Chinese demand generating off the chart profits for Bellamy’s (ASX:BAL)

One clear outperformer has been Bellamy’s Australia Limited (ASX: BAL). For those unaware, Bellamy’s is a Tasmanian firm producing organic baby milk powder and formula. Over the last year alone its share price has risen almost fivefold and profits sevenfold – so what’s driving this? It turns out that Bellamy’s has had extraordinary success with Chinese consumers. Chinese Australians are paying retail prices to buy entire supermarket shelves of stock and exporting to China, where the same product sells for many multiples. The profits generated from this trend have been off the charts. Bellamy’s return on equity for example rose from circa 8 per cent in the 2014 financial year to circa 19 per cent in the 2015 financial year. Given its low debt levels, these statistics would likely make it a prospect for further investigation by any investor with spare cash burning a hole in their pocket. What a value investor might first wonder however is how sustainable is this trend, after all, surely barriers to entry for the baby formula market would be fairly low? (VIEW LINK)