Shares in a2-only-protein infant formula and supermarket milk business the a2 Milk Company Ltd (Australia) (ASX: A2M) surged 6.5% today after rival organic baby formula business Bellamy's Australia Ltd (ASX: BAL) released a profit growth upgrade to the market late last night.
As a result Bellamy's shares surged 25% to $13.70 today in a return to prices last seen in 2016 just before the Tasmania-based business released a triple profit downgrade soon after substantial share selling by some of its former senior management.
Bellamy's now expects revenue growth of 30%-35% in fiscal 2018 thanks to rising sales in China, with EBITDA margins also revised higher to 20% to 23%.
The a2 Milk Company has a less volatile track record than Bellamy's and its sales growth has been even more spectacular largely thanks to rising demand from China and across Australia.
For the 4 months to October 2018 a2 Milk grew net profit 138% and is expecting strong full year profit growth. It will hand in its half-year results next month.
