Over 130% in less than 90 trading days. That’s how much Bubs Australia Limited [ASX:BUB] has gone up this year.
And I don’t think this industry is set to slow down soon.
What caused BUB to move up so fast?
Read on and you’ll find out…
Who is Bubs Australia?
Bubs is engaged in the production and sale of organic infant food and formula.
On 3 April, Bubs held a presentation for investors.
The company posted record revenue growth for the first half of 2019. That’s impressive considering the difficult market, especially when Bubs competes against the likes of bigger firms such as Bellamy’s and A2M.
Strong domestic growth, as well as success in China, drove this result.
BUB’s gross revenue of $21.03 million for the first half of 2019 exceeds its total revenue for 2018.
BUB is partnering with a Chinese company called Beingmate.
Beingmate is one of the largest Chinese-owned enterprises in the infant nutrition industry.
This joint venture should give BUB the ability to place its product in up to 30,000 mother-and-baby stores around China.
That dangles further high growth potential in front of the company.
What sent the share price soaring 19% last week?
Following the positive announcement from BUB at the start of April, the company has also completed the acquisition of another company called Australia Deloraine Dairy.
The Deloraine factory is one of only 15 licensed canning facilities in Australia authorised by China’s Certification and Accreditation Administration (CNCA).
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The CNCA allows Deloraine to export products into China legally.
The Deloraine factory also has three technical applications in progress with China’s State Administration for Market Regulation (SAMR).
Further approvals will allow BUB to export three of its products into China. This range includes BUB’s goat milk infant formula, organic cow milk infant formula and its conventional cow milk infant formula.
All of this will be positive news for BUB. And as a result, I believe investors are now buying the stock in anticipation of growing revenues.
Consequently, shares have shot up over 30% since the company’s April investor presentation, as seen in this chart.
This story highlights the kind of moves you can find in the small-cap space. However, this article is not a recommendation to buy or sell BUB. It’s an update only. I hope you found it helpful.
Until next time,