Is this a brilliant news? Not so surprising. Investor presentation pack clearly mentioned about their strategy and growth in the market. However, does the current price reflect this news? I don't think so. I think BUB share price is absolutely underpriced compared to relative competitors in the market. Only downside of this stock is volatility in price. Historically, BUBS has its swing in their share price as it's at initial stage of growth. Given that it had SPP at 60c, I think the price will still swing a lot. However, when this goes, it will be difficult to buy this under $1 soon.
In current retail market, the current trend is investing more in price, which is basically having their products on shelve with competitive pricing via managing vendor relationship, being efficient in managing COGS, and having the big data to support their pricing strategy. By cutting price, Woolies, Coles, ALDI and Metcash are all playing the volume game to meet their YoY profit/sales target. The Goat Milk products are unique, known as premium products. This gives huge advantage to BUBS to maintain high profit margin and competitive edge in retaining market share given that there's not many competitors with such design, product packaging and its growth strategy.
BUBs got into Woolies now. On the day of announcement, unfortunately we've had the biggest burn in the share market so I don't think we have got the Woolies announcement accounted in the price as well. Now, online sales agreement in China, that is huge. Linking this to current retail market trend, this will push the sales volume up while maintaining the good profit margin in their P&L.
BUB is tatking the right direction and steps in their expansion strategy simliar to how competitors like A2M, BAL, and WHA have been doing. BUBS has great products, which are known to be as premium products (Goat) in the market. The interest in goat milk products has been growing in SE Asian market. They have got good packaging, marketing and management.
These are my main reasons why I keep this stock as long term. At the moment, SP seems to be a bargain.
GLTAH DYOR
Expand
(20min delay)