One stock that performed well and one that underperformed on ASX
Takeover activity in the sector: Bellamy’s Australia Limited (ASX: BAL) stock rose over 7.48% on February 06, 2017 which may be due to investors charging back into the stock. This might be influenced from the takeover activity in the sector wherein the leading U.S. baby formula business, Mead Johnson, has received a takeover offer at about 30% premium to the market valuation from Reckitt Benckiser. The activity seems to be boosted by the growing Chinese demand while the growth prospects are expected from rising birth rates as the one-child policy has now been ended. Moreover, BAL’s peer, a2 Milk Company Ltd, had also reported for phenomenal sales growth. BAL in the 1H 2017 expects the sales to be in the range of $115m to $120m and the FY17 revenue is expected to be in the range of $220m to $240m. BAL’s profit after tax in 1H17 is expected to be between 6% and 9% of revenue, reducing to 4% to 6% in 2H17 owing to impact from lower sales volumes, shortfall payments, interest expense on borrowings, etc.
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