Are These 3 Infant Formula Stocks Turning Distasteful In Terms Of Growth – A2M, BAL And WHA?

Are These 3 Infant Formula Stocks Turning Distasteful In Terms Of Growth - A2M, BAL And WHA?

The a2 Milk Company (ASX: A2M)

The a2 Milk Company (ASX: A2M) runs its business through a2 Milk which is the top brand among the high- quality fresh milk, available in the 6 major supermarkets of Australia. Its other business is a2 Platinum, which is at present a leading infant formula brand in Australia. Its subsidiaries are A2 infant Nutrition Ltd, A2 Milk Company LLC, A2 Exports Pty. Limited, A2 Holdings UK Limited etc.

In its investor presentation, published by the company on 6 March 2019, it mentioned its first half outcomes which reflected its solid momentum. The group revenue stood at NZ$613.1 million for 1H19. The net profit after tax was recorded at NZ $152.7 million, and the company had a robust balance sheet, with the closing cash balance standing at NZ $287.9 million.

The infant formula consumption market share in China was 5.7%, the China label revenue was more than 82.6%, and the brand leadership in Australia was 35.7%. The US sales growth was more than 114.1% in USD, and more than ten thousand stores distribution. The Australian fresh milk value share was 10.8%, with revenue of more than 11.7% in AUD.

The stock of the company, by the end of the trading session, stood at A$13.400 (as on 15 March 2019), down by 2.332% from its previous close. It has a market capitalization of A$10.06 billion with circa 733.4 million shares outstanding. In the last 1 year, the stock of the company has given a return of 6.36%, and in the last six months, it has given a return of 25.30%.

Bellamy’s Australian Limited (ASX: BAL)

Bellamy’s Australian Limited (ASX: BAL) is engaged with production and marketing of organic food, along with formula products for infants, as well as children of young age. The company functions through 3 sections like Australia, Overseas Sales, and Australia Manufacturing. BAL provides formula and toddler milk drinks, cereals, and rusks etc.and baby foods which are ready to be served, and products made from milk powder. It was founded in 2004 and is domiciled in Australia.

On 27 February 2019, the company released its 1H19 results, where the group recorded the rise in the cash balance of $94.8 million, as on 31 December 2018. The group recorded the revenue of $130 million for 1H19 and EBITDA of $26M on a normalised basis. The company continues to maintain zero debt levels, with access to a $40M debt facility. The company had set a new platform for sustained revenue growth and a higher level of investment in China. It has an investment plan to double Marketing spend and the China team in 2H19 to step-change activation. BAL’s medium-term outlook remains compelling, aided by category fundamentals, its differentiated position and an aggressive 3-year growth strategy of targeting more than $500 million revenue by FY21.

The stock of the company, by the end of the trading session, stood at A$11.200 (as on 15 March 2019), up by 4.089% from its previous close. It has a market capitalization of A$1.22 billion with circa 113.37 million shares outstanding. In the last 1 year, the stock of the company has given a negative return of 48.83 %. However, in the last six months, it has given a return of 13.03%.

Wattle Health Australia Limited (ASX: WHA)

Wattle Health Australia Limited (ASX: WHA) is a company engaged with the development, sourcing, marketing of nutritional dairy and such products in Australia. It provides an array of nutritional infant formula dairy products. The company is domiciled in Australia and was founded in 2011. The company aims towards offering superior quality, completely Australian made health and wellness products where consumers can put their trust across different phases of life.

On 7 March 2019, the company notified the market about the appointment of international dairy leader, Dr Tony Mckenna as the Chief Executive Officer of Corio Bay Dairy Group (CBDG). CBDG is a joint venture between Organic Dairy Farmers of Australia, WHA and Niche Dairy Pty Ltd. At present, CBDG is engaged with creating the first dedicated nutritional organic spray dryer of Australia.

In its six months results ending 31 December 2018, the company recorded the revenue for the period standing at $363,000. The net assets for HY19 stood at $57.3 million from $15 million for HY18.  The working Capital was up by 350% to around $45 million for HY19. During the quarter, the company had inked 8 supply agreements for the supply of its organic infant food for the market in China.

The stock of the company traded flat during the day, and by the end of the trading session stood at A$0.860 (as on 15 March 2019). It has a market capitalization of A$167.27 million with 194.5 million shares outstanding. In the last 1 year, the stock of the company has given a negative return of 66.02 %. However, its overall yield until now has been of 345.13%.


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