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Bellamy's shares are being hammered despite stellar infant formula sales in China

Kevin Frayer/Getty Images

Shares in Bellamy’s, the Tasmanian organic infant formula producer the Chinese market can’t get enough of, are tanking.

A short time ago, they were down 12.7% to $12.15. They are, however, still way ahead of the $2.13 price of 12 months ago.

The company today posted an 83% rise in first half revenue to $105.1 million and there’s more growth on the way. Net profit for the six months was up a staggering 325% to $13.7 million.

The infant formula market in China is booming as parents there look to Australia to supply a clean and safe product. However, some analysts are saying that the market is being caught in the slowing economy in China, restricting sales for the Australian product.

However, Australian makers are increasing their production, trying to keep up with demand.

Blackmores, the vitamin maker, last month launched its own range of infant formula in a joint venture with Bega Cheese.

And infant formula sales at a2 Milk Company are also booming. Profits for the half-year are up almost 800% to $NZ10.1 million as sales of a2 Platinum formula exceed expectations.

So strong is demand that the formula makes have had to take steps to fight profiteering, where supermarket shelves are stripped of formula, repackaged and sold at highly inflated prices online in China.

Bellamy’s CEO Laura McBain says there’s increased scrutiny of the infant formula market in Australia because of restricted availability of certain brands in stores.

“In response, Bellamy’s ensured that the company’s online stores could supply customers, particularly within Australia.”

Bellamy’s has also contracted to get more formula made. The benefit of this will be felt early in the 2017 financial year.

The company expects revenue in the second half of the financial year to be stronger than the first. Revenue for the 2016 full financial year is forecast to be between $240 million and $260 million.

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