Ann: FY20 Q4 Activities Report and Appendix 4C Cashflow Statement, page-74

ASX growth shares to buy and hold

Bubs Australia Ltd (ASX: BUB)

Bubs is an Australia-based producer of goat milk products. It has established a portfolio of premium, high-margin brands, concentrating on infant formula products. The company is now extending its product range across other categories. These include organic baby food and adult goat dairy products.

The Bubs share price trended downward from late 2019 until mid-March this year. It then trended upwards until early May, after which it has trended largely sideways.

The third quarter of FY 2020 was a stand-out quarter for Bubs. It recorded a very strong 67% increase in revenue to $19.7 million for the three months to March. This was driven by strong growth during the coronavirus pandemic. Fourth quarter results just released saw a 5% decline in gross sales on the prior corresponding period to $13 million for Bubs. However, sales grew strongly by 14% compared to quarter sales in the corresponding period last year.

I believe that Bubs is an ASX growth share that’s well positioned for long-term success, driven by its expanding presence in Asia.




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Bubs Australia Ltd (ASX: BUB)

I believe that Bubs has a very promising long-term future. The infant formula business just announced its final quarter of FY20 which saw a revenue decline due to the huge amount of growth in the FY20 third quarter. However, the company reported a strong 32% increase in FY20 revenue to $62 million.


I think Bubs an exciting ASX share because of a few reasons.

The biggest reason is the large potential of the international markets for Bubs. In the last quarter of FY20, China direct sales increased by 26% compared to the prior corresponding period and represented 22% of gross revenue. Other export markets, which excludes China, saw fourth quarter sales growth of 71% and this represented 8% of total sales.

Asia alone is a huge market and can support a much larger Bubs business. Hopefully it can continue to grow its revenue by pleasing double digits each year.

The company also made two other exciting announcements yesterday. Jennifer Hawkins will be its global brand ambassador and it also launched Vita Bubs, a vitamin and mineral supplement range. The company expects this will materially add to domestic revenue.

In five years I believe the ASX share will be much larger, particularly if it’s able to win a decent market share with its organic grass-fed (cow) milk infant formula range.

I’d be very happy to buy shares at the current Bubs share price, particularly after yesterday’s dip.