At time of writing, shares of Bellamy’s Australia Ltd [ASX:BAL] are down 8.1% today, trading at $7.33 apiece.
Below you can see the steep decline of the stock since March:
Today’s decline means that Bellamy’s is down 68% from its 52-week high of $23.07.
Bellamy’s is Tasmanian-owned company that offers a range of organic food and formula products for babies and toddlers.
Why the sharp fall?
While Bellamy’s share price has been in decline since March, today’s drop is largely down to two factors.
The first factor is a 10–15% expected decline in revenue of its Australian label products in the first half of next year.
The second factor is that, as stated in its AGM presentation, it has ‘no further update on the timing of approval,’ regarding its SAMR registration in China.
SAMR is the State Administration for Market Regulation which controls intellectual property rights, drug safety supervision, and the issuance of business licenses.
Taken together, the uncertainty about marketing its products in China combined with a slowdown in revenue in the domestic market appear to be impacting investor outlook.
Belinda Moore, an analyst at Morgans Financial, says that ‘the underlying business is going backwards.’
Where does Bellamy’s go from here?
Although Bellamy’s has taken substantial hits this year, there may still be some room for a turnaround to occur.
The company is in the process of releasing a brand upgrade and its balance sheet includes $88 million in cash and no debt.
It has also invested $39 million in its supply chain over the 2018 financial year.
However, going forward it faces difficulties such as lower birthrates in China, fierce competition and continued regulatory delays.
For Money Morning
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