Wattle Health Australia Ltd’s [ASX:WHA] share price has risen by nearly 20% today, after China gave it the green light for general trade of milk products.
Wattle Health describes its mission as providing ‘high quality, 100% Australian made health and wellness products you can trust through all stages of life.’ It’s certain that we have the trust of the Chinese market, after this morning’s announcement.
Wattle Health have managed to secure regulatory approval to sell one of its products in China. The product in question is a one-kilo retail bag of Pure Australian Grass Fed Milk Powder, a popular type of infant formula.
The share price has levelled out but is still up by 9.09% at time of writing.
Why is the market in a frenzy?
It’s quite clear that this development will be a strong positive on the sales front. Not only will entry into a new market generate additional revenue, but Wattle Health will become more visible as a brand in the highly competitive Chinese market.
In fact, it could potentially become a number one go-to brand for the Chinese. Several marketing reports have long indicated that Chinese consumers perceive Australia as clean and green, with high quality, healthy and authentic products.
And scandals with China’s own infant formula brands in the past will only further push the Chinese market into loyalism towards Australian brands.
However, it’s important to remember this approval still doesn’t amount to the CFDA accreditation that the company longs for. Until that’s been granted, Wattle Health still won’t be able to sell its products directly into China.
Should you invest in Wattle Health?
While the share price is certainly riding at a healthy-looking high, the excitement could be short-lived — particularly if the company has to wade through any sticky spots in getting its CFDA accreditation ticked off.
And though this is positive news, tensions in trade are often only one political faux pas away. It could pay to remain abreast of US-China relations.
Wattle Health seems to have a great product that’s in Chinese demand. But let’s remember that A2 Milk Company Ltd [ASX:A2M], Bellamy’s Australia Ltd[ASX:BAL] and Bubs Australia Ltd [ASX:BUB] are also on the race to win hearts in that market.
Still, there’s some exciting scope for opportunity in the emerging Chinese middle class.
For now, it could be wise to look carefully at each competitor before making any huge investment. You wouldn’t want to miss out.
As seen on Money Morning on 25th July 2018