Must be Bega's turn to fly, page-3

China demand helps fuel rush for dairy stocks

• THE AUSTRALIAN
• DECEMBER 30, 2015 11:58AM

'Shares in dairy processor Bega Cheese are on the tear again today, surging a further 72c or 10 per cent, taking the two-day gain to 25 per cent and a record high of $8 a share.

While Bega (BGA) has not made a market disclosure, the surge is likely the result of the halo effect of the runaway performance of Bellamy’s and Blackmores, on the back of strong Chinese demand for their infant and nutraceutical products.
A dairy source said investors appeared to have woken up to the potential of a previously-inked supply link between Bega and Blackmores (BKL), the health products firm.
On October 29 the duo announced an equal partnership to develop a range of nutritional products, including high quality infant formula, through Bega’s subsidiary Tatura.
Blackmores already has a huge distribution presence in Asia across 25,000 chemists.
“You see 60 Blackmores products on a big long wall and it’s easy for them to say here’s another vitamin E or infant formula product,’’ the source said.
Investors have also rushed into dairy farm consolidator Australian Dairy Farms (AHF) which yesterday announced an $11m deal to buy Victorian processor Camperdown Dairy Company from Aussie Farmers Direct.
This creates the country’s only vertically-integrated owner of both farms and processing facilities.
The stock has gained 230 per cent over two days, ascribing a market valuation of $76m.
While Australian Dairy Farms is licensed to sell fresh milk to China, its shorter-term prospects lie with a white-label contract with Woolworths and developing its own brands for the domestic market.
While highly illiquid, shares in the Saputo-controlled Warnambool Cheese & Butter (WCB) have firmed since mid December.
Units in Murray Goulburn’s listed vehicle, the MG Trust (MGC), have also surged during that period to record highs.
Bellamy’s (BAL) shares gained a further 40c to $15.88 a share, while Blackmores shares eased 61c to $215.10 apiece.'

http://www.theaustralian.com.au/bus...s/news-story/11b51bf8225b58ff906c9d203ccd0fa3