Stocks’ Details

Bubs Australia Limited

Strong Domestic Presence: Bubs Australia Limited (ASX: BUB) is a small-cap company which has the market capitalization of circa $278.15 Mn as of September 28, 2018. The share price edged up 0.794% after the release of FY 2018 results in which the net revenue growth was 330% Y-o-Y to $16.91 million. The company is having a strong domestic presence, and this is evident by the contribution from the Australian region in the gross sales revenues. Of the total gross sales revenues, 84% has been garnered from the domestic markets in FY 2018.  The company’s management believes that in FY 2019 its net revenues would be boosted at least 100% on the back of $17 million sales contract with New Times Asia.  As of now, the company focuses on to expand its Infant formula as this most profitable product line. Hence, we expect that the company has a brighter outlook backed by organic and inorganic growth.


FY 2018 Gross Sales Revenue by Region (Source: Company Reports)

From technical standpoints, the stock momentum is bullish.  While applying 9-day exponential moving average or EMA on the daily chart of Bubs Australia Limited, it was viewed that the company’s stock price is expected to increase moving forward. Hence, we maintain our “Speculative Buy” recommendation on the stock at the current price of A $0.630. 
 

National Veterinary Care Limited

Growth Momentum to be continued: National Veterinary Care Limited (ASX: NVL) ended FY 2018 with total revenues amounting to $84.2 million, implying the Y-o-Y growth of 26%. The company’s management reflected favorable views in regard to the full year results. The company witnessed strong business growth in FY 2018. In the previous 12 months, the company has been making a significant amount of deployments in order to witness the growth momentum considering the long-term time span. The company has targeted inorganic growth in FY 2018 as it has acquired 13 veterinary services businesses. Moreover, in the same period, the company also witnessed the positive impacts from its New Zealand portfolio. As of now, the group focuses on three growth platforms namely: Organic growth, Growth by acquisitions and Develop management services and procurement division. In order to achieve the organic growth, the primary concern would be to improve the veterinary services. This can be achieved by expanding the wellness program which would be better for the pet group. This could further help in improvement of the revenues.
 
FY18 Financial Performance (Source: Company Reports)

Moreover, the company sees ample amount of opportunities with regard to the industry consolidation because of the change in the workforce’s characteristics as well as because of industry’s fragmented nature. From the technical standpoint, looking at the daily chart of NVL, momentum indicator MACD (Moving Average Convergence Divergence) has been applied with the default values. As per the observation, the MACD line would cross the signal line and it is expected to move upwards after the crossover. This reflects the bullish momentum. Therefore, we give a “Speculative Buy” recommendation on the stock at the current price of $2.250 (up by 0.45% on October 1, 2018) which is still a low level  given the recent fall of 16% in last three months.
 

Comparative Stock Price Movement (Source: Thomson Reuters)
 

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