Financial experts are warning that the company was at one point trading on a multiple of 33 times its earnings and warned that a deteriorating market, most notably in China, was showing little signs of improvement.
Earlier this week we reported how a major shareholder demanded the removal of four of the company’s board directors.
In a notice sent to Bellamy’s board, Black Prince Private Foundation, which holds a 14.48 % share of the company, sought to remove independent, non-executive directors Patria Mann, Launa Inman, Michael Wadley, and Charles Sitch, and to replace them with Jan Cameron, Chan Wai-Chan, Vaughan Webber, and Rodd Peters, who is also an authorised representative of Black Prince.
It came after last month’s dropping of share prices, and the company’s voluntary suspension from trading its shares on the Australian Securities Exchange (ASX), both largely prompted by China’s new infant formula regulations.
On Wednesday the company removed McBain and replaced her on an interim basis by Andrew Cohen. A root-and-branch review of all senior executive positions is now being undertaken.
The ongoing unrest has now prompted two brokerages, CSLA and Ord Minnett to recommend investors sell their shares.
Bellamy’s suspended it shares on December 12 at A$6.68. Trading resumed on Wednesday with a 19.9% fall. By the close of trading on Thursday, they had fallen a further 17.7% to $4.40, and by Friday afternoon they were struggling to stay above the $4 mark. They were trading at $4.16 by Monday lunchtime.
By contrast, they stood at $14.99 in August 2016.
The suspension came about after more than $500m was slashed from its market value on December 2 after it revealed the impact of the China downturn on sales and profits.
A raft of infant formula firms have reported sales slumps and profit warnings in the wake of new regulations in China.
Despite the short-term impact, most industry analysts expect the measures will boost international firms in the long-run as they will prevent local outfits from flooding the markets with multiple brands, many of which are suspected of containing the same product.