Bellamy’s Australia Ltd gets one of its Chinese export licenses suspended

Management has placed Bellamy’s Australia Ltd (ASX: BAL) shares into another trading halt this morning, after the company revealed that its manufacturing facility had lost its CNCA license, a key requirement for the export of baby formula into China.

Following a need to establish a secure source of supply, Bellamy’s recently raised capital to acquire Camperdown Powder Pty Ltd, a CNCA-licensed manufacturer, with a view to ensuring the ability to sell its products in China.

However, the company has been struck another blow this morning, after Bellamy’s requested a trading halt “to allow the Company to determine the reasons and impact of the Camperdown’s suspension of its CNCA license by the China authorities overnight.”

The suspension will come as a surprise to investors, especially considering the Camperdown Powder Pty Ltd was only granted registration as recently as 24 February 2017, according to some media sources on the web. Given that Bellamy’s is undergoing a lot of changes at the moment, with a new CEO, recent acquisition, and new manufacturing facility, today’s trading halt comes at precisely the wrong time for the business.

Fortunately Camperdown is not Bellamy’s only supplier, with the company also sourcing product from Bega Cheese Ltd (ASX: BGA) and Fonterra  (ASX: FSF).

Bellamy’s expects its shares to recommence trade after the release of an announcement from the company, or by Tuesday 11 July, whichever comes first. We’ll update you when that happens.

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Motley Fool contributor Sean O'Neill has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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