Known for robotic hand gestures and questionable claims of improved wellbeing Swisse (vitamins and miracle cures) has today announced a $1.5bn sale. It is unclear at this stage if the charismatic James O’Connor or the overdressed Nicole Kidman were included in the deal but the once small bakery from St Kilda is now in the hands of Biostime International Holdings, a company listed in Hong Kong.
This is symbolic of the emerging demand from Asia, in particular countries like China and South Korea for vitamins marketed towards health conscious consumers. This blog in the past has spoken about the emerging middle class in Asia and the corresponding demand for quality Australian produce, what is not as widely acknowledge is the opportunities that sit next to this. Think cosmetics, jewellery, fashion and of course health products like vitamins.
There are a number of good Australian companies operating in this space, capitalising on the exploding demand.
Blackmores (Unfortunately, we could not get stock quote ASX:BKL this time.), perhaps the best known among the publicly listed vitamin companies has been celebrated for amazing growth over the past year. Having been priced at just over $30 a share this time last year, the company is currently trading at $136.80, a capital gain of over 350%. Interesting still is that the news announced by Swisse today saw a gain of 5.23%. This is a $2.2bn company with a hockey stick trend line, but is possibly overpriced.
Yesterday saw the listing of Vitaco Holdings (Unfortunately, we could not get stock quote ASX:VIT this time.). Another vitamin company with a presence in Asia. Having listed on the ASX with an issue price of $2.10 Vitaco blitzed the opening bell trading as high as $2.59 on the opening day before closing at $2.38. The company had another good day today closing up 3.36%. These guys are looking to increase the presence in China by opening a local office with the intention to increase the share of revenue from 8% from the last financial report. This is a company with large upside, congratulations to those lucky enough to get in on the IPO.
Vita Life Sciences (Unfortunately, we could not get stock quote ASX:VSC this time.) is another player in the health supplement and vitamin space, and has been a listed company for 8-ish years. Peaking in 2014 the share price has since plummeted. A massive range of products and a strong foothold in key markets the company remains well placed to capture the demand from Asia. Prior to this year revenue growth has averaged over 16% for the 5 year period, however sluggish growth recently reported saw a decline in profit and smashed the share price. So right now it’s a bargain and a stock to watch.
As the demand is driven by both the aesthetic appeal and the generally heath conscious it’s fair to say it’s going nowhere fast. Not only do they stand to gain from the aging Australian population desperate for calcium supplements and those ever so fragrant fish oil tablets, but our friends in China, well they are getting old too. The recent spike in demand is only just the beginning. So watch out for these stocks, and hopefully another smooth and not at all awkward TV ad from Swisse.