Jatenergy flags higher than expected revenues for Q3

By Megan Graham. Published at Aug 16, 2018, in Juniors

Name: Jatenergy Ltd (ASX:JAT)

Market Capitalisation: $38 million

Closing Share Price: 6.3 cents

Jatenergy (ASX:JAT) is a China-Australia cross-border specialist in Fast Moving Consumer Goods (FMCG) exports. It develops in-house brands for Australian products for sale offline and online, with a focus on milk products and baby formula.

Yesterday it released a market update stating that the September quarter revenues are likely to be materially higher than expected (if the market based its assumptions on income generated in recent quarters). This revolves around the finalisation of the August acquisition of 50% of Sydney-based wholesaler, distributor and exporter, Green Forest International.

Green Forest sells to more than 50 shops and pharmacies in Hong Kong, and over 200 gift shops, duty free stores and daigou (‘personal shopper’) warehouses in Australia, as well as Chinese cross-border platform like Taobao and WeChat.

This represents a significant boost to JAT’s distribution capacity and sales. Based on Green Forest’s earnings, JAT’s revenue for the September quarter is expected to be as much as A$8.7 million.

This estimate includes the impact of Green Forest revenue for only half of the September quarter, and it should be noted that 50% of Green Forest’s contributions are associated with minority interests. The December quarter will benefit from a full three month contribution from Green Forest.

The company’s management noted that sales for the June quarter of A$320,000 were relatively low as the company focused its efforts on putting in place the elements necessary to drive sales, particularly of in-house branded products.

NEURIO, a milk powder that’s sold in supermarkets and baby and maternity stores, is a core in-house brand in the small cap’s control that comes from Sunnya, another of JAT’s acquisitions.

However it is an early stage of this company’s development and if considering this stock for your portfolio you should take all public information into account and seek professional financial advice.

JAT to present at Expo

JAT will be showcasing at the inaugural China International Import Expo (CIIE), where Australian businesses are invited to showcase their products and services. Over 500,000 visitors from China and around the world are expected to attend the first expo in November, representing a key opportunity for exposure of JAT’s in-house and client brands.

China is the second largest importer and consumer in the world, and expects to import products and services valued at over US$10 trillion in the next five years. China now takes about two-thirds of Australia’s infant formula exports.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of Maven Capital Pty Ltd (AFSL No. 418504). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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