YPB Group Limited (ASX:YPB) has secured a three-year take-or-pay contract with China’s Zhongneng CIC International Import and Export Trade Co Ltd valued at around A$600,000 for the use of the T2 Tracer-Scanner product.
Zhongneng CIC will deploy the T2 Tracer-Scanner into anti-tamper and anti-counterfeit packaging for its customers in the tobacco, liquor and pharmaceutical industries.
This is an important contract win for the product authentication and consumer engagement solutions provider, and the highest minimum annual value contract secured in China to date.
Other sectors being identified
YPB group chief executive officer John Houston said: “This contract with Zhongneng CIC is a great example of the revenue and customer base we are now building in China – long-term contracts that deliver recurring and predictable revenue streams with large and respected entities that have scope for further growth.
The around A$600,000 of revenue we will book in the first few years is based on YPB’s T2 Tracer-Scanner technology being deployed in three sectors only, and Zhongneng CIC has already identified more sectors and other areas of their business where the technology can be used.
“This is indeed a very high-value customer win.
“We believe that this contract has the potential to grow in value and could lead to other Chinese customers contracting with YPB."
Houston added, "We now have considerable momentum in our new business pipeline in China. We have also made considerable progress with the pending commercial launch of MotifMicro1 and we expect to provide a further update as soon as possible.”
Maximising revenue potential
Under the contract, Zhongneng CIC will pay YPB China around A$20,000 10 days after contract execution, and under the take-or-pay provisions of the contract, it will pay YPB at least around A$200,000 each year.
YPB’s operations in China are performing well and benefiting from a ‘business as usual’ trading environment there.
Business development is active with growing demand for product authentication technologies.
The strategy of developing relationships with government bodies and industry groups is working well and gives YPB access to larger sales teams within reseller organisations.
Leverage and enhanced market access is central to YPB’s strategy to lower the cost base and headcount in China while maximising revenue potential.
Headquartered in Beijing, Zhongneng CIC is a large and diversified company with operations in importing/exporting and trading, energy, tourism, finance, chemicals, media and technology.
It will deploy the T2 Tracer-Scanner technology to its end customers seeking the most advanced anti-counterfeit and anti-tamper packaging solutions.