Oceania Natural shares jump 16% in NXT debut

See also: Oceania Natural has its sights firmly set on China

UPDATED: Oceania Natural [NXT: ONL] shares climbed 16 percent in their NXT debut, capping off the first local listing of the year. 

The shares traded at 74 cents on the NZX's small-cap market, up from the 64 cents touted in a compliance listing of 25.7 million shares. That values the food supplements maker at $19 million. 

The Auckland-based company produces food supplements derived from manuka honey and noni fruit juice, and generated revenue of $1.5 million in the year ended March 31, 2015, which it expects will have more than doubled in the 2016 year finishing today, and will rise to $5.4 million in 2017, according to the company's listing document. 

The bulk of Oceania Natural's revenue comes from China, where the company has three separate five-year distribution deals into the Shangdong and Guizhou provinces and the city of Wuxi. Those third-party distribution channels are forecast to deliver the bulk of the company's revenue, with just 19 percent projected from direct sales in the 2016 year, rising to 26 percent in 2017. 

Oceania Natural wants to branch out into other Chinese territories and develop markets in North America, Taiwan, Canada and Australia. 

The company is controlled by chief executive and chairman Walker Zhong, who owns 62 percent of the shares. The board is rounded out by Sean Meng, who owns 8 percent of the company, and independent directors Zhi Jun Shi and Ross Keeley, the former chief executive of fish oil supplement maker SeaDragon.

Oceania Natural was marginally profitable in the 2015 year, and reported earnings of $155,000 in the six months ended Sept. 30 on sales of $1.4 million. It didn't provide profit projections. 

The company has entered into a long-term contract with one of its principal honey suppliers, and is looking to enter into similar arrangements, as well as acquire its own hives, to protect the security of supply. Similarly, Oceania Natural sources noni fruit from one supplier in the Cook Islands, stockpiling the fruit as a way to mitigate against the lack of a contract with its supplier. 

Oceania Natural is looking at acquiring beehives and honey processing assets and developing new products, which it said it will do both organically and through acquisition. 

Its key operating metrics - part of the NXT market's looser disclosure requirements - are total revenue, direct sales, distributor sales, and gross margin. 

(BusinessDesk)