Blackmores (BKL) – A balanced view on media speculation

At this stage, our view is that preference for food security by the Chinese consumer outweighs the sensitivity of the demand pipeline to these incremental price changes in the products. Therefore, we believe that the medium-term demand pipeline will not be materially impacted. It would appear that the recent price moves are more of a symptom of speculation than fact at this stage. However, this reiterates the regulatory risk which exists in this market and should remain an ongoing consideration for investors. Lincoln Indicators continue to cover BKL as a Star Growth Stock with a valuation of $188.73.

Bellamy’s Australia Limited (BAL), who are also exposed strongly to the Chinese food security thematic via their organic infant formula product, calmed the nerves of the market Thursday with a confirmation that their products will continue to be allowed to enter China via the country’s free trade zones.

As BAL’s infant formula is currently registered with the Certification and Accreditation Administration in China (CNCA) that is sold via the Central Board of Excise and Customs (CBEC) channel (cross-border transactions), per guidance issued on 13 April 2016, it will not have to obtain CFDA formulation registration until 1 January 2018.

Given BAL’s current registration with the relevant regulatory bodies in China and their history of operations there, management expects to be able to navigate the accreditation process prior to 2018 and do not foresee any disruption to their access to the Chinese market.

Lincoln Indicators continue to cover BAL as a Star Growth Stock with a valuation of $15.85.

Original article from Lincoln Indicators blog:  (VIEW LINK)

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