Definitely spot on with analysis there Chris.
The NetEase Kaola deal & Brilite Nutritional deal both got signed in June 2017. Bear in mind these deals were just signed June 2017 hence we have not seen the capability of these deals. I think some people on here are not getting the full picture. I am going to say without a reasonable doubt that revenue will significantly multiply (I can't even imagine crunching the numbers as the potential is too huge) in the next financial year.
Please re-read these formal ASX announcements and try to factor in the possible cash flows/revenue that will be generated in the next financial year:
http://www.asx.com.au/asxpdf/20170608/pdf/43jtf01qb6n187.pdf
http://www.asx.com.au/asxpdf/20170619/pdf/43k0g0mh8gdbm1.pdf
I've read some garbage posts on here saying the value of the stock should be in the range of $0.2 which is honestly complete bul*s**t. If you actually believe what you are posting, please do not further invest in the stock market and you will likely lose most of your hard earned money.
Similar to when MOU or legally binding contracts being signed, a company is re-rated when significant deals like these gets signed.
Furthermore, I've also read some people saying that the will require a CR raise in the future. Logical/simple analysis will tell you that the company will definitely require a CR when/if they do acquire a CNCA approved canning facility which I am sure they most likely will hopefully sometime in December~January when they find the right place and license sorted.
Why should the company raise cash now if they know the share value can be improved further from what it is now once the boxes have been ticked? I am sure the BOD/management team have thought about this. I believe a CR is imminent however it may likely be done over the $1 mark.
Just having a look at the company's actions will tell you so much about the future.
http://www.copyright link/brand/chanticleer/the-pitfalls-of-milking-the-china-market-20170818-gxz07s
- Aug 18 2017 at 11:45 PM
- Updated Aug 18 2017 at 11:45 PM
The pitfalls of milking the China market
http://www.copyright link/content/dam/images/g/t/n/t/8/h/image.related.afrArticleLead.620x350.gxz07s.png/1503046031884.jpg
One of the financial backers of Bubs is Wattle Hill, the private equity fund run by Jessica Rudd's husband, Albert Tse. Brian Cassey
It is no secret the risks can outweigh the rewards for Australian companies trying to milk China's appetite for infant milk formula and other baby products.
That demand is not going away and the next wave of Australian entrepreneurs eyeing off the world's second largest economy is learning from the lessons of the trailblazers like
Bellamy's which have stumbled in the region.
While the $240 million market capitalisation of infant formula newcomer Bubs Australia is dwarfed by Bellamy's and
a2 Milk Company, it is catching up fast.
Shares in the company, which were already trading six times higher than their January listing price, jumped another 19 per cent on Friday after the company announced it had appointed Mandarin-speaking corporate advisor Dennis Lin as its new chairman. Lin replaces Alan van Noort who annoyed the company's investors by stepping down in January just a week after the company listed.
That did not stop the company forging ahead with its China strategy, announcing two partnerships giving it access to the country's online and bricks-and-mortar market. Bubs hopes to sell the goat milk infant formula product it sells in Australia via Coles in some of China's largest cities.
Lin's appointment adds to the list of talent within the company who have genuine insights into the opaque Chinese market, a skill set that many Australian firms have struggled to tap into.
This is crucial ahead of the changes to regulations covering China's infant milk formula market at the end of the year.
Wattle Hill, the private equity fund run by Jessica Rudd's husband Albert Tse who is well-connected in China, is one of the company's backers along with Ellerston Capital's Ashok Jacob and Kerry Stokes' family investment vehicle.
Charles Li, the chief executive of Bubs' Chinese distribution partner Brilite Nutritionals, says changing regulations mean around half the volume of infant formula in China is being sold in so-called "mother and baby stores" – a network of privately-owned stores usually run by small groups of family members.
He is advising Bubs on new infant formula regulations, which kick in next year, which mean the tins of formula lining the store shelves can no longer display any commercial marketing material.
They will just be plain cans with a brand name and a nutrition chart. This means producers will rely on clerks in the stores promoting their products to shoppers who will not have a lot of information to go on when selecting from up to 20 different brands on the shelves.
Li says Brilite has a team of trainers who go from store to store educating the clerks about the products it distributes.
He says Chinese mothers are fussier and often better educated about baby products than their western counterparts so will be hungry for information. Store clerks are also trained to give technical advice on mixing the formula and problems feeding.
Li and Bubs chief executive Nicholas Simms have been doing the rounds with investors in Australia over the last two weeks to explain the strategy.
Simms says it is important to have a partner which would enable Bubs to have control over the supply chain so they did not lose track of what was happening once the goods arrived at a mainland Chinese port.
Shares in a2 Milk Company have also been on the tear, more than doubling so far this year. The company now has a market capitalisation of $3.4 billion. Given its steep market valuation, a2 will have to deliver when it reports full-year results next week.
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The future does look bright from here. The more I analyse, the more I believe in my own analysis of the intrinsic value of the company. I'd say it's a buy even at this price. I will top up tomorrow on open to back up my statement.
(20min delay)