The share price of Australian nutritional business, Star Combo Pharma Limited [ASX:S66], has rocketed up over 23% this morning. It has since calmed down a bit and is currently, at time of writing, up 7.5 cents to 62.5 cents per share.
S66 develops, manufactures and distributes a range of branded vitamins, dietary supplements and skincare products, serving both domestic and offshore markets. The company’s products are sold through several retailers including pharmacies and all Australian international airports.
Star Combo also sells its products internationally through its own website, as well as various online e-commerce platforms, such as Chinese giants Taobao and JD.
Star Combo secures Chinese retail channel
Star Combo shares were placed in a trading halt yesterday as the company brokered a deal to acquire the e-commerce platform Austoyou Group.
Austoyou is a fast-growing Australian-based platform that sells a wide range of products direct to Chinese consumers.
Star Combo also acquired Koala Mall Pty Limited, a supplier and distributer of vitamins and dietary supplements.
In a statement released this morning, Star Combo said the purchase of the businesses would be completed for $10 million.
CEO of Star Combo, Su Zhang, said the acquisitions advanced the evolution of the business…
‘These acquisitions are consistent with the Company’s listing strategy of acquiring an e-commerce platform that will advance the evolution of our business from a vitamin and supplements manufacturer and supplier to a fully integrated Australia – China health care company with manufacturing and multiple sales channels along with the expansion of our distribution networks.’
Australian nutritional and dietary supplements are in increasing demand by Chinese consumers. The Acquisition of Austoyou gives Star Combo a unique competitive advantage in this high-demand market.
What’s next for Star Combo?
By 2020, the market for vitamin and dietary supplements is expected to reach US$22.3 billion with a compounded annual growth rate pf 6.4% in the 2015–2020 period.
If the demand in growth continues, Star Combo should see those sales figures swell over the coming years.
But we should also expect to see more Australian health product suppliers target the Chinese market — and competing directly with Star Combo.
Blackmores Limited [ASX:BKL], for example, saw profits more than double in 2016 after increasing direct sales to China.
No doubt it will be difficult to compete with the larger players like Blackmores and Swisse, however, today’s acquisitions reflect Star Combo Chairman Richard Allely’s ambitions to emulate the success of the bigger players in China.
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