Bubs Australia’s Share Price Soars 22% on Chinese Partnership

Bubs Australia Ltd [ASX:BUB] is today the beneficiary of positive investor sentiment after the announcement of a strategic channel partnership between Bubs and Kidswant, a prominent baby retail chain in China.

Bubs Australia markets itself as a manufacturer of premium infant formula and nutrition products based entirely on goat’s milk.

At time of writing, shares for the infant formula company have risen 22.58% to $1.14.

Why the partnership with Kidswant?

Kidswant is described in the release as an ‘innovative data and consumer relations’ service provider with a place as the ‘market leader in infant and child retail with the largest market share in China.’

The subsequent partnership means that Bubs will now be able to sell its range of Bubs Organic food products in all 275 Kidswant stores, based throughout 123 cities on the mainland.

As you might imagine, this opens the door to a fairly large and active community, which the company believes to be around ‘27 million mothers’.

The company estimates that the deal could result in an annual retail sales performance of AU$6.25 million for FY2020.

10/10 for opportunity

Aside from 275 large-scale physical stores, Kidswant also operates online shopping channels, a mobile terminal APP, and a specialised parenting and purchasing consulting service.

Given that their current turnover stands at AU$2 billion annually, with clear room to grow, Bubs seem well-placed to profit from the deal.

It also means that the company will have access to a ‘trusted ecosystem’ with one of the largest markets in the world, as well as an audience who have placed their trust in Australian products.

This was sorely needed for Bubs, which has felt the effects of the recent trade war in a competitive market with big players like The a2 Milk Company Ltd [ASX:A2M] and Bellamy’s Australia Ltd [ASX:BAL].

Regards,

Ryan Dinse,
For Money Morning

PS: If small-caps like Bubs Australia spark your interest, we recommend that you check out our brand-new Money Morning report: Three Small-Cap Stocks to Own Right Now’. Download for free here.


Ryan Dinse is a contributing Editor at Money Morning. He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur. With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle. Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.  


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