One of the best performers on the market today has been the Bellamy's Australia Ltd (ASX: BAL) share price.
In late morning trade the infant formula company's shares are up almost 6% to $11.87.
Why are they higher?
With no news out of the company or broker notes to speak of, today's gain is likely to be related to the positive trading update provided by a2 Milk Company Ltd (Australia) (ASX: A2M) at its annual general meeting this morning.
With demand for a2 Milk's infant formula in China continuing to grow strongly, investors appear to believe that Bellamy's is also in a position to profit.
In fact, it isn't just Bellamy's, other infant formula companies have followed suit. The Bubs Australia Ltd (ASX: BUB) share price is also up almost 5% today following a2 Milk's update.
Whilst I do not doubt that there is a huge market opportunity for these companies in China, at present a2 Milk is the only listed Australian company that has the accreditation required to continue selling in the market from January 1 when regulations change.
I believe this gives a2 Milk and other accredited international peers such as Mead Johnson, Abbott, Wyeth, FrieslandCampina, and Nestle a key competitive advantage.
In light of this, considering the sky high premium that both Bellamy's and Bubs' shares trade at, I would suggest investors hold off an investment until they provide sales data from their respective Chinese activities next year.
