James Dunn
Tuesday, August 28, 2018 Bellamy’s Australia (BAL) The market will be keenly interested in Bellamy’s forward guidance and an update on its application to the China Food & Drug Administration (CFDA) to sell its reformulated product in China. There is some nervousness that Bellamy’s may find this delayed, caught up in tensions between the governments of Australia and China. It’s possible that the Huawei ban recently announced by the Australian government could be a complication. The company has deferred a major upgrade of its Camperdown plant, pending the outcome of its CFDA licence application.
In January, infant formula maker Bellamy’s Australia lifted its full-year profit guidance on the back of better-than-expected sales in China during the first half. Bellamy's lifted its revenue growth target from between 15%–20%, to between 30%–35%. The company said its earnings (EBITDA) margin would lift from between 17%–20% to a higher range of 20%–23%. In February, it reaffirmed that guidance.
From that, analysts have extrapolated to a consensus estimate, on FN Arena’s collation, that has Bellamy’s earning 37.9 cents a share in FY18, versus a loss of 0.8 cents in FY17, and paying a dividend of 1.5 cents, versus no dividend in FY17; while Thomson Reuters is looking for EPS of 39 cents for FY18, and a dividend of 1.5 cents.
Analysts see Bellamy’s as offering plenty of value at present. The current share price is $9.86, but FN Arena shows an analysts’ consensus price target of $16.35, and Thomson Reuters’ price target collation is even more optimistic, showing a consensus target of $17.90.
BAL Price at posting:
$11.17 Sentiment: Buy Disclosure: Held
