At a time when China is cracking down on its international import market, dairy products company Halo Foods (ASX: HLF) looks to have bypassed the market headwinds to have signed a deal valued at $54 million (USD $40m) to develop and manufacture a new brand of powdered dairy products specifically for China.
The deal comes in the form of a Memorandum of Strategic Cooperation with Theland New Cloud (Shanghai) Digimart Limited, a business majority owned by the Alibaba Group.
Under the 2-year partnership, Halo Foods will develop and manufacture Theland’s whole milk powder, skim milk powder and other formulated nutritional powders across a range of pack formats including bags, cans and PET jars.
“We are thrilled to have formed a strategic partnership with Theland in China supporting the significant scale they are set to achieve. Theland’s ambitions, strategic priorities and calibre complement our company’s capabilities and first-class facilities in New Zealand and we look forward to a long and prosperous partnership,” said Halo Foods CEO, Danny Rotman.
“We will support Theland’s growth ambitions with new product development and the ability to continue to scale across their formulated milk powders as they continue to expand their footprint in China.”
Theland is a Chinese-based brand distributor which has sales capabilities in more than 25 Chinese provinces and is one of the largest importers of powdered milk products in China.
Initial orders under the partnership have already been placed with the first batch valued at $2.0 million and is due to commence production by the end of November 2021.
Halo Foods was previously known as Keytone Dairy (ASX: KTD) until the re-brand was finalised earlier this month following shareholder approval at the Company’s Annual General Meeting.
Upon signing the agreement, Mr. Sheng Wenhao, CEO of Theland Asia Pacific Region said, “We have selected to work with Keytone for this key and strategic partnership, aligning with Theland’s strategy and growth priorities in core markets as we continue to build and scale our formulated dairy brands and bring new products to market.
“Keytone’s advanced facilities aligns with Theland’s objective to provide high quality products and flexible services from green, clean, pristine New Zealand to Chinese consumers. We look forward to a long and successful relationship with Keytone.”
For the quarter ended 30 September 2021, Halo Foods reported sales of $15m which represented a 10% increase on the previous corresponding quarter and highest quarterly sales figure in the Company’s history.
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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