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- Australia-Asia trade specialist, Jatenergy (JAT) has reported its December 2019 quarterly report
- In a busy quarter the company completed acquisition of Australian National Milk Association and has ordered machinery for a plant upgrade
- To expand its offering JAT will open a Shanghai maternity and infant boutique in March 2020
- The company is also considering changing its name from Jatenergy to JAT Limited due to shareholders thinking this current name does not reflect operations
- Jatenergy is down 3.77 per cent on the market this morning, trading at 5.1¢ per share
Australia-Asia trade specialist, Jatenergy (JAT) has reported its December 2019 quarterly report.
The company is on its third successive cash flow positive quarter, with $20.8 million in cash receipts, a 15 per cent increase since this time last year, generating $700,000 in net cash from operations.
“We are pleased to have delivered another quarter of consistent profitable growth while continuing to invest in developing our business,” Managing Director Wilton Yao said.
“The investments we made during the quarter have significantly enhanced our production capabilities. This has underpinned our ability to secure several new distribution agreements which we expect to meaningfully boost our sales in the year ahead,” he added.
ANMA factory upgrade
Last year, Jatenergy acquired a 70 per cent interest in Australian Natural Milk Association (ANMA).
In November, ANMA placed orders for new machinery which will help the facility produce high-standard milk powder in Australia.
Once the new machinery is installed and operated, ANMA will have the capacity to deliver milk powder into several different sized containers and produce individually packed sachet products (such as lactoferrin) into three different pack sizes.
The machinery is expected to be installed and operating by February 2020, and once completed will produce around 620,000 tins of various sizes per month.
Beta A2
Jatenergy signed a five-year manufacturing and supply agreement with a new customer, Beta A2 Australia Manufacturing.
This agreement allows the company to manufacture and supply Beta with Beta’s milk formula products, branded “Farmers Beta A2”, from its ANMA milk manufacturing facility.
The company received an initial order for the first four months, with the first delivery in February. The amount of the order is more than $1.8 million.
Beta gave an estimated forecast for the first eight months of orders to be worth more than $4.9 million.
Plant-based Meats Business
In October, Jatenergy partnered with Oppenheimer to create a range of plant-based meats to be sold in China and other Asian markets.
Oppenheimer is a private company based in Sydney which has a focus on being a world-class ingredient manufacturer and a leading provider of global foodservice brands in Australia, New Zealand, India, China, Southeast Asia and Singapore.
The two businesses created a company called JAT Oppenheimer to carry out the plant-based meat business.
“Directors of Jatenergy consider that the supply of plant-based meat products is becoming a fastgrowing industry with a very significant market available in China and other Asian countries,” the company said.
Its plant-based meats were shown at the second China International Import Expo (CIIE) in Shanghai and received high exposure on several Chinese media outlets.
The first products to be made will be beef, pork and seafood and will be produced in a variety of forms including meatballs and mince.
The first shipment is expected to be sent to China in February and will be marketed under the “Vmeat” registered trademark.
In December, JAT Oppenheimer signed a distribution agreement with Shanghai Gurun Wanfeng Catering.
Shanghai Gurun specialises in catering and restaurant operations and management in China. The company operates fast-food restaurants in A-class office buildings, manages restaurants at large commercial and industrial parks and provides catering services for large enterprises.
Its team of chefs have been largely recruited from 5-star hotels and major restaurants.
Under this agreement, Shanghai Gurun has the non-exclusive right to distribute the plant-based products under the Vmeat label in China. However, it must purchase a minimum of $2 million of products within the first year, of the two year agreement.
Shanghai Gurun will use the plant-based products in its own facilities as well as distributing it to other restaurants in China.
Maternity and Infant Boutique
Jatenergy has announced plans to open a maternity and infant boutique in a prime retail location in Shanghai.
It believes it will be the first Australian company to sell its dairy products through its own retail outlet in China. The manufacturing facility will be located in Australia.
The boutique is strategically placed near the Shanghai Children’s Hospital, Pregnancy School, Putuo Maternity & Infant Health Institute and Oasis Kindergarten.
It will open after the Chinese New Year holiday in March 2020.
Distribution Agreements
Cyclone
At the CIIE, Jatenergy renewed its partnership with China-based health, wellness and maternity product distributor, Cyclone E-Commerce.
Under the existing agreement, Cyclone purchased over $7.5 million in products over twelve months.
“Cyclone met that sales target, leading to the agreement being renewed for a further 12 months,” the company said.
It will now aim to sell $17 million worth of Jatenergy products within the next 12 months.
The distributor will sell a range of Neurio milk powder products, the full range of Neurio vitamins and new products that Jatenergy is set to release in the near future.
Kigobaby
In November, Jatenergy signed a distribution agreement with Kigobaby, to be the exclusive distributor in China of a newly-developed Neurio product line, being Neurio Formulated Milk Powder with Lactoferrin + Sialic Acid.
Shaanix Kiss Kangaroo
Also in November, Jatenergy appointed Shaanxi Kiss Kangaroo Ecommerce Co, as a non-exclusive distributor for Neurio products through its online platform.
Kiss Kangaroo was established in 2018 and is located in Xi-an, it focuses on high-end mother-infant products.
Ocker Products
Following the end of the December quarter, the company signed a distribution agreement with Ocker Products (OPP). OPP will distribute Jatenergy’s dairy and other products in China for the next three years.
OPP is based in Australia and has a strategic partnership with Beijing Grain Group (BGG) and Beijing JingLiang Logistics (BJL) to procure food and farm produce on behalf of BGG and BJL.
The Distribution Agreement between Jatenergy and OPP is to facilitate OPP meeting orders which it receives from BGG and BJL.
Products to be sold under the agreement will be dairy products including full cream, skim milk and goats milk powders.
“Jatenergy expects to receive orders for both packaged goods and for raw materials. The company intends to fulfil orders for packaged goods through its ANMA dairy manufacturing facility in Melbourne,” the company told the market.
In the first year under the agreement, OTT will purchase a minimum of $80 million of Jatenergy’s dairy products and other products supplied by the company. No minimum amount has been specified for years 2 and 3.
“The company believes there is a real opportunity for it to fulfil BGG/BJL orders greater than $80 million per year, subject to it obtaining additional funding and increasing its manufacturing capacity,” it added.
Cosmetics JV
During the quarter, Jatenergy contributed its $500,000 share capital for the establishment of JWR International, a 50:50 joint venture in the cosmetics industry.
JWR will specialise in researching, developing, manufacturing and distributing clinical skincare and cosmetics products.
The Chinese JV partner has directed extensive research with various research institutes, industry experts and manufacturers on both the latest manufacturing technologies and target market sectors.
It plans to develop specific products for three separate consumer groups: adults,
pregnant women and children. Five products for adults and three products for children will be introduced to the market in early 2020.
The JV is outsourcing the manufacture of the products to companies in Japan and South Korea.
The new products will use the latest CBD (an oil extracted from the hemp plant) based skincare technology, with a release planned for February 2020.
Green Forest
A large proportion of sales revenue obtained by Green Forest is generated from pharmacies and other retail stores in Hong Kong.
Due to the street protests in Hong Kong over the last few months, sales by Green Forest have dropped below forecasts.
The management of Green Forest believes that the situation in Hong Kong is now stabilising and expect sales to increase in the current and future quarters.
Green Forest is in the process of expanding its range and importantly, developing its own products, some of which will be released in the March 2020 quarter.
Jatenergy is also considering a name change to JAT Limited, due to feedback from shareholders saying the current name does not reflect business operations.
Jatenergy is down 3.77 per cent on the market this morning, trading at 5.1¢ per share at 12:36pm AEDT
