Bellamy's Australia - Organic white gold

Bellamy's Australia (BAL) has signed a new manufacturing contract with Fonterra. We view this as a sign of strong trading and that its supply constraints are being dealt with. On average, BAL has implemented price rises of +20% across its infant formula range in Australia. This will have a twofold impact of driving top line growth and margin expansion. Following strong trading and the implementation of large price rises, we have increased our NPAT forecasts for FY16 (26.5%), FY17 (47.9%) and FY18 (50.4%). Our new FY16 NPAT forecast of A$24.5m represents 165% growth on the pcp. We highlight that our forecasts do not include BAL entering new markets in South East Asia, the US, Europe and the Middle East or developing new products outside of the baby category, all of which are targeted by management over the coming years. View further detail on the Morgans blog: (VIEW LINK)