Is it time for renewed faith in the sustainability of Bellamy's growth?

Following its 219% run up over the past year, the market has rightfully been questioning whether there's anything else on horizon for infant formula marketer Bellamy's Australia Ltd (ASX: BAL) that hasn't already found its way into the current price.

Without question, Bellamy's has one of the best quality balance sheets of any stock on the ASX, with a long-term funding surplus, and return on equity (ROE) and earnings per share (EPS) growth that's forecast to continue outperforming.

Exceptional EPS over the last five years is expected to grow from $0.38 in 2016 to $0.66 and $0.85 in 2017 and 2018 respectively, while ROE is expected to remain above 50%.

The stock is currently trading at a 30%-plus discount to its price peak of $16.50 late-December 2015, which puts its current premium to intrinsic value (IV) at a very modest 13%.

There's an expected 43.67% change in Bellamy's IV over the next two years.

For a growth stock, that looks encouraging, but Bellamy's has a (relatively) short history as a listed stock, and despite its market cap (now $1 billion-plus) there are ironically less than five analysts providing forecasts on the stock.

Twelve month target prices on Bellamy's range from a low of $9.50 to $17.80, but based on full year 2017 consensus forecasts, the stock is trading on a price to earnings (P/E) of 16.70 times, which signals degrees of uncertainty about the sustainability of Bellamy's earnings beyond 2018.

The big issue for investors is less about whether Bellamy's can outperform the market – that's a given – and more about its ability to maintain recent levels of growth, and the downside risk to the share price if it can't.

Much of that concern comes from renewed questioning over the real magnitude of China's consumption boom, especially given recent move by China to restrict the grey market for imports.

Clearly, the table-stakes for investors wanting to enter Bellamy's at current levels are considerably different than they were for early-stage investors who have basked in the stock's runway success.

It's also important to note that what underscored Bellamy's strong sales and earnings growth during financial year 2015 was Chinese parents' fear of buying locally-produced foods for their children given the health issues associated with some of those products in the past.

The significance of new regulations, which will make it more difficult for foreign businesses to sell their infant formula into the Chinese market, shouldn't be lost on anyone.

New regulations have only fuelled concerns over Bellamy's long-term growth prospects and this has been reflected in more recent share price volatility. However, assuming Bellamy's does get the necessary approvals, new regulations could be a net-positive by making it harder for new entrants to come to market.

Meantime, Bellamy's has confirmed that it is still on track to generate between $240 million and $260 million in revenue for financial year 2016, with margins consistent  with those achieved in the first-half of the year.

A new supply agreement with Fonterra means Bellamy's will be able to substantially lift volumes from the first quarter of the 2017 financial year (FY17) – to meet growing demand.

The stock's 33.86% rise since November 3, 2015 suggests that the market is has little doubt it will satisfy new regulations in China, and   the seven months technical chart setup indicates low risk for stock going forward.

But investors buying in at current levels need to take a longer-term view on the stock, and before doing so should get as much research as possible on where future growth is coming from.

Given the limited coverage by analysts, it's important to watch closely what's in store for Bellamy's in China, how it fares with a new regulations environment, any movements by major shareholders, and any moves by fund managers to significantly reduce or increase their holdings.