BWX Ltd (ASX: BWX) is a vertically integrated developer, manufacturer, distributor and marketer of branded skin and hair care products with an emphasis on the natural segment of the beauty and personal care market. The Sukin brand is its most well-known product in Australia. BWX was listed in November 2015 and has a market capitalisation of $454 million.

What are the key features of BWX FY20 result?

BWX net revenue for FY20 is $187.7 million, up 26% from FY19. Earnings before interest, taxes, depreciation, and amortization for FY20 is $27.5 million, up 30% from FY19. Statutory NPAT for FY20 is $15.2 million, up 59% from FY19. BWX will pay a final dividend of 2.6 cents per share (fully franked).

Regarding BWX’s operational performance, Sukin’s net sales for FY20 is $81.7 million, up 55% from FY19. This was driven by strong brand connection with consumers and as Sukin becomes increasingly available through mass channels spanning APAC, the USA and Europe. In Australia, Sukin is the market leader in natural products with Sukin gaining market share in both channels of Australian Pharmacy and Grocery (with strategic partner Coles) to 62.8% (May 2020) from 59.6% (Feb 2020).

Andalou Naturals net sales for FY20 is $53.3 million, up 10% from FY19. Andolou Naturals remains the number 1 brand for natural skincare in the US. The main driver of the 10% observed growth is the increase in market share Andalou Naturals gained over the year.

Nourished Life net sales for FY20 is $24.1 million, up 15% from FY19. The main driver of this result was due to BWX push to increase online shopping making these products more widely available.

What is the outlook for BWX?

BWX management has provided an outlook for FY21. BWX expected Earnings before interest, taxes, depreciation, and amortization growth of at least 10% in FY21.

The outlook for BWX is looking positive with BWX’s plans to build a new operations facility. This new facility will extend BWX’s core capability with a new and scalable manufacturing hub that is expected to deliver: production efficiencies to further scale current and future volumes; enhance margins; an improvement in the quality and consistency of product through innovation and R&D lab; risk mitigation and enhanced control over end-to-end supply chain; and enhanced commitment to sustainability through less waste product. This new facility is expected to increasing earnings for BWX in FY23 and is expected to cost around $33.7 million.

What is the market’s reaction?

The market reaction to BWX FY20 result (21 August 2020) was positive. BWX share price was up around 3.5%. BWX today (24 August 2020) is currently trading at $4.34. BWX is trading at a forward P/E ratio in the mid-thirties and has an annual dividend yield of around 0.9%.

 


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August 25, 2020