Jatenergy increases exposure to China’s infant milk market though Golden Koala acquisition

Jatenergy ASX JAT China infant milk Golden Koala

Jatenergy (ASX: JAT) has secured a 51% stake in Golden Koala which produces Australian-made infant formula and powdered milk for adults and sells into China’s market.

According to Jatenergy, Golden Koala’s brand in China is growing particularly its infant formula product. The brand has received a number of awards and accolades including one from former Australian Prime Minister Kevin Rudd who promoted Golden Koala’s products and a green and healthy Australian dairy option.

In the last three years, Golden Koala has sold 264,000 tins of infant milk formula into China – generating more than A$6 million in revenue for the company.

As part of the transaction, Golden Koala’s current owner Rongjun Zhao will receive an initial A$2 million cash payment and A$1.5 million Jatenergy shares plus a further A$3.5 million in cash and shares upon reaching agreement milestones.

Additionally, upon finalising the purchase, Jatenergy will be able to appoint two directors to Golden Koala’s board with the remaining director being Rongjun Zhao.

Earlier this month, Jatenergy reported its 100%-owned subsidiary Cobbitty Country was about to start delivering its first full cream milk powder orders into China.

The company slipped the announcement through at 3pm on Friday 8 December, but more than A$2 million in stock had been traded during the day and the company’s share price sky rocketing more than 200% in intraday trade to peak at A$0.095 before dipping slightly to end the day at A$0.07 – up a whopping 141% on its A$0.029 price at beginning of trade.

Specialising in moving Australian consumer goods into China’s market, Jatenergy has grown from A$1 million in sales during the 2016 financial year ending June to A$10 million the following year, with more than A$4 million in milk powder sales contributing to the figure.

In addition to milk powders, Jatenergy distributes wine, cosmetics, skin creams, nutraceuticals, cereals, oats, biscuits and organic oils.

Some of the products include major Australian brands like Coles and Woolworths, as well as Bellamy’s organic infant formula and the Sukin skin and body range.

As well as distributing well-known Australian brands, Jatenergy is also developing its own in-house brands for distribution, particularly its own infant milk formula product.

The company claims it is across all China’s networking and distribution platforms and has good relationships with Chinese import authorities and daigou groups. Jatenergy estimates Australian daigou trade, alone, is worth at least A$350 million per annum.

At the time of writing, Jatenergy remained suspended from the ASX pending an ASX determination on its activities in relation to the Chapter 11 listing rule.

Lorna has more than 10 years' experience as a finance journalist and editor. She has written for an array of industry publications reporting on various sectors, including: resources, energy, construction, biotech, pharma, science and technology, agriculture, and chemicals. Specialising in resources, Lorna has covered a myriad of small and large cap ASX and dual-listed stocks.