food staples and a range of health and wellness products is significant". 

Blackmores had recently completed the acquisition of Catalent Australia's world-class manufacturing facility in Braeside, Victoria. This acquisition will provide the company with increased research and development capabilities, and provide greater control over production. Hopefully, the combination of greater innovation and control in its production and its strategic turnaround plan will pay dividends for the business moving forward.

However, I would personally need to see it to believe it. Blackmores needs to produce some positive announcements to show that its business is moving in the right direction. 

The post Could the Blackmores share price stage a recovery in 2020? appeared first on The Motley Fool Australia.

Significant wins 

On Wednesday, Keytone announced that it had signed a manufacturing agreement with a substantial international client in the health and wellness sector, Iovate Health Sciences. It confirmed that opening orders total in excess of $3,600,000. This order represents 143% of Keytone's total audited revenue of its FY19 year. The company confirms that the contract is indefinite and the volumes to be manufactured are to be confirmed on an ongoing purchase order basis, in line with client forecasts for China and Australia. 

On Thursday, it announced the receipt of confirmed purchase orders from Walmart (China) and Nouriz (Shanghai) for a combined total of $1,688,000, commenting that, "following the outbreak of COVID-19, the increased uplift and global demand Keytone is experiencing for clean, green, pristine food staples and a range of health and wellness products is significant".

This strong demand for healthy products could have broader implications for other health products, including A2 Milk. 

Keytone also has 2 acquisitions under its belt – OmniBlend and Super Cubes, both growing and revenue-generating companies. For FY19, OmniBlend was forecast to generate a pro-forma revenue of $29.7 million and earnings before interest, tax, depreciation and amortisation of $2.24 million. In its first full 12 months of trading, Super Cubes realised sales of approximately $650,000.

Foolish takeaway 

Keytone is still in its infancy and despite surging revenues, it may not necessarily turn a profit. However, the company has leveraged the Chinese opportunity by securing multiple contracts with the likes of Walmart and Nouriz. Its acquisitions are also expected to make a strong contribution to its growing revenues. 

This goes to show that its products and manufacturing capabilities are highly relevant and that the Chinese economy is slowly coming back online. Keytone also has a strong balance sheet position – as at 30 September 2019, the company had a combined cash balance of approximately $10 million. 

The bottom line is that Keytone is a speculative opportunity, but is showing early signs of momentum and ability to scale its capabilities. 

The post This small cap ASX dairy share is up 50% in 1 month, could it be the next A2 Milk? appeared first on The Motley Fool Australia.

There aren't many other large cap players in this space besides Blackmores Limited (ASX: BKL) and the recently acquired Bellamy's Australia Ltd. However, there are plenty of smaller names that have a market capitalisation of less than $500 million. These smaller players are more volatile and inherently risky as their businesses are still in their early days, but I think they are worth a closer look in 2020. 

Nuchev Ltd (ASX: NUC)

Nuchev hit the ASX on 11 December 2019. The company had an IPO offer price of $2.60 per share with a $117 million market capitalisation at the offer price. The company is an Australian-based business with a dedicated focus on developing, marketing and selling a range of premium Australian-made goat nutritional products. It sells premium goat infant formula and goat full cream milk powder under the Oli6 brand in Australia, China and Hong Kong.

Nuchev's statutory FY19 report highlights $9.5 million in revenue and an earnings before interest, tax, depreciation and amortisation (EBITDA) loss of $9.2 million. For FY20, the company forecasts $18 million in revenue, with EBITDA losses improving to $7.9 million. This would place the company at roughly 17 times FY19 revenue, or 9 times FY20 revenue.

The company is in its early days and only has a market capitalisation of $166 million at today's prices. An expansion in the company's distribution network overseas, increasing its production capacity and/or an improved outlook for the business could easily rally the shares. However, there are inherent risks around regulations in China and a crowded baby formula space.

Keytone Dairy Corporation Ltd (ASX: KTD)

Keytone Dairy is a New Zealand-based manufacturer, packer and exporter of dairy and nutrition blended products with a current focus on powdered dairy products. Its business model is aimed at generating revenues from the sales of high-margin, value-added products under its own brand, as well as manufacturing and packaging products for leading supermarkets, retail chains, dairy producers and other consumers under the customer's private label brands.

Keytone made 2 acquisitions in 2019 – Omniblend, a profitable Australia-based product developer and contract manufacturer of high value, formulated, blended power products and long-life drinks, and Super Cubes, a producer of smoothie 'cubes' that are available in Woolworths, 400 independent supermarkets and online.

In the company's half-year report it highlighted $7.4 million in revenue, a 441% increase on the prior corresponding period and an EBITDA loss of $3.1 million. Surprisingly, Keytone could deliver higher revenue and a better EBITDA loss than Nuchev for FY19. I believe Keytone is a speculative buy at today's prices as it only has a market capitalisation of $81 million. 

Clover Corporation Limited (ASX: CLV)

Clover is involved in the sale of omega-3 oils and encapsulated bioactive ingredients for infant formula, children's foods, supplements and medical foods. In FY19, the company delivered a 21.8% increase in revenue and 33.1% increase in NPAT while trading at a current price-to-earnings ratio of approximately 45.

The company derives 50% of its revenues from the ANZ region, however, other geographies such as the Americas, Europe and Asia are slowly playing an increasingly larger role in the group's revenue. Clover has enhanced its business development capabilities in Europe and China and continues to focus on products developed to address customer requirements, legislative changes and market trends.

Foolish takeaway

Clover presents a diversified health and wellness portfolio at a relatively higher valuation. However, the company has numerous growth avenues with growing revenues in its fish oil and formula business in Europe and USA, while China remains a relatively new market for its baby formula and supplements. Alternatively, Nuchev and Keytone represent more speculative investments as both companies are still loss making. Keytone trades at a cheaper valuation, but both have their own unique value propositions and growth stories.

The post Forget a2 Milk! Why these 3 ASX baby formula stocks could soar in 2020 appeared first on The Motley Fool Australia.

1. Keytone Dairy Corporation Ltd (ASX: KTD)

Keytone Dairy is a manufacturer and exporter of formulated dairy products in Australia and New Zealand. The company floated on the ASX in July 2018 at an offer price of $0.20 and currently has a market capitalisation of less than $100 million.

Keytone is in its early days and developing sales momentum both organically and through acquisitions. In its FY19 full-year results, the company saw its total sales revenue increase by 366% to $1.5 million. Furthermore, there has been a significant interest in the company's products from the likes of Walmart China, which has made two orders totalling approximately NZD$1,000,000 within a matter of weeks of each other. 

The company has been busy on the acquisition front. On 17 June 2019, Keytone acquired health and wellness powdered and UHT (Ultra-high temperature) drinks producer, Omniblend. Omniblend serves top health and wellness companies including brands such as Tony Ferguson, Muscle Milk, Aldi and Bellamy's Organic. It holds numerous accreditations, including from the Certification and Accreditation Administration of the People's Republic of China. 

On 17 October 2019, Keytone also acquired Super Cubes. Super Cubes is a premium Australian consumer health and wellness brand that produces a range of all natural frozen cubes of fruits, vegetables, plant-based protein and highly nutritious ingredients for an enriched smoothie. In FY19 it delivered $650,00 in sales.

As at 30 June 2019, Keytone had $7.6 million cash in the bank. The company is in a good position to continue to leverage its complementary acquisitions and economies of scale on its road to profitability.

2. Clover Corporation Limited (ASX: CLV)

Clover is engaged in the production and sales of omega-3 oils, children's foods, infant formula, supplements and medical foods.  

The company delivered 21.8% revenue growth and 33.1% net profit growth in FY19 while trading at a price-to-earnings ratio of approximately 50. Clover has a diversified global footprint with 50% revenue coming from the ANZ region, 37% from Asia, 8% from Europe and 5% from the Americas. All regions are experiencing strong year-on-year growth, while Asia is a key growth area for infant formula products. The USA also represents a key growth channel for non-infant formula goods.

Foolish takeaway

Of these 2 small-caps, Keytone represents a higher risk/reward investment. The company is still operating at a small loss, but has plenty of a cash in the bank and recent acquisitions to fuel triple digit year-on-year growth. Clover is a more established business with a diversified product mix and global footprint. It does come with a premium valuation, but is in its early days of growth.

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