Having raised $650,000 to be used for the technical development of its Motif Micro and Connect Platform technologies, business development and marketing costs, product authentication and consumer engagement solutions provider YPB Group Limited's (ASX: YPB) is in a strong position to continue its momentum.
This week, YPB announced that its China business has signed two important new channel partners: a high-volume pharmaceutical packaging supplier, effectively marking YPB's entry into the China pharmaceutical sector and a well-established label printer with a broad, blue-chip customer base.
Combined, the two contracts are expected to add first year revenues of around $75,000, with possible upside in years two and three as YPB's solutions are on-sold to the channel partners' end customers.
YPB's proprietary Brand Protection and Consumer Engagement suite allows Government and Brands to protect their assets and their consumers to confirm product authenticity; for brands it can trigger consumer engagement.
The combination of YPB's smartphone authentication solutions and its SaaS Connect platform creates ‘smart' product packaging, opening cost-effective, digital and direct marketing channels between brands and their consumers.
In fact, the company reported it had made excellent strides during the last quarter despite COVID-19 issues relating to its progress with regard to the development of Android for Motif Micro (MM) as part of the new generation MM app.
These strides include the blossoming of its focus on the China market.
Three-year contract could open up pharma market
YPB China has signed a three-year contract to supply Suzhou-Haishun Packaging Material Co. Ltd with YPB's proven T2 tracer-scanner authentication solution.
In a unique product innovation, Suzhou-Haishun will incorporate YPB tracer into an advanced foil application for a pharmaceutical customer in China with a YPB T2 scanner used to confirm product authenticity through the supply chain.
YPB will supply its proprietary tracer and scanners with minimum annual take or pay conditions, and with additional incentives for increased volume.
Suzhou-Haishun will promote the brand and consumer protection benefits of YPB's solutions more broadly to its customers, and management anticipates growth beyond the contracted minimum value over time.
Suzhou-Haishun Group is a prominent, large pharmaceutical packaging and flexible packaging material (laminated foil and end products) manufacturer in China, producing cold-forming foils, tropical blister foils, suppository films plus lid stock of all types for pharmaceutical, cosmetic and food applications.
The group has a portfolio of major clients domestically and globally and is certified by the US FDA and DMF (Drug Master File).
The contract has a minimum total contract value of A$75,000. Further information about the contracts can be read in YPBs ASX release and on the YPB website.
Beijing Haihui Printing also on board
A second three-year supply contract has been signed with Beijing Haihui Printing Co. Ltd which will integrate YPB's product authentication tracer and scanner technology into anti-counterfeiting label printing for its customers.
Haihui is a well-established printing company that has been operating in China for over 20 years delivering integrated planning, design, production, printing and packaging.
The group specialises in the technical research and development, design and printing services of self-adhesive label identification, anti-counterfeiting label identification and various composite label identification.
Haihui provides labelling services for nearly 100 customers across a diverse range of sectors, and its customers include Nippon Coatings, CQC, Sinopec, ZFT, Duoduo Pharmaceutical, Tsinghua Unigroup, Sony Ericsson and French Andros.
Revenues will be based on purchase orders.
Commenting on the significance of these developments, particularly in light of the company's revised sales strategy in China, YPB chief executive John Houston, “Securing two new, high quality China channel partners in new end-customer segments that are immediately revenue generating and with the sales process occurring through the difficulties of COVID-19 reflects the increasing effectiveness of our revised China sales strategy.
“Over the past ten months, YPB China has developed new channel partnerships in a number of large and lucrative sectors.
“We are now better at demonstrating the value, relevance and simplicity of our forensic tracer-scanner solution.
“The fact that major intermediaries are staking their own reputations by offering YPB's solutions to secure product authenticity for their customers' products is proving that there is indeed a significant market for high quality anti-counterfeit solutions.
“We've always had great technology, and after years of toiling we are now creating an effective sales machine.
Indeed, YPB is steadily building a base of longer-term contracts and with strong client management the group can generate repeat orders and recurring revenues.
Despite market conditions YPB's China operations have continued to adapt and improve by better contract management and increasing the incidence of “take or pay” provisions.
The potential to generate additional revenue streams in China is enormous, and YPB's growing suite of channel partners provides leveraged market access to those very high volumes.
Sound channel management is expected to result in revenue growth and ultimately a profitable China business over time.