Australia’s leading producer of goat milk products, Bubs Australia Limited’s (ASX: BUB) securities were placed in a trading halt today (i.e., 29 March 2019) at the request of Bubs, pending an announcement by Bubs in relation to a proposed acquisition and an associated proposed capital raising.
Bubs has requested that the trading halt should continue until the earlier of commencing of normal trading on 2 April 2019 and when the company makes an announcement to the market and requests the trading halt be lifted.
The company recently announced its entry into a new market segment-post-infant nutrition. Bubs has launched an innovative range of eight toddler snacks certified organic by Australian Certified Organic (ACO). All eight new products will be ranged in Coles supermarkets nationally by late May 2019.
Recently one of the largest Chinese owned enterprise in the infant and maternal nutrition industry, Beingmate Baby & Child Food Co., Ltd entered into a memorandum of Understanding with Bubs to form a Joint Venture for marketing and distribution of Bubs® full portfolio of infant formula and organic baby food products in China.
Since 31 December 2018, the company has entered a strategic manufacturing partnership with Tatura Milk Industries under which Tatura is going to convert fresh goat milk directly from farm gate into Infant Formula nutritional base in one step processing. This will help bubs in reducing unit production costs and shorten the cash cycle. As a result of this, the company is expecting improvement in gross margin of 2H FY19.
In December 2017, the company completed the acquisition of NuLac Foods which transformed Bubs Australia into a clear leader in the Australian goat dairy landscape, with exclusive access to around 65 percent of Australia’s total goat milk production.
In the first half of FY 2019, the company reported gross revenue of $21.03 million, up 465% on the previous corresponding period. During the half year period, Bubs® products sales increased 155% (2.55x) on pcp, totaling $9.0 million or 43% of group 1H revenue. During the half year period, the company’s administration costs increased by 49% as the business grew. The administration costs represent only 14% of H1 FY19 revenue compared to 57% of revenue for the same period last year.
As at 31 December 2019, Bubs Australia had a strong balance sheet with $26.71 million in cash reserves, of which $7.0 million was classified as financial assets, and $12.47 million in inventory.
Now, let’s have a glance at the company’s stock performance and the return it has posted over the past few months. The stock last traded at a price of $0.805 with a market capitalisation of ~$368.1 million. The stock has provided a year till date return of 76.92% & also posted returns of 26.77%, 67.71% & 43.75% over the past six months, three & one-month period respectively. It had a 52-week high price of $0.940 with an average volume of ~3,125,759.
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