YPB Group [ASX:YPB] specialises in ‘covert brand protection and security systems for Brand Owners, OEMs and government agencies.’ They use the latest marking technology, some of which they’ve patented, to add a mark which can’t be counterfeited.
Source: ypbsystems.com
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Today, they announced a big deal with a massive Chinese state owned business.
YPB says the deal is worth about $325,000 a year. That’s a big deal for a company that, according to their last annual report, only made $6,000 revenue last year. They expect the deal to run for three years.
The Group will supply invisible tracers and scanners to help the China National Salt Industry Corporation (CNSIC). The labels and equipment will help identify up to a billion packets of salt for the Corporation. Inspectors in the field will be able to check packets using the scanners, to tell authentic products from fakes.
According to YPB Group CEO John Houston, genuine food product identification could be the company’s next big target application. ‘This is yet another substantial market where we expect to make a large impact… Recent press in the South China Morning Post and Hong Kong Free Press has revealed the capture of salt counterfeiters, confirming the growing need for YPB’s technology in the Chinese salt market,’ said Mr Houston.
Yes, fake salt is a thing
Industrial grade salt is high in toxic nitrites, often has harmful levels of heavy metals, and doesn’t have added iodine. It’s not suitable for human consumption. Rather, it’s used for a variety of applications such dyeing fabric, producing some plastics, and other applications. Eating it can cause health problems ranging from thyroid interruption, to reproductive issues, and even serious mental problems.
But table salt is much more expensive to produce than industrial grade salt. So some gangsters in China have been ripping off consumers, endangering them to make a quick buck. They’ve been putting industrial salt into bags that look identical to the real thing. The Epoch Times published the image below last March; the bag on top is a rather convincing fake.
Source: theepochtimes.com
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Counterfeit salt has been a problem for the Chinese government for several years. The first big arrest came in 2010. In November 2010, 12 people in Chongqing in the Sichuan province were given sentences of up to 13 years each for participating in a fake salt scam. In March last year, around 26 tons of industrial salt packaged as table salt was found in Guangdong province. In April this year, police raided factories across northern China and found around ¥20 million worth of counterfeit salt. And that’s just a small sample of the cases.
It’s not the first dangerous fake food scandal to hit China. As far back as 2008, diluted milk was tainted with melamine so the milk would test as being high in protein. At least four babies dies, and thousands of people were hospitalised. Other scandals, from fake walnuts (concrete bits, wrapped in paper, with a walnut shell glued around) to fake rice (rice shaped pellets made from a mixture of potato powder and plastic) have also been reported.
At the moment, government inspectors have to do time-consuming and expensive lab tests to check the iodine and nitrite content of salt. With YPB’s help, they’ll be able to tell fake salt from the real thing in a matter of seconds.
With a market cap of just $12.32 million, YPB is still a small-cap company. Their stock price has climbed 22.5% since they listed in August last year, but they’ve got plenty of room to grow yet. By the way, if you’re interested in small-cap stocks, don’t miss Sam Volkering’s special report. In ‘The At-Home Investors Guide to Profiting from Australian Small-Caps’, Sam shows you an elegantly simple four step guide to finding the best quality small-cap stocks, while they’re still cheap – i.e. BEFORE the big fund managers catch on. Click here to find out how to download your free copy of Sam’s report.
Eva Mellors
Contributor, Money Morning