Baby Bunting Group Ltd

BBN Details
· Expanding stores presence: Baby Bunting Group Ltd (ASX: BBN) stock surged over 4.7% on November 21, 2016 driven by the group’s fiscal year of 2016 performance entailing a solid sales growth of 31.4% year on year (yoy) to $236.8 million driven by positive comparable store sales performance which ended the year at 12.5%. Gross profit income surged 31.2% while cost of doing business enhanced 109 basis points. Consequently, pro forma EBITDA rose 51.1% yoy to $18.7 million while NPAT (on a pro forma basis) increased 55.8% to $10.6 million.  BBN opened 5 new stores during the year and accordingly revised potential future store network of over 80 stores against earlier 70 stores network. The group is focusing on online sales which now represents for 5.7% of their sales year to date, an increase from 4.2% of sales in prior corresponding period. The group is focusing on shopping experience for the consumer and now has a Net Promoter Score of 57. BBN also reported a solid sales growth of 20.3% with comparable store sales growth for the period of 10.0% as of November 13, 2016, and accordingly forecasts a better second half comparable store sales. BBN expects EBITDA in the range of $21.5 million to $24.5 million for the year, which is a growth of 15% to 31%. On the other hand, the group’s transition to click and collect service from a centralized fulfilment model to a store based fulfilment model might shift sales from the online channel to the bricks and mortar store network.

· Recommendation: The stock price already rallied over 15.06% in the last six months (as of November 18, 2016) and he stock is now trading at an unreasonable P/E. We give an “Expensive” recommendation at the current price of – $ 2.88


Baby Bunting Group’s network presence (Source: Company Reports) 

St Barbara Ltd

SBM Details
· Ongoing buyback activities: St Barbara Ltd (ASX: SBM) stock surged over 7.24% on November 21 with gold price movement and market sentiments, while the company announced changes to director’s (Kerry Jo-anne Gleeson) interest notice. The group is buying US$33 million in aggregate principal of its US 144A Senior Secured Notes. After this purchase, the group has a cash balance of over A$70 million. Moreover, SBM will have bought over US$210 million in aggregate principal of the original US$250 million of Notes with US$40 million of the Notes remaining on issue at that time.

· Recommendation: Given the volatile gold prices environment, we maintain our “Expensive” recommendation on the stock at the current price of – $ 2.37

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