The Bubs (ASX: BUB) share price is slightly down after revealing its sales update for the first quarter of FY20.
Bubs was founded in 2006 by Kristy Carr and was listed on the ASX in January 2017. Its infant formula is based on goat milk and it also sells organic baby food. Bubs recently acquired NuLac Foods, Australia’s largest producer of goat milk products, it also guarantees exclusive supply of local goat milk from Australia’s largest herd of milking goats.
Bubs Reports Record Quarter In FY20 Q1
In Bubs’ quarterly update to investors, the infant formula company said revenue grew by 58% to $14.21 million. Management were pleased with this growth, saying it was validation of the company’s continuing focus on its growth strategy whilst investing in its supply chain and manufacturing capabilities.
Australian sales grew by 34% compared to the prior corresponding period. Direct China export sales were up 113% compared to a year ago and up 46% compared to the June 2019 quarter thanks to the partnerships with Beingmate and Alibaba.
Perhaps even more impressively, in international markets sales revenue grew by 973% compared to the September 2018 quarter and represented 8% of gross sales of this quarter.
Looking at the individual products, infant nutrition products grew by 66% (and made up 38% of sales) while adult milk powder sales increased by 100% (and represented 53% of total sales).
However, sales and profit growth are not the same thing.
Bubs ended the quarter with $18 million of cash and its operating cash outflow was just over $4.1 million for the quarter.
Bubs Founder and CEO Kristy Carr said: “For the future, the strategic channel partnerships and rich data provide the underpinning for the increasing role that in-market marketing will play in developing the China market.
“This is complemented by our corporate Daigou partners, who are well placed to adapt to the evolving regulatory environment, as well as continuing to build trust and credibility in Australia for Chinese consumers, especially new mothers.
“We have been investing in the development of goat dairy product innovation and brand extensions beyond infant milk formula to target new consumer segments and functional dietary needs.”
Is The Bubs Share Price A Buy?
Bubs is trading expensively for its current financial position, but if it keeps growing strongly it can very easily grow into its valuation. But there are still a wide range of outcomes, so I’d only invest a small amount for now and invest more when it hits certain milestones.
But I think Bubs, and the small growth shares in the free report below are definitely worth watching.
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