Aumake Limited Announces Strategic Procurement Framework with Yangtze River Group
AUK (AUK) Share Update July 2024 Sunday 21st
Aumake Limited Enters Strategic Procurement Framework with Chinese SOE
Aumake Limited (ASX: AUK) has announced a significant strategic partnership with Chinese State-Owned Enterprise (SOE) Yangtze River New Silk Road International Logistics (Hubei) Group Co., Ltd. This partnership aims to establish a comprehensive supply chain network for Australian goods and services.
Instant Summary:
- Aumake Limited enters a three-year strategic framework with Yangtze River Group.
- Yangtze River to purchase a minimum of A$100M worth of Australian goods annually.
- Total procurement plan valued at A$300M over three years.
- Focus on Australian agricultural and livestock products, FMCGs, frozen goods, and bulk resource commodities.
- Aumake to leverage Yangtze River's logistics network to streamline costs and improve margins.
- Aumake to form strategic alliances with domestic partners to meet demand.
Strategic Partnership Details
On 19 July 2024, Aumake Limited announced a non-binding three-year strategic co-operation framework with Chinese SOE Yangtze River New Silk Road International Logistics (Hubei) Group Co., Ltd. The framework, effective from 22 July 2024, involves Yangtze River purchasing a minimum of A$100M worth of Australian goods from Aumake each year. The total value of the procurement plan is set at A$300M over the three-year period.
Both companies will develop detailed procurement plans at the beginning of each agreement year, specifying the types of goods, quantities, and delivery schedules. This partnership will focus on Australian agricultural and livestock products, fast-moving consumer goods (FMCGs), frozen goods, and bulk resource commodities.
Leveraging Logistics and Supply Chain Networks
Aumake will utilize its extensive sales channels in Australia to assist Yangtze River in developing a supply chain network for Australian products. By integrating Yangtze River's port, warehousing, logistics, and trade resources in Hubei, China, Aumake aims to streamline its cost profile and drive improved margins, accelerating profitability in FY25.
Forming Strategic Alliances
To fulfill specific procurement orders from Yangtze River, Aumake plans to establish strategic alliances with domestic partners. These alliances will be supported by Aumake's newly launched digital marketing assistant, Streamii, which will assist partners with cross-border sales management.
Aumake has already started this process by leveraging its relationship with Petersons Wines, resulting in the establishment of Hunter Valley Wine and Tourism Alliance Pty Ltd. This joint venture will launch an innovative tourism and wine gift store under the brand 'Wine Couture.'
This strategic partnership is expected to have a positive impact on Aumake's stock as it opens up significant revenue streams and enhances profitability through cost efficiencies. The collaboration with a major Chinese SOE like Yangtze River demonstrates Aumake's strong positioning in the market and its ability to secure high-value deals.
Investor Reaction:
Investors and analysts have reacted positively to the announcement, highlighting the potential for increased revenue and improved margins. The strategic framework is seen as a significant milestone that could lead to further opportunities in the China-Australia trade corridor.
Conclusion:
Investors should keep an eye on the implementation of this strategic framework and its impact on Aumake's financial performance. The company's ability to leverage Yangtze River's logistics network and form strategic alliances will be crucial in maximizing the benefits of this partnership.