Company Overview: Baby Bunting Group Limited (ASX: BBN) offers one-stop-baby shop operates into speciality baby goods retailing. It mainly caters parents of newborn to children three years of age. The company was listed on ASX on 14 October 2015.

BBN Details

Half-Yearly Results 2022: Despite of supply chain constraints faced, the company reflected uplift in its financials for the period ending 26^th December 2021, as shown below:

Key Metrics Homes’ Information (Source: Analysis by Kalkine Group)

Top 10 Shareholders: The top ten shareholders together form around 39.73% of the total shareholding. Recently, Norges Bank also ceased to be company’s substantial shareholder. Australian Super and Bennelong Australian Equity Partners Pty. Ltd. are holding a maximum stake in the company at ~13.37% and ~10.36%, respectively, as also highlighted in the chart below:

Source: Analysis by Kalkine Group

Key Metrics: BBN’s cash cycle days slightly increased in 1HFY22 and cash balance at the end of 26^th December 2021 remained decent as shown below:  

Liquidity Profile with Cash Cycle Days (Source: Analysis by Kalkine Group)

Key Risks:

• COVID-19 and Omicron Variant Risks: Due to COVID-19 and the new variant, the company could be affected by the lockdown regulations and restrictions.
• Inventory Management Risks: The business is inventory intensive and susceptible to the risks associated.
• Supply Chain Risks: Considering the market volatility, its sales are dependent on the external demand of the products and its supply.

Outlook:

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation (Illustrative)

Stock Recommendation:

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

BBN Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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