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A newly listed company, BWX Ltd manufactures and sells skincare products throughout Australia and is looking to expand offshore. Some of the group's brand names are Sukin, DermaSukin and Uspa.

 

"They've got a strong balance sheet, good management team and a definable plan to grow their business. Additionally, they're now looking to leverage their number one position in Australia into the overseas market," said Romano Sala Tenna, portfolio manager at Perth-based Katana Asset Management.

 

In the IPO prospectus, BWX had said, quoting a Nielsen survey, that Sukin was the best-selling 'natural' skincare brand in Australian pharmacies over 12 months to 23 August 2015. Sukin's sales grew 40% over that period, also making it the fastest growing brand of the top five skincare brands sold in pharmacies in the country, BWX had stated.

 

On its listing debut on 11 November, BWX closed at $2.26, 51% above the stock's IPO issue price of $1.50.

 

"Obviously everyone is looking for the next Bellamy's, the next Capilano, the next Blackmores as we are, and we think this could potentially be one company that has the same appeals ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ very strong EPS [earnings per share] growth over the coming two years," said Sala Tenna.

BWX is now $4.10

 

from a month ago:

Melbourne-based BWX owns, makes and distributes skin and haircare brands, and manufactures others for third parties. After raising $39.3 million at $1.50 a share and listing in November, BWX has risen to $2.80. Glennon Capital, a listed investment company, invested in the BWX float and was willing to buy stock up to $1.80. "BWX is due for a breather at the current price, but has solid long-term prospects," Michael Glennon says. "Its key brands have excellent market recognition, good profit margins and are efficient to make. We see BWX entering other markets here and overseas." Glennon says the upcoming micro-cap IPO, Total Face Group, has interesting prospects. The surgical medical aesthetics company is raising $6 million to develop anti-ageing and body sculpting treatments. Its strategy involves acquiring and consolidating smaller clinics that provide Botox and other services. "This is a long-term growth industry that is fragmented, with lots of small operators," he says.

 

some broker comment:

Floated in Nov 2015 at $1.50, BWX now more than doubled shareprice in the 2 months. It distributes Sukin and Edward Beale ranges; it operates at price points below premium labels like Jurlique and Aesop but above mass market products from Nivea and Garnier. Factory in Dandenong has excess capacity; sells most of its products through pharmacies and also does 'private label' lines through the supermarkets Forecast net profit to rise from $9.6mill to $11.1mill in 2016Our maiden profit result as a listed company is a great beginning and reflects the significant growth in the sales of Sukin products for the first half of the financial year," chief executive John Humble said. "Sales efforts have been concentrated on the domestic market while we continue to establish our growth platform to support export strategies."

 

Most of BWX's sales growth came from local sales of the Sukin brand as more retail outlets stock it. BWX also focused on digital media to promote the brand. About 10 per cent of sales came from the new Sukin "Super Greens" product range ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâہ¡ÃƒÆ’‚ containing a blend of kale, parsley, spirulina and chlorella ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâہ¡ÃƒÆ’‚ launched in March 2015. BWX said it was engaged in "regeneration" programs for its Edward Beale and Uspa brands. On its outlook for the 2016 full financial year, BWX expects revenue to lift 18.8 per cent to $53.6 million, and a 29.2 per cent lift in net profit to $12.4 million ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâہ¡ÃƒÆ’‚ 11.7 per cent above prospectus forecasts. The company expects to pay its first dividend at the conclusion of the full financial year.

 

BWX profit soars as it eyes lucrative Chinese market (AFR 11.02)

Small cap company BWX Limited is generating a buzz about its move into the lucrative China market, but its success will not come at the cost of its booming domestic business or a break from its cruelty free approach, its chief executive says. BWX, which manufactures a range of personal care products for brands it owns as well as third parties, was listed on the ASX in November at $1.50 a share. Its shares climbed above $4 on Wednesday, up as much as $4.50 in early trade after it reported a 53 per cent rise in half-yearly earnings before interest, tax, depreciation and amortisation to $9.5 million and a 61 per cent rise in net profit after tax to $6.3 million. Its performance is due mostly to its Sukin skincare range, which enjoyed sales growth of 50 per cent. The range is not tested on animals, is vegan-friendly and its packaging is carbon neutral. Chief executive John Humble said while the personal care market grew by 1 per cent per year, its segment of that, natural skincare, grew by 40 per cent. Its popularity on the so-called grey market, where Chinese buy locally and import to China through non-official channels, has led it to be swept up in a bundle of stocks which fund managers believe can be the next Blackmores-type success story. "Blackmores wants to be the next BWX," Mr Humble said, tongue-in-cheek. "It is a very strong domestic growth story with incredible leverage, their fixed costs only went up marginally. They're getting tremendous leverage from their fixed cost base," Wilson Asset Management portfolio manager Matthew Haupt said. "The upside from the China push is still a bit factored into the share price but not fully reflected, if they can get this up to speed it can be very positive on the share price," he said. Mr Humble said BWX was taking a measured approach to its expansion in China. Exports account for 15 per cent of sales, including to New Zealand and Britain.

"We have worked with a very select group of people so that we're having multiple geographies and multiple channels covered while trying to limit crossover," Mr Humble said.

While the company had been approached by as many as 30 would-be distributors in China, the nation's animal testing regulations on cosmetics remained a hurdle.

"For cross border trade there is no CIQ [inspection and quarantine] registration required. For bricks and mortar stores on the ground there is a general rule that all cosmetics need to be tested." "There is some subjectivity around that, and there is also discussion that that situation may change."

But any requirements to test on animals will not be met, with the company strictly adhering to its vegan friendly status.

"We've got a booming domestic business we want to make sure is absolutely preserved."

Bell Potter analyst John O'Shea said the opportunity in China was "very significant" and a scenario representing the potential upside from the company. "The company is guiding it to some healthy export growth, and that's excluding China," he said.

BWX is forecasting a full year earnings before interest, tax, depreciation and amortisation of $19 million for an NPAT of $12.4 million, a 29.2 per cent increase on the prior year

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COMPANY HIGHLIGHTS FY16

- Successful IPO

- FY16 Revenue of $54.0m

- FY16 EBITDA of $20.2m

- FY16 Basic EPS of 14.08 cents following share consolidation

-FY16 NPAT of $12.0m

 

- Maiden dividend payable in October of 4.8 cents per share

- Outperformed prospectus forecasted EBITDA by 15.4%

 

- Successful acquisition of Lightning Brokers

- Export expansion through UK's number one health food retailer Holland and Barrett

- Progressed implementation of the Company's China export strategy

- Established Sukin Flagship stores on JD.com and Tmall.com, two of the World's largest online retailers

- Increased production capacity

 

Owner and Producer of Leading Pharmacy Brand ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ Sukin

ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ Leader in the High Growth 'Natural' skin care market

ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ Vertically integrated business Manufacturing own Brands

ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ Growth Opportunities in both Domestic and Export markets

ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ Multiple new Product Launches

ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ High Quality Management

ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ Attractive Financials and EPS growth

ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ Forecast EBITDA growth of 30% FY17

ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ Maiden Dividend of 4.8 cents per share

ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ FY17 Forecast Dividend pay out ratio 35 to 50%

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BWX, a genuine small-cap worth less than $500 million, saw its shares decline almost 30 per cent in the back half of last year. The company owns the Sukin range of skincare and personal care products, with strong momentum in its Australian business, and exciting growth opportunities in the UK, Canada, China and elsewhere.

 

Besides being caught up in the [recent] growth sell-off, it also suffered by association with Bellamy's problems, notwithstanding limited relevance. We increased our holding. The company reported very strong half-year earnings, pushing its shares higher by 20 per cent from recent lows

Julian Beaumont - Investment Director, Bennelong Australian Equity Partners (a Bennelong Funds Management boutique).
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Skincare company BWX is paying $US38.4 million ($A50.5 million) cash for US-based natural cosmetics company Mineral Fusion National Brands. The acquisition of Mineral Fusion gives it a beachhead in the US, making it the market leader in the US natural cosmetics market.

 

BWX plans to sell its Sukin skincare range through Mineral Fusion's US distribution network, which includes health food chains Whole Foods Market, Sprouts and Natural Grocers and mass market retailers such as pharmacy chain CVS, Wegmans and Meijer. BWX also plans to expand Mineral Fusion sales outside the US, leveraging its distribution networks in Australia, the UK, New Zealand and China.

 

"This transaction puts two leading brands in quite strong markets together to give us scale and a platform for accelerated international growth," BWX chief executive John Humble told investors. "It puts us well down the pathway of becoming a genuinely global personal care company," he said.

 

Mineral Fusion has more than 150 stock-keeping units across 45 product categories, including colour cosmetics (which account for 65 per cent of sales), skin care, nail and hair care. Colour cosmetics is the fastest growing segment of the personal care market.

 

The Mineral Fusion brand was developed in 2009 specifically to meet Whole Foods' demand for high quality natural cosmetics and is now sold in more than 3000 retail outlets across the US.

 

Mineral Fusion also has a strong online presence including Amazon.com, with online sales growing 50 per cent (CAGR) over the last three years and now representing more than 10 per cent of total sales.

 

BWX paid Mineral Fusion's owner, private equity firm North Castle Partners, about 11 times earnings before interest tax depreciation and amortisation of $US3.5 million or $A4.6 million for the California-based business. The deal, signed on June 30, also includes a potential $US4.6 million ($A6.1 million) earn out payment if Mineral Fusion achieves agreed gross margin targets over the next 12 months, lifting the value of the transaction to $US43 million ($A56 million).

 

While the multiple is higher than that for recent beauty industry acquisitions, Mr Humble said the investment was expected to be earnings per share accretive in the first full year. The acquisition is expected to boost BWX's annual revenues by about $US24 million ($A31.5 million) or 40 per cent.

 

"This transaction gives us great opportunities to expand not just in the US for Sukin but for Mineral Fusion in Australia and the international networks we're in the process of establishing," Mr Humble said. "Although it's in 3000 doors (in the US) that's less than 10 per cent of the addressable doors in the US - there's massive opportunity for growth and an incredible amount of low hanging fruit," he said.

 

Mr Humble also affirmed the company's previous guidance for a 30 per cent increase in EBITDA in 2017, excluding the impact of the Mineral Fusion deal.

 

"Whilst we continue to grow Sukin both in Australia and offshore, we have been on the look out for acquisitions that align with the overall strategy for BWX" . "The product suite of Mineral Fusion provides BWX a gateway into the natural cosmetics categories, a key area of growth going forward as we see consumers looking for more natural alternatives in all products they use," he said.

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