It still needed final clearance and the approvals did not cover formula made at other facilities, the company added.
“This is the first step in recommencing sales in the China offline channel and executing a multi-tier product strategy,” chief executive Andrew Cohen said.
“It will position us well to compete in the critical battleground of tier three and four cities.”
Bellamy’s shares rose nearly a quarter in afternoon trading before closing up 15.59 per cent at $11.12, their biggest gain in 15 months, while the broader Australian market rose 1 per cent. The stock is still down 51 per cent from a year earlier.
The approval would result in a 10 per cent lift in production for Bellamy’s under its deal with ViPlus which will be wholly targeted at the Chinese market.
The company is still awaiting SAMR approval for the much larger facility at Camperdown in Victoria, which it bought for $27.5 million in 2017.
This is a partial win but it’s not there yet.
Blue Ocean Equities strategist Mathan Somasundaram
“This is a partial win but it’s not there yet,” said Mathan Somasundaram, a market portfolio strategist at Blue Ocean Equities.
Bellamy’s regards China as its top growth market, which has relied on Chinese shoppers in Australia who re-sell products at home for most of its sales. The SAMR approval will give Bellamy’s a more direct route to the market.
In February, it said its half-year profit fell almost two-thirds as it was hit by delays securing regulatory approvals in China and falling domestic sales.
ViPlus Dairy chief executive Jon McNaught said the company’s supply deal with Bellamy’s would boost production at its Gippsland plant for the next three years and allow for new investment.
“This supply partnership with Bellamy’s… will further underpin the exciting expansion plans the company is embarking on,” he said.
Reuters with staff reporter