Baby Bunting Group Ltd

BBN Details
 
Targeting defensive retail segment and growth underpinned by new store openings: Baby Bunting Group Ltd.’s (ASX: BBN) has surged about 36.61% in the last four weeks (as at December 07, 2015). The company is an Australian speciality retailer of baby goods serving parents with children from newborn to 3 years of age. The product categories proffered by BBN include prams, cots and nursery furniture, toys and other baby accessories and the company operates only within Australia. The market demand for baby goods is dependent on resilient long-term drivers such as the number of births and population growth. The industry is characterised by many small independent speciality retailers, a number of online only retailers and a few large retailers with baby products as part of an overall offering. The company operated 31 stores across the country and a baby goods website and focuses on offering a multi-sales channel experience to customers with flexibility on how, when and where they will transact. BBN reported that the profit of the consolidated entity for the financial year ended 28 June 2015 after providing for tax amounted to $ 6.04 million compared to $ 4.06 million in the previous year. During the year the company opened about eight new stores across Australia with a positive impact on sales and earnings and the new store rollout resulted in the employment of an additional 93 staff members.
 

Sales Growth (Source: Company Reports)
 
The company reported revenues of $ 180.17 million compared to $ 150.15 million in the previous year and cost of sales of $ 118.31 million compared to $ 100.22 million in the previous year. Gross profit came to $ 61.86 million compared to $ 49.93 million; and after expenses that primarily included store expenses of $ 37.83 million compared to $ 31.91 million, the profit before tax was $ 9.02 million compared to $ 5.83 million; and after income tax expenses of $ 2.98 million compared to $ 1.77 million, the profit after tax was $ 6.04 million compared to $ 4.06 million in the previous year. The EPS from continuing and discontinued operations works out to basic 6.25 cents per share compared to 4.23 cents per share and diluted 6.19 cents per share compared to 4.22 cents per share. Cash flows from operating activities came to $ 4.78 million compared to $ 5.38 million in the previous year, cash flows from investing activities was ($ 6.02 million) compared to ($ 3.52 million) in the previous year and net cash provided by financing activities came to $ 1.43 million compared to ($ 1.05 million) in the previous year. Cash and cash equivalents at the beginning of the financial year was $ 3.37 million compared to $ 2.57 million in the previous year, and at the end of the financial year was $ 3.56 million compared to $ 3.37 million.
 
As mentioned earlier, the stock has surged a lot since its listing on the ASX within a couple of months only. According to the prospectus, the growth in sales has been at a compounded annual rate of 24% since 2009 and pro forma total sales growth forecast for FY2016 is 21.3%. The company should continue to do well but because of the run-up in prices, we consider the stock to be expensive and do not recommend an investment at the current price value.
 
 
BBN Daily Chart (Source: Thomson Reuters)
 

Beacon Lighting Group Ltd

       BLX Dividend Details
 
Strong result and store roll-out program: Among the highlights of FY 2015, Beacon Lighting Group Ltd (ASX: BLX) demonstrated record sales and record profit with an increase in sales by $ 29 million which was 19.3% more than the previous year and store comparative sales increase was 10.4%. There was a strong increase in gross profit of 20.1%. The company opened seven new company stores, purchased one franchise store and closed one company store. The company designed and developed 440 exclusive new products and showed increased sales across all divisions and sales channels. Expense productivity gains were achieved in all aspects of the business and operating expenses were down by 3% as a percentage of sales. EBITDA increased by $ 7.3 million which was 36.4% over the previous year and net profit after tax increased by $ 5.1 million up 43.6% over the previous year. The gross profit margin was 64.3% compared to 64.7% in the previous year, the EBITDA margin was 13.4% compared to 15.3% , the EBIT margin was 12% compared to 14% in the previous year and the NPAT margin was 7.8% compared to 9.4% of the previous year.
 
As regards the new store rollout, the company is now targeting six new stores. An independent analysis showed growth for additional locations for the foreseeable future. In terms of optimising store portfolio and operations, increase sales and profits will be driven by the existing store network supported by store expansions plans and merchandise upgrades. The company will continue to build awareness for the GE and Lucci brands. With the online platform, the company intends to implement better functionality within the code website, continue to use social media to drive traffic and brand awareness. BLX also plans to continue to roll out LED technology throughout the product range.
 

  Balance Sheet (Source: Company Reports)
 
BLX stock surged about 30.72% this year to date (as at December 07, 2015) and is trading at a high P/E ratio. Further, the risks that need to be borne in mind include falling AUD that may affect margins and cyclic nature of the housing market. Further, weakening economy may also influence retail sales. Overall, we would regard the stock at the current price levels as expensive with little room for upside.
 
 
BLX Daily Chart (Source: Thomson Reuters)

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