Stock market casino comes to manufacturing

Comment by Peter Roberts

The stock market is often likened to a casino.

This is especially true in Australia where most active companies on the ASX are mining minnows, all competing for attention with their latest discovery.

Cyclically this market burns white hot, and the white shoe brigade bids up the prices of penny stocks that all seem about to take the world by storm.

In Australia right now it is explorers and miners of rare earths that are gathering attention, a desperate following of the would-be wealthy hoping for another Poseidon.

Manufacturing rarely commands the attention of such investors, other than a few rare occasions when a supposed breakthrough technology such as Vapocure bursts onto an uncomprehending market.

On occasion too biotech stocks have rocked the market, but otherwise manufacturing is barely on the investment radar.

Penny stock to $200 a share happens rarely, but this past week has shown that it is more than possible where infant formula and Chinese consumers are concerned.

As reported elsewhere in @AuManufacturing news, Tasmanian dairy Bellamay’s has warmed to a $1.5 billion takeover offer from a Chinese bidder.

It still lags the darling of the New Zealand and ASX exchanges, a2milk, which is valued at more than $10 billion, a valuation that bears little resemblance to the company’s realities.

A third player, Bubs Australia, has burst on the scene in the past year with newly-created supply and China distribution arrangements.

Today it is valued at more than $612 million even though it has yet to make a profit, and sales are tiny through a few online and e-commerce channels. Earnings per share are minus 0.078 cents per share.

Bellamay’s shares jumped 60 per cent in one day last week – the casino has come to manufacturing.

Picture: Bubs Australia products on sale in Chaina

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