The Bellamy’s Australia Ltd (ASX: BAL) share price is up 24% to $11.93 this lunchtime after the organic baby formula producer announced that last night the Chinese regulator, “SAMR released a series of approvals, three of which relate to the approval of a new Bellamy’s branded formulation-series to be produced at the ViPlus Dairy (ViPlus) facility in Toora, Victoria.” However, Bellamy’s also cautioned: “It is important to note that this is a separate application to Bellamy’s existing SAMR application to produce its organic series at Camperdown Powder, which remains in progress.”
So even though Bellamy’s is yet to receive the key approval for products manufactured at its Camperdown factory this news seems to be a step in the right direction and auspicious for its chances of receiving the full approval needed to sell its products in the Chinese market. As at April 16 Bellamy’s had 11.7% of its outstanding shares sold short by speculators betting on the share price falling perhaps as they believe the company will produce bad news related to unpredictable Chinese sales and regulation.
For now though it looks like the opposite could be true to suggest short sellers are playing a high stakes game, with the potential for massive losses vis-a-vis today’s 24% share price rise. Elsewhere, another baby-formula business in a2 Milk Company Ltd (ASX: A2M) has received its required Chinese regulatory approval (notably its supplier Synlait Milk Company Ltd (ASX: SM1) is largely Chinese owned) and is printing new record highs again today.