OK, Thanks Dzaak for your question. This is how I see it....
Profit after tax for nine months this year is $75,558,000, UP 145% on prior yr on sales which are up 63% on prior year. So profit is increasing at twice the rate of sales which is wonderful operating leverage/economies of scale (whatever you want to call it).
Third qtr profit was $27,258,00 so the momentum had continued into the third qtr.
The rumours of a slowdown came in April but from what I can gather, through various news articles, Management has never conceded that there is a problem. In fact, at some point they had said that the new regulations would benefit them and also that they would advise the market of any significant changes to their business or outlook (you can check my prior posts or do a google search for news re Blackmores over last 4 months).
Let's assume Profits (after tax) for 4th qtr equal 3rd qtr. Profits attributable to shareholders for the year would come to $75,558,000 + $27,258,000 i.e. $102,816,000.
From memory, there is an impressively tiny amount of shares issued, I think 17,224,000.
So EPS is $5.97 per share;
At Share Price of $150, P/E would be approx. 25
Of course, at $150 or even $200 or more, you'd have to say that the shares are in absolute bargain territory given the enormous momentum over several years and profits growing at circa 150%.
Nevertheless, there are significant risks (I believe) in doing business in China. Who's to say that the Authorities there don't cut you off completely at some point in the future.
The company itself has been flawlessly managed in my opinion. I love that they have so few issued shares, no debt issues, enormous margins to play with, ridiculously high ROE coupled with first mover advantage into China (and who knows how big that market could actually be), a beautifully presented product and sublime marketing (e.g. using Li Na to promote product in China).
The most exciting part of the story for me is the impact of the Daigou. The Chinese, all over the world, are one of the most resilient, determined, and creative exponents in the pursuit of money and the freedom/status it brings. I don't believe these guys can be stopped once they've had a sniff of success. From the gold rushes of the 1800s to the casinos of today, if there's money to be made, I'm certainly not going to be the one betting against them.
Anyway, to conclude, I think if I didn't have any shares already I'd definitely be happy to buy at around $150. After reviewing I probably would be going in quite hard (in terms of weighting relative to portfolio) but could be wise to split your purchase into a couple of parcels to take advantage of any continued weakness.
I checked my orders and I did actually buy at $152 on the way down and then topped up at $137, $134, $135, $132, then bought some more at $151 on it's recent run. So, I have gone a bit crazy on BKL but having said that I am playing with profits from its initial run up to $220. That makes me a little braver than I otherwise would have been.
I'm fully weighted in BKL at this time so it would take a price in the $130s to get me interested again.
As always you need to do your own research and invest according to your own goals and risk tolerance.
Good night.
BKL Price at posting:
$150.50 Sentiment: Hold Disclosure: Held
