Jatcorp (ASX:JAT) - Managing Director, Wilton Yao (centre)
Managing Director, Wilton Yao (centre)
Source: Jatcorp
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  • After experiencing significant declines in sales due to COVID-19, Jatcorp is starting to see the positives, with new partnerships on the horizon
  • The consumer goods developer has recently been approached by potential partners interested in distributing its nutritional products
  • Jatcorp primarily develops milk formula products but is in the process of launching a diabetic formula as well as avocado and walnut cooking oils
  • Jat has signed a distribution agreement with HongKong Suning Appliance Resourcing
  • Suning has already made its first purchase order which is valued at $127,000
  • Suning will distribute Jat’s products throughout China until the end of the year which may be followed by an agreement renewal
  • Company shares are up 4.35 per cent and are trading for 2.4 cents

Consumer goods developer and manufacturer Jatcorp (JAT) has provided an operational update which includes a new distribution partnership.

Operational update

Due to COVID-19, Jat’s sales suffered significant revenue loss like many other companies that produce and distribute milk formula across China.

From January and July 2020, Jat’s sales declined 25 per cent from the prior year’s corresponding period decreasing from $40.2 million to $30.1 million. Sales continued to plummet in August when Jat experienced a 72 per cent sales decrease to $1.2 million from $4.2 million in August 2019.

Of course, this decrease was felt by most within the industry. According to China’s National Bureau of Statistics, from January to July this year, the national total retail sales of consumer goods was 20,446 billion yuan — representing a 9.9 per cent decrease year on year.

Prior to COVID-19 lockdown, Jat began reducing its reliance on daigou stores
and Chinese tourists by establishing direct links with Chinese state-owned companies and large private enterprises to create stable supply chains.

The company is also continuing discussions with additional potential partners to develop revenue streams together in China.

To assist with this, recently-appointed Non-Executive Director, Sun Xin, is aiming to establish more business connections with Chinese companies.

Despite previous declines, Jat has started to experience signs of recovery and has been approached by potential distributors. This comes at an opportune time as Jat is in the process of launching more nutritional product lines to the market. These include specialty products such as diabetic formula.

Additional products include an avocado oil and walnut oil which will be launched under Jat’s Hopefern brand. In developing these products, Jat is meeting increasing demand for nutritional and healthy food ingredient which includes high-quality cooking oil.

Distribution agreement

Jat has signed a distribution agreement with HongKong Suning Appliance Resourcing.

Under this agreement, Suning will distribute Jat’s in-house brands in China on a non-exclusive basis and has already made its first purchase order which is valued at $127,000.

The agreement will be in place until the end of this year and may be followed by a new annual agreement in January 2021.

This partnership strongly aligns with Jat’s goal of having a much more stable and reliable distribution platform to mitigate any potential changes in the Chinese trading environment.

Company shares are up 4.35 per cent and are trading for 2.4 cents just after midday AEDT.

JAT by the numbers
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