What Made Jatenergy Tumble On ASX?

Jatenergy Ltd (ASX:JAT) signed a memorandum for purchase with Shanghai Dragon Corporation (SDC), and the announcement for the same was made on November 8, 2018.

Shanghai Bios Medical Nutrition Technology Limited (SMN) that works in the field of research and development of nutritional and functional food products entered in a MOU of strategic partnership agreement with JAT at the China international Import Expo organized in Shanghai on November 7, 2018.  Â

The company has also signed a Memorandum with Guangzhou Eastern Bridge Import & Export Co Ltd (Eastern Bridge). SMN uses both its in house research as well as its Collaboration with Fudan University, Shanghai Jiao Tong University, the People's Liberation Army Navy Medical University and nutritional consultants for the development of nutritional and functional food products. This strategic partnership agreement will provide the framework to jointly work and develop new nutritional and functional foods for Chinese consumers.

Under the agreement with Shanghai Bios Medical Nutrition Technology Limited, the latter will work towards the development of functional food products that will help in meeting the market demands. The development of the food products will be required to have full compliance with the appropriate Chinese regulatory frameworks. SMN will publish the research results in Chinese journals after undertaking the proper clinical studies of the product. SMN will manage the applications for Chinese trademarks and domestic patents.

JAT will also have the key responsibility towards arranging and managing the entire production in Australia. JAT will be responsible for all activities pertaining to certification, exporting and shipping, sales and marketing. The validity for the agreement is twelve months, which will be renewed after the mutual agreement between the concerned parties. The agreement is done in order to effectively use the excellent research capabilities of SMN in promoting the launch of existing Australian products in China. JAT and SMN will together select the products that can be used to develop and make effective associated branding. On November 8, 2018, the signing ceremony for the Strategic Cooperation Agreements between Chinese buyers and companies from Britain, Thailand, Japan, Canada, Hong Kong, Sweden, Denmark, Greece, Uzbekistan, Austria, New Zealand and Australia was hosted by Orient International (Holding) Co., Ltd. The sole Australian Company that participated in this MOU with Shanghai Dragon Corporation was JAT. Shanghai Dragon Corporation Limited is a publicly listed entity having 40 years of international trading record. SDC growth is backed by strong state support, with excellent logistics and warehousing infrastructure. Strong market presence with more than 4000 retail outlets and excellent sales growth of AUD 1 billion per annum has been noted.

Under this partnership agreement with publicly listed state-controlled business of SDC, SDC will import and help in the distribution of USD$5 million of JAT food products during calendar year 2019 that will include Golden Koala infant formulas and milk powders, NEURIO Formulated Milk Powder with Lactoferrin, and other Neurio products, and Cobbitty Country products.

The MOU will lay strong foundation between the two businesses. JAT moved up 14% in early trade on November 8, 2018 from its previous close of $0.092 on November 7, 2018 to the day high of $0.105 on November 8, 2018. The scrip slipped heavily after making high of $0.105 and closed at the levels of $0.082, down 10.8%.

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