The Bubs Australia Ltd (ASX: BUB) share price has jumped 7% in early morning trade after announcing a 73% uplift in first-half revenue.
Bubs is an Australian producer of infant nutrition and dairy products derived from goats milk.
BUB share price
China market roars back to life
Key highlights for the first-half include:
- Gross revenue of $38.5 million, soaring 73% year-on-year (YoY)
- Record second-quarter revenue of $19.9 million, up 56% YoY
- Free cash flow of $2.7 million
- Cash of $30.6 million
The key driver of first-half sales growth was a 121% bump in China revenue, which contributes 60% of Bub’s total sales.
“For our China facing business, our response to the pandemic impact and decision to realign our China sales channels to execute ‘Bubs Daigou 2.0’ strategy has been validated”
“Working alongside our strategic channel partner, AZ Global, we focused on enhancing channel engagement and campaign activation, whilst maintaining stabilised pricing and balanced fresh inventory levels”
The corporate daigou channel recorded a 196% uplift YoY.
Sales now exceed pre-pandemic levels, indicating demand may be normalising after a difficult two years for importers.
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China sales were also aided by strong performance on cross-border e-commerce and its adult brand CapriLac.
“Bubs Goat Infant Formula achieved the number one share position for imported Australian goat formula brands on JD Global⁵ and Tmall TDI”
The positive free cash flow result – a common measure of profitability – demonstrates that when Bubs scales it can begin to produce profits.
No laggards
Bubs also benefitted from a 9% increase in domestic retail and a 66% growth in the international market (ex-China).
Bubs is now the fastest growing infant formula manufacturer across major supermarkets Woolworths, Coles and Chemist Warehouse.
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Scan rates across the three outlets are up 31% YoY and now represents a 3.9% market share.
During the half, Bubs went live on popular USA retail sites Walmart, Amazon and Thrive.
My take
Today’s trading update was impressive, given the tough market difficult conditions.
Furthermore, while big bro A2 Milk Company Ltd (ASX: A2M) continues to struggle, Bubs is setting records.
I’d have to do more research into the company.
But with Bubs share price still lingering near two-year lows, it could be one for the watchlist.
To keep up to date on all the latest news regarding Bubs and its half-year report in February, be sure to bookmark the Rask Media home page.
