The Share Price Of BUB Zoomed Up By 3.409% After Its Major Goat Milk Supply Agreement

On 21 December 2018, Bubs Australia Limited (ASX: BUB) announced its sales agreement with Central Dairy Goats Ltd which is a group of dairy farmers in the Northern island of New Zealand. As per the agreement, Bubs Australia Limited will be receiving 2.2 million liters through to May 2019 from Central Dairy Goats Ltd and another 6.2 million liters by May 2020. It will encourage both the parties to grow in the future. The agreement between both the parties will be for five years.

Through this agreement, Bubs Australia Limited will have guaranteed supply to additional goat milk more than 6 million liters of goat milk of premium quality from New Zealand per annum which will help in producing the CapriLac range of adult milk powders. It will be the world’s first Bubs infant formula prepared through Australian goat milk.

Other than Central Dairy, the company has other existing exclusive source of milk supply. It means that the company will have access to receive milk from around 30,000 goats in the region of Australia and New Zealand. These goats will be able to provide 20 million liters of milk which will benefit the company regarding meeting the increasing demand of the milk. Also, this is an opportunity for the Central Dairy Goats Ltd in the regions of Australia and Asia due to the growing demand of the goat’s milk and the product made through this milk.

Further, the contract includes the risk mitigation techniques, the price regime, maintenance of comprehensive quality control and provenance. Failure to meet the agreement requirement may lead to the termination of the agreement.

The milk processing into powder will be at the facility in New Zealand. For further processing of the milk to produce CapriLac products will be in Australia.

The official listing date of Bubs Australia Limited in ASX is 05 October 1993. Since then, the performance of the company is negative. The five-year results of the company were positive and are 277.14%. The last one-year performance of the company is -38.03%

The profit and loss performance from the date of acquisition of Uphamgo Australia Pty Ltd, New Zealand Nutritional Goat Company Limited and Cambria Unit Trust till 30 June 2018, represents total revenue of $4,699,710. The company made a net loss of $60,274,364. Although the balance sheet of the company shows that the company has a strong net asset base, but it is also evident that there was a tremendous increase in the accumulated losses in the fiscal year 2018, which indicates a weak operating performance of the company. It will create a wrong impression on the investors and the shareholders. The company has generated revenue by the issue of share capital which makes the total shareholder’s equity worth $89,609,369.

By the end of trading on 21 December 2018, the closing price of the share was A$0.455 which is 0.015 points above its previous closing price. The stock holds a market capitalization of A$194.26 million.


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