ASX Baby Formula Stocks – SM1, A2M, BUB

  • May 05, 2019 AEST
  • Team Kalkine
ASX Baby Formula Stocks – SM1, A2M, BUB

On 2 May 2019, the S&P/ASX 200 Consumer Staples (Sector) reported an increase in the index by 0.11%. In this article, we will be discussing the three Baby formula stocks SM1, A2M and BUB and look at their stock performance on ASX.

Synlait Milk Limited (ASX: SM1)

Synlait Milk Limited is a dairy manufacturer from the Consumer Staples sector, which focuses on supplying higher value dairy products to leading milk-based health and nutrition companies.

On 2 May 2019, the company in the Macquarie Australia conference presentation provided its investor with an overview of company and its operations along with brief idea about FY2018 financial review.

On 11 January 2019, Synlait Milk Limited announced that it got registration of its Dunsandel plant, which got renewed with the General Administration of Customs of the Peoples’ Republic of China (GACC) which enables the company to export canned infant formula to China that is issued by GACC. The process of re-registration is done in every four years.

On 28 January 2019, the company confirmed that it would revise down the milk price forecast for the 2018/2019 season to $6.25 kgMS due to fall in the dairy commodity prices.

On 20 March 2019, the company released its 1H FY2019 results where the company made a net profit of $37.3 million. The production and the sales volume improved during the period through manufacturing efficiencies.

On 26 March 2019, the company provided an update to its investors that the first large-scale electrode boiler of New Zealand, located at its Dunsandel in Canterbury is commissioned fully and was operational since January 2019.

The shares of SM1 last traded at A$10.040 (as on 3 May 2019). SM1 holds a market capitalization of A$1.8 billion with approximately 179.22 million outstanding shares and a PE ratio of 26.92x. The shares of SM1 generated a decent YTD return of 17.56%.

The A2 Milk Company Limited (ASX: A2M)

The A2 Milk Company Limited is a company that was founded in New Zealand back in 2000 by Dr Corran McLachlan after a scientific discovery. While he was learning at Cambridge University, he tried to understand how proteins in milk affect people in a different manner.

After his years of research, he was able to find that many people face digestive discomfort when consume ordinary cows’ milk. They find a2 Milk™ easy to digest as it contained only A2 protein. The product of A2M is traded in Australia, China, New Zealand, the US, United Kingdom along with various emerging markets in Asia.

On 1 May 2019, the company participated in the Macquarie Australia conference where it highlighted the trading performance of the company for the last 9 months till 31 March 2019. In 1H FY2019, the revenue of the company was up by 41% to NZ$613 million and EPS by 53% to 20.9 cents on pcp. In 3Q FY2019, the Group revenue (9 months to 31 March 2019) was NZ$938 million, up by 42% on pcp driven by sales growth in nutritional products and liquid milk.

Recently, on 25 March 2019, the company appointed a new leader to its Greater China team.

On 20 February 2019, the company released its 1H FY2019 results. To know more click here.

In the last six months, the shares of A2M generated a return of 54.55%. The shares of A2M last traded at A$15.390 (as on 3 May 2019), down by 0.324% as compared to its previous closing price. A2M holds a market cap of A$11.35 billion and a PE ratio of 48.000x.

Bubs Australia Limited (ASX: BUB)

Bubs Australia Limited was founded by Kristy Carr who wanted to do something about the void in premium organic baby food. She laid the foundation of the company from her kitchen situated in Sydney and launched the initial array of organic pouch baby food which was sold in the supermarkets based in the Australian region. Bubs Australia Limited is one of the largest producers of goat milk products in Australia.

The stock has generated an excellent YTD return of 162.64%.

During the Q3 period, the company’s revenue increased by 103% to $11.83 million on pcp. The YTD gross revenue was $32.87 million. The gross sales of Bubs goat milk infant formula went up by 302% on pcp which contributed 41% of the Q3 revenue. The gross sales of Organic baby food of the company increased by 22% on pcp, which contributed 6% of Q3 revenue.

On 18 April 2019, the company notified the market that it has concluded the procurement of Australia Deloraine dairy and about fundraising from C2 Capital Partners.

On the same date, the company entered into binding heads of agreement with the Chemist Warehouse Retail Group for the sale and promotion of Bubs product in Chemist Warehouse stores.

On 17 April 2019, Bubs Australia announced the sale of certain assets of Coach House Dairy brand to The Remarkable Milk Company Pty Ltd.

On 27 February 2019, the company had entered into a strategic partnership with Tatura Milk, a subsidiary of Bega Cheese.

Today, the shares of the company last traded at A$1.325 (as on 3 May 2019), up by 10.879% from its previous closing price. Bubs Australia holds a market capitalization of A$607.77 million and approximately 508.59 million outstanding shares.


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