Shareholders of BWX Ltd (ASX: BWX) haven't had much to smile about in the last six months, but that has all changed today following the release of the personal care company's half-year report.
Key highlights from the report include:
- Revenue of $37.5 million, up 36.4% from the first half of FY 2016.
- Gross margin expanded to 65.1% from 58.9% a year earlier.
- Net profit after tax of $8.2m, up 30.2% on the prior corresponding period.
- Sales of Sukin branded products increased 59.4% to $31 million.
- Exports of Sukin rose 115.7% from a year earlier to $6.7 million.
- Diluted earnings per share of 8.3 cents.
- Interim fully franked dividend of 2.5 cents per share has been declared.
- Guidance of 30% growth in FY 2017 EBITDA reiterated.
BWX's half-year result was one that I have been waiting eagerly for and pleasingly it didn't disappoint. Because of this I can't say I'm surprised to see its share price climb as much as 11% to $4.80 in early trade.
Whilst exports into the UK, Canada, and China will be the key to long-term growth, I was very impressed with its strong domestic performance during the half.
Thanks partly to larger distribution and new product releases, domestic sales of the Sukin brand rose 48.7% to $24.3 million.
What now?
For the full year management has reiterated its guidance of 30% EBITDA growth. I expect BWX to deliver on this or perhaps even exceed it if its exports continue growing strongly.
Whilst the China market is an exciting one, I am most interested in the UK market. The Boots pharmacy chain now stocks a range of Sukin products in 114 of its stores. If the product sells as well as I expect it to, I don't believe it will be long until it is rolled out across its entire 2,500+ store network.
Furthermore, another health retailer by the name of Holland and Barrett has started to stock its Sukin range in 142 of its leading stores.
Sukin's Supergreens and Oil Balancing have proven to be very popular with Holland & Barrett customers. So much so the range will soon extend more widely throughout their ever-expanding 765 retail store network.
Is it a buy?
Although after today's rally its shares are changing hands at 33x trailing earnings, I feel BWX could still be a great option for buy and hold investors thanks to its enormous growth potential domestically and internationally.
It may not be the bargain buy it was three months ago, but it would have to be up there with a2 Milk Company Ltd (Australia) (ASX: A2M) and Premier Investments Limited (ASX: PMV) as must-buy growth shares in my opinion.
