The Bellamy's Australia Ltd (ASX: BAL) share price has climbed 90% in the past 3 months, from a low of $3.81 to today's price of $7.24:
Investors have latched on to the idea that the company's woes are repairable, despite the recent dilution of the capital raising and the forecasts for earnings before interest and tax (EBIT) loss of between $9 million and $14 million in the second half of 2017.
Excluding one-off costs, the underlying second half result is expected to be positive $16.5 million to $20.5 million.
A number of positive events have occurred since the company hit choppy waters in January and subsequently was unable to secure licensing to sell its product in China. Management recently purchased an accredited production facility in Victoria and renegotiated its agreement with Synlait. $60 million in new capital was also raised to fund the acquisition and other necessary expenses.
Shares in competitor A2 Milk Company Ltd (Australia) (ASX: A2M) have also been on a cracking run, up 61% in the past 3 months as the company continues to grow sales. It remains to be seen what might happen if the companies move into more direct competition.
Still, with the recent hard work from management to stabilise the ship, it could be time to reappraise Bellamy's.
