PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 13:47 UK, 2nd Aug 2017, by Mike Verdin
Ausnutria shares hit record high, as its milks Chinese market

Shares in Ausnutria Dairy Corp soared to a record high after the Hong Kong-based dairy group, whose operations range from Australia to the Netherlands, unveiled upbeat earnings expectations, citing infant formula.

Ausnutria shares jumped 13.4% at one point to an all-time high of HK$3.72 before easing back to close at HK$3.67, a gain of 11.9% on the day.

The jump followed the release by the group of its second "positive profits alert" of 2017, pegging earnings attributable to shareholders for the January-to-June period at 152m-158m renminbi.

That represents an increase of "50-56%" year on year, the company added.

It would also take the group well over half way to the 288.5m renminbi in earnings that investors have pencilled in for the whole of 2017, representing growth of 36%.

Market revamp

Ausnutria said that its improvement was down in the main to success in "restructuring" its strategy over its core product, its own-brand infant formula, for which China is a huge market, boosted by an increase in working mothers as well as the phasing out of the country's one-child policy.

However, the market has also been marked by some turmoil for suppliers, in the run-up to food safety rules which from 2018 will impose strict licensing on infant formula suppliers red tape which follows a history of contamination of dairy products in the country.

Last month, Italy's Parmalat and Australia-based Bellamy's fell foul of the clampdown, seeing regulators suspend export licences from Australia.

In the case of Parmalat, the move covered the import of fresh milk, over concerns about high temperatures used in heat treatment.

Shares in Bellamy's tumbled 13% at one point in Sydney on July 20, to Aus$5.88, after the group revealed suspension of a permit to export formula from its Camperdown Powder plant, although the stock has recovered since to close at Aus$7.30 on Wednesday.

'Clear brand positioning'

Ausnutria revealed that its sales had risen by some 36% to 1.7bn renminbi in the first half of 2017, led by a 50% jump to 1.2bn renminbi in sales of infant formula products, which it produces from both goat and cow's milk.

The group also flagged "continuous improvements" in its sales network, and "clear brand positioning" as behind the improvement in its performance.

Part of China's revamp limits companies to registered a maximum of three brands in the country.

Ausnutria itself in May revealed two Australian dairy acquisitions in one day paying Aus$10m for Australian Dairy Park, an infant formula maker already registered for selling into China, and Aus$11m for Oz Farm, a leading producer of specialist dairy powders for its domestic market.

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