Why Wattle Health Australia Ltd shares are in a trading halt

The Wattle Health Australia Ltd (ASX: WHA) share price won’t be going anywhere on Friday after the baby food and infant formula company requested that its shares be placed in a trading halt.

Wattle Health’s shares will remain in a trading halt until the sooner of the market open on Tuesday January 16 or the release of an announcement.

Why are its shares in a trading halt?

According to the request, Wattle Health’s shares are in a trading halt pending the release of a material announcement in relation to a new product accreditation arrangement.

The only product accreditation that the company is seeking, that I am aware of, is the CFDA accreditation for its infant formula products.

Following the introduction of strict new regulations on January 1, CFDA accreditation is now required in order to sell infant formula products in the lucrative Chinese market.

A2 Milk Company Ltd (ASX: A2M) is the only other listed Australian company with this accreditation at present. Rival Bellamy’s Australia Ltd (ASX: BAL) is expected to receive its accreditation later this year.

Should you invest in Wattle Health?

I think Wattle Health is a very exciting company and well worth keeping a close eye on. If this announcement is in fact the successful receipt of its CFDA accreditation then I expect its shares could rocket when they come out of their trading halt.

However, accreditation merely allows the products to be sold in China, it doesn’t necessarily guarantee sales.

In light of this, I plan to hold out to see how its products resonate with Chinese consumers and whether its sales growth justifies the premium its shares are trading at.

In the meantime I think these high-flying blue chip shares could provide strong returns for investors this year.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. 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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