Beyond Meat stock is popping 7% on Tuesday on news that the plant-based meat alternative maker will have its own production facility in China, which would further expand its reach in a region hungry for protein.
Beyond Meat (ticker: BYND) said it had signed a deal with the Jiaxing Economic & Technological Development Zone “to design and develop manufacturing facilities...including a state-of-the-art production facility to manufacture plant-based meat products.” The factory will make Beyond Meat’s faux beef, pork, and chicken products for the brand in China.
The agreement marks the first time a pure-play international faux-meat maker will bring its own major production facility into China. While initial production will begin in the coming months, it won’t be running at full scale until 2021.
The move shouldn’t surprise investors, as Beyond Meat has been making numerous inroads in the nation. The company entered the Chinese market with a partnership with Starbucks (SBUX) earlier this year, and has been expanding its reach ever since, including deals with other fast-food chains and a deal to distribute its products in Alibaba Group Holding’s (BABA) retail stores in China.
Investors have cheered the news, given the huge size of China’s market, which could help the stock live up to some of the high expectations surrounding it.
Robert W. Baird’s Ben Kallo reiterated an Outperform rating and $160 price target on Beyond Meat Tuesday, writing that the new production facility “increases access to key, growing protein markets.” China alone will account for an estimated 35% of global protein market value by 2025, and the Beyond Meat factory will not only give the company a competitive edge and market access to China, but to the greater Southeast Asia region as a whole.
“Particularly given recent disruptions from African Swine Fever, we think there is a significant opportunity for plant-based protein in the region,” he wrote.
Kallo also thinks that the facility could lead to more opportunities to partner with restaurants, much like it has done with Starbucks and Yum China Holdings (YUMC).
Beyond is up 7.1%, at $134.72, in recent trading, and is up 78% in 2020. The S&P 500 is down 1.6% in recent trading.
Write to Teresa Rivas at teresa.rivas@barrons.com
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Beyond Meat’s New China Factory Could Help the Stock Live Up to Its Hype - Barron's
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