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Why the Wattle Health Australia Ltd share price is on fire today

Shares in goat-milk-based infant formula producer Wattle Health Australia Ltd (ASX: WHA) jumped 10% today after the business announced a deal that sees it move closer to gaining China Food and Drug Authority (CFDA) approval for its products.

The group has signed a memorandum of understanding with Blend and Pack Pty Ltd which gives Wattle’s infant formula a “brand slot” to be nominated for approval by the CFDA. If accreditation is received it will represent a significant boost to Wattle Health in its ambition to grow sales in the large Chinese market.

According to the company: “It is projected that in 2018 the China market for goats’ based infant formula will be around $1.9 billion an increase of 43% on 2017”.

Wattle Health shares have now rocketed 855% over the past year, although the company made just $84,451 in sales for the quarter ending September 31 2017.

It’s one of a number of infant formula businesses including Blackmores Limited (ASX: BKL), the a2 Milk Company Ltd (ASX: A2M) and Bellamy’s Australia Ltd (ASX: BAL) all hoping to cash in on rising Chinese demand for infant formula.

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Motley Fool contributor Tom Richardson owns shares of A2 Milk and Blackmores Limited. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. 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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