Want to know where money flows faster than in China?
Look no further than Vietnam. It’s a country that should be watched, especially with their increase in manufacturing. And let’s not forget a growing middle-class population.
When I learnt that Bubs Australia Ltd [ASX:BUB] is launching in Vietnam, I had to find out more.
Any company ballsy enough to take the plunge into Vietnam could explode higher.
Bubs: The Vietnam Connection
Vietnam has a population in excess of 95 million people.
A country 23 times smaller than Australia.
Now, before we delve into the news and where this could take Bubs, let’s take a step back and understand who the company is and what they do.
Who is Bubs?
Bubs sell infant nutrition products.
The main thing that sets the company apart from its competitors is their Goat Milk and organic grass-fed infant formula range.
Bubs has an exclusive milk supply from the largest milking goat herd in Australia.
The company issued their latest activity report on 31 October.
Bubs saw a 58% lift in revenue to $14.21 million — the highest in the company’s history.
What looks even more compelling was the uplift in gross sales across the various regions, notably with China up 113%. And international markets rocking up 973%.
Australia is still the largest market for Bubs which covers 70% of gross sales. But as Bubs expands, I expect this to shrink as other markets close the gap.
That’s especially the case with Bubs Adult Goat milk now being sold on Alibaba in China.
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A strategic move
With that said, let’s take a look at Bubs latest announcement and Vietnam.
Bubs Australia has secured a deal with Vietnam’s largest baby chain, Bibo Mart JS.
Bibo Mart is a chain that operates 135 stores across Vietnam.
And as you can guess, they assist mothers by providing products that support children between 0 and six years.
At the moment, Bibo Mart JS will support Bubs products in stores where the demographics suggest they have more disposable income.
Though, as time progresses and demands increases, we may see Bubs products supplied all over Vietnam.
But that’s not all. Earlier this month, Bubs signed a deal with Viet Nam TVV.
That’s one of Vietnams largest distributors of infant nutrition. They have over 20,000 outlets…
…which includes the Bibo Mart JS chain.
This partnership with TVV could open more doors and give Bubs the ability to penetrate the market. And in one way or another, compete against lower or same quality local brands.
What this means for the Bubs share price
This could be very bullish for Bubs. At the moment, the stock market hasn’t responded to the news.
Which could be a positive. I’d be looking for higher prices here. That would tell me that investors are pricing in growing revenue and profits.
Follow the money, they say.
As always, this is not a recommendation to buy or sell Bubs shares. It is an update only. I hope you found it useful.
Until next time,