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HY21 result impresses, Clover (ASX:CLV) share price up

The Clover Corporation Limited (ASX: CLV) share price is up 7% after the business reported its FY21 half-year result (HY21).

Why is the Clover share price going up?

The numbers reported by Clover weren’t exactly positive. Net sales revenue decreased by 21.7% to $29.4 million. Excluding the negative foreign currency exchange impacts, net sales revenue was $30.3 million.

Clover’s net profit after tax sank 45.8% to $2.5 million. However, excluding the Melody Dairy start-up costs and IP legal defence costs, it would have made an underlying net profit after tax of $3.3 million.

Why are things difficult?

Clover explained that it experienced tough trading conditions in the first half of FY21. The infant formula market has seen a shift in demand and the supply chain driven by COVID-19 restrictions and market conditions in China. Global infant formula manufacturers are adjusting their market response.

Even so, Clover revealed that it has retained and grown its customer base.

The daigou channel has caused an impact and there is minimal travel by Chinese and students which have slowed the ‘grey market’ importation of many products, including infant formula.

The local Chinese market has also become more competitive with local manufacturers competing on price and aggressive channel strategies.


The Clover board decided to declare a dividend of 0.5 cents per share.


Clover stated that the fundamentals of the business remain strong with opportunities for growth across markets and segments currently impacted by COVID-19. The global uncertainty is leading to a slow recovery in the infant formula market and Clover has forecast FY21 revenue to be in the range of $60 million to $70 million.

Is the Clover share price a buy opportunity?

This seems like the type of problem that’s affecting businesses like A2 Milk Company Ltd (ASX: A2M), Synlait Milk Ltd (ASX: SM1) and Bubs Australia Ltd (ASX: BUB).

At some point the infant formula sector could bounce back, which would benefit Clover (and the others).

The Clover share price is down a long way from where it was in the middle of 2020. It seems like an interesting business, but it’s not one I’m looking to add to my own portfolio right now because I’m not sure how big of an opportunity the business is.

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