Bellamy’s shares climb out of a hole with business as usual in China

A wrestling competition in milk and tofu at Qingyuan, Guangdong Province of China. ChinaFotoPress/ChinaFotoPress via Getty Images

Shares in Bellamy’s have recovered some lost ground after the infant formula maker said its booming business in China shows no sign of stopping despite changes to local regulations.

The share prices of Australian companies with products sold in China via online platforms have been hammered since announcements outlining additional taxes for goods bought by Chinese overseas.

Vitamin maker Blackmores has seen its shares hit $165.81 today, down from $204 last week, despite protests that the changes haven’t affected its business.

Last week the Chinese government issued a new tax policy which included a list of products which would be allowed to enter the country’s free trade zones. And the Ministry of Finance in China provided guidance on infant formula registrations.

Demand has been so strong for clean and safe baby formula from Australia that the makers have had to take steps to fight profiteering, where supermarket shelves are stripped of formula, repackaged and sold in China at highly inflated prices online.

Bellamy’s says the rule changes only confirm that it will continue to operate in China as it has been. From January 2018, Bellamy’s formula products will need to be registered with China Food and Drug Administration.

Today Bellamy’s shares were up more than 5% to $9.85.

“We have not seen any change in demand for clean, pure, organic Australian made infant formula in China,” says CEO Laura McBain.

“With Bellamy’s infant formula and manufacturing facilities already registered in China, we believe we are well placed to transition to the new requirements once they are known.

“Bellamy’s has been successfully operating in China for over six years. Bellamy’s has a strong bricks and mortar business in China selling the company’s GB compliant formula.”

McBain says Bellamy’s has grown strongly in China also due to the success of an ecommerce strategy.

Bellamy’s online flagship store on Tmall is one of the top 15 brands for infant formula.

“Our growth has been strong because we live and breathe by our values; that all children deserve the purest start to life,” McBain says.

The company in February posted an 83% rise in first half revenue to $105.1 million. Net profit for the six months was up a staggering 325% to $13.7 million.