Jatenergy Ltd (ASX:JAT) is one of the stocks on the spot, as the Coronavirus pandemic continues to cause havoc. The company continues to register a material increase in its product orders. The company’s Neurio lactoferrin brands continue to elicit strong demand driven by the spread of the coronavirus in China. Similarly, the company has had to increase production in a bid to meet soaring dairy products orders abroad.
Revenue Growth Boost
Conversely, the company registered its highest revenues to date of $8.3 million in February. The executives expect revenues over the next few months to exceed the February level as orders for the company’s dairy products continue to exceed average levels. The impact of the coronavirus has forced most people to switch focus to Neurio lactoferrin products.
While the company’s subsidiary Green Forest, did register a dip in sales in the half-year ended December 31, 2019, due to the Hong Kong Political unrest, things are finally looking up. Sales appear to have picked up in February, jumping to $3.2 million compared to $1.1 million registered in January.
New products developed by Green Forest, set for release starting March, will mostly drive revenue growth going forward. Buoyed by the strong product demand, Jatenergy Limited executives expect revenue for the June 2020 half-year to surge to record highs of $36 million.
In January, Jatenergy Limited entered into a distribution agreement with OPP for the non-exclusive distribution of its dairy products in China for the next three years. Under the terms of the agreement, OPP is to purchase a minimum of $80 million JAT dairy products in the first year.
The company’s ANMA manufacturing facility is already ramping up production operations in a bid to keep up with the more than 660,000 units of confirmed lactoferrin and milk powder orders. Additional orders are expected for delivery before June 2020. In a bid to keep up with the soaring orders, the facility will have to operate two eight-hour shifts. Jatenergy Limited is also planning to hire additional personnel to ramp up operations.
Jatenergy Limited has also identified additional dairy products expected to elicit strong demand and conversely strengthen the company’s product pipeline. However, in order to produce these products, the company will have to acquire additional machinery that could cost upwards of $1 million.
Similarly, the company has already inked a strategic partnership with a leading Australian food manufacturer Oppenheimer. Under the terms of the agreement, the two are to work together on the development of plant-based meat substitute products to be sold worldwide
Oppenheimer has already undertaken extensive R&D and product development. Jatenergy Limited, on its part, will have to source buyers of the expected products more so in China. The strategic partnership that Jatenergy Limited has inked should help strengthen the bottom line after the company reported impressive half-year results for the period ended December 31, 2019. Net loss for the period shrunk to $2 million from a net loss of $21 million reported a year ago. Revenue, on the other hand, increased to $30.6 million from $30.4 million reported a year earlier.