Shares in Chinese baby-milk maker Beingmate Baby & Child have rallied sharply since Fonterra entered an alliance with the firm, which includes the Kiwi dairy giant buying a 20 per cent stake in its new partner.

The Shenzhen-listed manufacturer's stock last changed hands at 14.36 yuan before trading was halted on June 18, when the company is understood to have begun talks with Fonterra.

The deal was announced on August 27 and Beingmate shares surged 25 per cent to close at a high of 17.95 yuan on September 11, two days after the trading halt ended, reversing a slump in the stock that took place in the nine weeks before trading was halted.

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Beingmate shares opened at 16.98 yuan yesterday.

Fonterra, which reports its full-year financial result today, has said it would spend more than $600 million purchasing a 20 per cent stake in Beingmate.

The company said it would buy the stake at 18 yuan per Beingmate share - a 25 per cent premium to the stock's last traded price before the trading halt - through a partial tender offer that will reportedly take six to eight months.

Fonterra hopes the partnership will help its Anmum infant formula brand, which was launched in China last year, gain traction in the Asian superpower's booming baby-milk market, which the company has projected to almost double in size, to $33 billion, by 2017.

The New Zealand dairy co-operative has said the deal would provide access to about 80,000 retail outlets across the world's second-biggest economy and could lift Anmum's Chinese sales to $100 million by 2018.

The partnership is likely to give Beingmate - which has a roughly 10 per cent share of China's infant formula market - enhanced access to raw dairy ingredients from this part of the world.

And the two companies are planning to establish a joint venture that will purchase Fonterra's Darnum manufacturing plant in Australia.

Beingmate's lacklustre recent financial performance is likely to have contributed to the slump in its share price earlier this year.

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Revenue fell 25 per cent during the first six months of 2014 to 2.4 billion yuan, while profit plunged by more than 70 per cent, according to a Chinese news report translated for the Business Herald.

Another Chinese press report said Beingmate's "traditional distribution model" was being disrupted by rapid changes in China's infant formula trade.

The news report did not specify the changes, but Chinese baby formula sales are rapidly moving online and to specialist maternity stores.

A recent report by Macquarie Research said infant formula sales at supermarkets in China fell last year for the first time, dropping 4 per cent year-on-year.

Manufacturers with access to e-commerce channels and maternity shops would be the beneficiaries of the changes, the report said.

Fonterra's result announcement today is expected to include an update on the Beingmate partnership.