Baby and children’s supplement manufacturer Bubs Australia (ASX:BUB)
reported a dramatic 22 per cent increase in its share price yesterday, prompting market operator the ASX to approach the company for a justification.
The infant formula producer has responded to the enquiry, reassuring that they have upheld their compliance and disclosure obligations in accordance with market regulations.
Bubs associated the surge with no other reason but China’s new population strategy of encouraging families to have three children, an increase of one child from the previous stringent limit of two children per family.
Beijing explained the rationale behind the new birth policy is a move to “improve the population’s structure” with a rapidly aging workforce.
The loosening of birth restrictions promises to boost demand for Australian baby formula and other children-related supplements, which are preferred by many Chinese consumers.
Bubs Australia is among these suppliers well positioned to take advantage of the increased need from the Chinese market.
The company has announced a plan to downsize its joint venture with Bub’s Chinese partner in a bid to increase self-sufficiency. Bubs has set the target of forming a wholly-owned branch to support the Chinese market.
The $251 million company’s share price hike represented an addition of $45 million to its books within a day.
Shares in Bubs Australia (ASX:BUB)
last traded at 41 cents