Bellamy's shares surge on profit upgrade and new acquisition

SHARES in Bellamy's Australia Ltd (ASX: BAL) have surged more than 20 per cent in early trade after a robust profit upgrade.

Bellamy's shares were trading at $13.36 at around midday (AEDT) following Monday's closing price of $10.96 per share.

The share price hit an early high this morning at 10.35am (AEDT) at $13.98 per share. 

Bellamy's upgraded FY18 guidance for its core business from 15 to 25 per cent to a revised target of 30 to 35 per cent revenue growth.

The group has also upgraded its anticipated earnings guidance from 17 to 20 per cent to 20 to 23 per cent. This is driven by a combination of cost management and stronger revenue growth.

The company, which develops organic baby formula, food, and snacks, says the upgraded guidance is subject to contingent liabilities. This includes a current class action being brought against the company.

The upgrade is due to seasonal impact of certain events occurring in China which has seen higher winter consumption in China.

Bellamy's also announced it has completed the acquisition of the remaining 10 per cent of its Camperdown plant.

Bellamy's now owns 90 per cent of Camperdown, a licensed powder products blending and canning line in Victoria. The total consideration for 90 per cent of Camperdown was $28.5 million.

The completion of the acquisition means Bellamy's beneficially owns 100 per cent of the shares in Camperdown.

Bellamy's had a particularly rough 2017, thanks to Chinese regulations which significantly delayed the group's expansion into the country.

The company went into a trading halt on 7 July following the surprise suspension of a Chinese regulatory license for its newly acquired canning facility.

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Business News Australia