Bubs trading at 160% premium to IPO price
Published 10-JAN-2017 16:16 P.M.
2 minute read
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
Shares in recently listed Bubs Australia (ASX: BUB) continued to soar on Tuesday, hitting a high of 26.5 cents in morning trading, representing a 165% premium to the group’s IPO price of 10 cents.
It should be noted however that historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may not be replicated. Those considering this stock should seek independent financial advice.
Bubs is the repurposed Hillcrest Litigation Services Group which recently acquired the Infant Food Holding Company Proprietary Limited.
Shortly after listing on the ASX, Commercial Director for Infant Milk Formula, Nicholas Simms said, “Becoming a listed company was a key step in the transformation of Bubs from its humble beginnings to inspire new generations of happy, healthy bubs both in Australia and internationally”.
It would appear that the targeting of overseas markets is central to the group’s expansion strategy. Cornerstone investors in Bubs and its subsidiaries include Ellerston Capital and an investment company of Nancy and Richard Zhang, the founders of JD.com.
The Zhang connection should be extremely beneficial in penetrating the all-important Chinese market where other Australian companies in this space are active.
Impressive range diversification
Importantly, Bubs business extends beyond the infant formula sector with the company also offering organic alternatives to conventional baby food where it successfully competes with multinational brands.
The company’s range includes fruit and vegetable purees, protein meals, cereals and healthy toddler snacks. The recipes are largely based on organic ingredients such as blueberries, banana and pumpkin with an allergy friendly menu also available.
The company also produces Bubs Advanced Plus goat milk formula, which is made in Australia and available in three stages from infant to toddler. It blends goat whey protein with a balanced daily intake of essential fatty acids, vitamin C, amino acids and prebiotics.
Bubs products are sold Australia wide in over 1000 retail outlets including major and independent supermarkets, department stores, organic and health food stores and pharmacies.
Overseas consumers pay premium for trusted brands
The products are also sold on leading Chinese cross-border e-commerce platforms including JD.com. Export markets include Southeast Asia, the Middle East, Singapore, Hong Kong and the United Arab Emirates. In fiscal 2016 international sales accounted for less than 40% of total sales.
Overseas consumers are often prepared to pay a premium for trusted foreign brands with China being a case in point where contamination scares from local products resulted in increased demand for imported goods.
Consequently, there could be a stronger skew in earnings in the future in terms of contributions from export sales.
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.