Bellamy Share Price Falls (Again) by 6.35%

Shares of Bellamy’s Australia Ltd [ASX:BAL] have fallen sharply in value by 6.35% today, sitting at $16.82 at time of writing.

Bellamy’s, an Australian owned producer of organic baby formula and other dairy products, has benefited recently from the rising popularity of exporting baby formula to China.

What’s behind Bellamy’s rise and fall?

As one of Australia’s premier suppliers of baby formula to Asian markets, Bellamy’s (along with The a2 Milk Company) has enjoyed a recent upswing in its share value due to China’s voracious need for imported baby formula.

This desire for quality formula is driven largely by China’s own food safety scandals and limited choices. China — and much of the global market — view western food as infinitely safer and better value.

However, Bellamy’s has had a complicated relationship with the Chinese market. Tougher regulations on importation have led to lower-than-expected sales in the region. The effects of these regulations were keenly felt in 2016.

These regulations have resulted in high controversy, with grey-market groups buying up the formula in Australia to sell back at home at higher margins.

The company has also received fines from ASIC in late 2017 for breaching its continuous disclosure obligations to shareholders. Bellamy’s denied the allegations but paid $66,000 to avoid further costs.

This, after a board restructure, a CEO sacking and a near bankruptcy, had a profound effect on investor sentiment.

What’s next for Bellamy’s Australia?

Despite Bellamy’s cycle of rising and declining share prices, the company is continuing to expand its organic milk supply with further development and production in Tasmania. This could restore faith for shareholders in the long run.

Of more interest to shareholders will be the continuing regulations in the Asian region, and whether Bellamy’s can maintain Chinese import approval — which will undoubtedly affect the company’s profit forecast.

Regards,

Ryan Dinse,
For Markets & Money

PS: Exporters like Bellamy’s are strongly affected by the value of the Aussie dollar. One finance expert is forecasting a serious crash in the value of our currency. Find out why, and read his survival tips, in his free research report ‘Aussie Dollar Crash’.


Ryan Dinse is an analyst at Markets and Money. He has two decades of experience in financial planning, equity analysis and credit markets. Ryan combines fundamental, technical and economic analysis to identify and invest in good ideas at the appropriate stage of the economic cycle. He has a strong interest in technology, economic history and disruptive business models. His focus at the moment is as lead analyst on two of our most recent and innovative investor services, Crash Market Investor and Sam Volkering’s Secret Crypto Network. He will write about the exciting opportunities for investors to benefit from significant changes in world markets. He is a member of Fintech Australia, a former member of the Digital Currency Council, and is a fully accredited financial adviser.


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