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Why Wattle Health Australia Ltd (ASX:WHA) shares stormed higher today

One of the best performers on the local market this morning has been the Wattle Health Australia Ltd (ASX: WHA) share price.

At one stage the Wattle Health share price was up as much as 18% at $1.23 before giving back a good portion of these gains.

At the time of writing the health foods and infant formula company’s shares are up 9% to $1.14.

Why are its shares storming higher today?

This morning the company advised that it has received approval for general trade in China for its 1 kilogram retail bag of Pure Australian Grass Fed Milk Powder product.

However, it is worth noting that this is not the much coveted CFDA accreditation that the company is seeking for its infant formula products.

Like rival Bellamy’s Australia Ltd (ASX: BAL), Wattle Health must continue to wait for this approval and cannot sell its infant formula products directly into China until it is granted.

Management does still believe that this development will be a big positive for the company. As well as generating additional sales, it expects this to increase its brand awareness in the market, helping to lift the sales of its infant formula product once they are accredited.

Should you invest?

I certainly wouldn’t invest on the back of this announcement, nor would I necessarily be in a rush to invest if it receives its CFDA accreditation.

I would only invest when its sales in the massive market start to grow meaningfully. At present I’ve yet to see any real signs that Chinese consumers are interested in its products ahead of the likes of A2 Milk Company Ltd (ASX: A2M), Bellamy’s, and Bubs Australia Ltd (ASX: BUB).

So for now, I would suggest that investors keep their powder dry and restrict Wattle Health to just their watchlist.

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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 Scott Phillips.

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