What is making Bellamy’s Australia Ltd.’s Stock Price Soar?
Possible easing in import rules by Chinese regulators drove the stock sentiment: Bellamy’s Australia Ltd (ASX: BAL) stock soared 15.7% on March 21, 2017 partly driven by the speculation on probable easing of import rules by Chinese regulators. In terms of performance, BAL had reported a 47% year on year drop in 1H 17 NPAT to $7.2 million. The result was impacted by higher than expected inventory impairments and restructuring charges that totalled $8.6 million (one-off costs). There was also an impact on the operating cash outflows of $23.7 million owing to the inventory build-up. The group has given an outlook for 2H17 for underlying EBIT of $11 million – $15 million and reported EBIT of $9 million – $13 million (including a further $3.2 million in restructuring charges). On the other hand, China supply chain has been rationalised and the group has identified about $8 million in cost savings while supply agreements have been renegotiated. In the past one year, BAL has also been impacted by a multitude of other factors, such as departure of the CEO and demotion of the CFO. The chairman of the group, Mr Rodd Peters, recently confirmed that he no longer is an authorised representative for Black Prince Private Foundation (a shareholder of BAL).In addition to the changes and other updates at the board level, the group also reported about a further representative proceeding filed in the Federal Court of Australia in Victoria against the group with regards to shares acquired by shareholders between April 2016 and December 2016.
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