4 Stories on Infant Milk Formula Stocks- Bellamy's, A2M, Wattle and Nuchev

  • Dec 11, 2019 AEDT
  • Team Kalkine
4 Stories on Infant Milk Formula Stocks- Bellamy's, A2M, Wattle and Nuchev

The best way for a healthy and nutritious diet to an infant is breastfeeding. However, for overall development of babies who are not breastfed, a safe and nutritious alternative is suggested for the infants and toddlers- Infant Milk Formula. Infant formula comprises of various nutrients such as vitamins, minerals, fats, carbohydrates, proteins, trace elements and others.

According to some media reports, the global baby infant formula market size is expected to grow with a CAGR of 9.5% from 2018 to 2025 and is projected to achieve $45,348 million by 2025.

According to Australian and New Zealand guidelines for infant feeding, it is recommended to feed commercial infant formulas as an alternative to breast milk till 12 months (if an infant is not breastfed).

In the Australia New Zealand Food Standards Code, infant formula products are regulated under Standard 2.9.1 which stands for Infant Formula Products. There are three types of infant products covered by this standard-

  • Infant formula (suitable for infants aged 0 to less than 12 months);
  • Follow-on formula (suitable for infants aged from 6 to less than 12 months);
  • Infant formula products for special dietary use.

In this article, we are highlighting what is recent for Infant Milk Formula Stocks- BAL, A2M, WHA, NUC.

Bellamy’s Australia Limited (ASX: BAL) shares last day on ASX-

An Australian F&B company, Bellamy’s Australia Limited (ASX: BAL) is the country’s largest organic infant formula maker. The company provides nearly 40 products according to the need of infants or toddlers.

Acquisition of Bellamy's-

According to an ASX announcement on 10 December 2019, the company unveiled that the Supreme Court of New South Wales has approved the proposed acquisition of Bellamy's by Mengniu, a wholly owned subsidiary of China Mengniu Dairy Company Limited.

The trading in Bellamy's shares was suspended from the close of trading on 10 December 2019. The shareholders of Bellamy’s would receive $13.25 cash per share in respect of the Bellamy's shares they hold at 7.00 pm (AEDT) on Tuesday, 17 December 2019, and this comprises-

  • Scheme consideration- Approximately $12.65 per Bellamy's share will be paid by Mengniu under the Scheme.
  • A fully franked special dividend of $0.60 per Bellamy's share which is paid by Bellamy's in the form of the special dividend.

The scheduled implementation date is on Monday, 23 December 2019 on which Mengniu and Bellamy’s would pay the scheme consideration and special dividend, respectively to the shareholders on the implementation date.

On its last day at ASX, BAL quoted $13.230 (on 10 December 2019), with the market capitalization of $1.5 billion.

The a2 Milk Company Limited (ASX: A2M)

An infant formula company, The a2 Milk Company Limited (ASX: A2M) is into the commercialisation of A1 protein free milk under the name of a2 and a2 MILK brand. The company was founded in New Zealand in 2000 by scientist Dr Corrie McLaughlan and currently operates in the US, Australia, New Zealand, China, Singapore and Hong Kong.

MD & CEO Announcement-

On 9 December 2019, the a2 milk board announced that Jayne Hrdlicka, MD & CEO of the company will step down from her role. The Board mentioned that the global search of the new CEO will begin, and, in the meantime, the former CEO of the company Geoffrey Babidge would work as an Interim CEO.

On this announcement, the a2 Milk’s Chairman commented-

On 11 December 2019 the company’s stock was settled the day at $14.620, up by 1.52% from its previous close. The A2M stock has a market capitalization of approximately $10.6 billion with 735.88 million outstanding shares on ASX. The P/E ratio of the stock stands at 38.380x. A2M stock has 52 weeks high price and 52 weeks low price of $17.300 and $9.810, respectively.

Wattle Health Australia Limited (ASX: WHA)

An Australia-based company, Wattle Health Australia Limited (ASX: WHA), is into the development, sourcing and marketing of health and wellness food and dairy products made in Australia. Wattle Health Australia operates in FMCG industry and is focused on the infant formula and dried dairy products.

The Supply agreement with Chemist Warehouse-

On 6 December 2019, the company announced that it had signed a long-term (10 years) agreement with Chemist Warehouse (CW) for its full certified organic nutritional dairy range, which also includes a premium range of Uganic infant formula and the Little Innoscents organic skin care range.

As a part of the supply agreement with Chemist Warehouse, Wattle Health would issue the following equity on specific milestones-

  • Wattle Health will issue 3,000,000 fully paid ordinary shares on the signing of this supply agreement;
  • The company will issue 5,000,000 fully paid ordinary (FPO) shares on Chemist Warehouse (CW) providing equivalent value in marketing support and the ranging of the Uganic infant formula range across the CW retail network;
  • 10,869,792 fully paid ordinary shares on CW providing equivalent value in marketing support and the ranging of Wattle health’s proposed ultra-premium certified organic A2 protein based infant formula range across the retail network of Chemist Warehouse;
  • A total of 1,130,208 fully paid ordinary shares for providing professional services.

For the five years of this agreement, Wattle Health would spend approximately $1.2 million on an annual basis for the marketing and support to build brand loyalty, awareness and sales.

Nuchev Limited (ASX: NUC)

An Australian based company Nuchev Limited (ASX: NUC) is working with the aim of improving human health and well-being. The company was established in 2013, and it is into the production, marketing and selling of various goat formula products into the Asian and Australian markets. With a highly skilled and experienced management team lead by its CEO Ben Dingle, NUC operates in a unique position within the dairy nutrition market and is planning to expand into the other health and nutrition-related products. Nuchev was listed on ASX on 9 December 2019.

On 9 December 2019, Nuchev Limited updated its financial report for the year ended 30 June 2019. The key financial highlights of the company are-

  • The company generated revenue of approximately $9,499,278 for the fiscal year 2019, which was $3,441,257 for the prior corresponding year (pcp).
  • Nuchev has cash and short-term deposits of $10,314,376 for FY2019 (as at 30 June).
  • The distribution, warehouse and logistics expenses of the company for FY2019 was approximately $599,736.

On 11 December 2019, the company’s stock quoted $3.780, up by 11.17% from its previous close. The NUC stock has a market capitalization of approximately $153 million with 45 million outstanding shares on ASX. The company’s stock has 52 weeks high price and 52 weeks low price of $4.170 and $3.160, respectively.


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