The Bubs Australia Ltd (ASX: BUB) share price has continued to build on last week's impressive gain and has rocketed higher in morning trade.
At the time of writing the infant formula and baby food company's shares are up 16% to 25 cents. This means its shares have now rallied over 72% since this time last week.
What happened?
Bubs shares have been on a tear since it announced that it has expanded its access to Chinese consumers with the signing of a strategic partnership with China-based NetEase Kaola.com at the start of last week.
With its infant formula and organic baby food products now available on Kaola's cross-border e-commerce platform, it has opened the brand up to approximately 15 million targeted customers that seek quality international brands through the Kaola platform.
Importantly, approximately 42% of Kaola's customers have at some stage purchased baby products.
Should you invest?
I believe the Kaola platform gives Bubs a great opportunity to compete with larger rivals a2 Milk Company Ltd (Australia) (ASX: A2M) and Bellamy's Australia Ltd (ASX: BAL) in the lucrative China market.
Furthermore, I feel it is also an extremely cost-effective way for the company to reach its target market. Undoubtedly this all bodes well for the future growth of this fledgling company.
But until I have sales data available to judge whether or not Bubs is penetrating the China market sufficiently to justify its current valuation, I intend to sit on the sidelines.
But it certainly is one company I'll be watching very closely over the next few months.
