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The Bubs Australia (BUB) Share Price Has Gone Ballistic

The Bubs Australia Ltd (ASX: BUB) share price has gone ballistic today, up 6%, after the infant formula company revealed its growth in the fourth quarter of 2019.

Bubs Australia 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.

4th Quarter Growth

Bubs Australia today reported that in the final quarter of FY19 it achieved 108% sales growth to $18.46 million compared to the last quarter of FY18. But, growth was 56% compared to just the previous quarter.

Bubs’ fourth-quarter revenue was higher than FY18’s entire revenue. The whole of FY19’s revenue amounted to $51.3 million, which represents an increase of 179%.

Perhaps even more importantly, the company achieved positive operating cashflow in the fourth quarter and it ended with $23.3 million of cash at 30 June 2019.

Looking at the categories, infant formula grew by 341% compared to the prior corresponding period and total Bubs products increased by 236%, representing 47% of gross sales in the quarter. Adult Dairy products grew 47% and represented 50% of gross sales. Deloraine production represented 2% of gross sales after the acquisition in April 2019.

Bubs had a very busy three months after establishing a joint venture with Beingmate in China, a strategic equity-linked alliance with Chemist Warehouse and more.

This demonstrates the validity of our continuing focus on our four-pillar growth strategy, combined with underlying investments in supply chain and capabilities,” CEO and Founder Kristy Carr said.

Are Bubs Shares A Buy?

Bubs seems to be delivering on its potential growth with a very strong end to FY19. The question is, can Bubs keep going at a strong pace for years like A2 Milk Company Ltd (ASX: A2M) has? I’m not sure. But in this era of lower interest rates, I’d be willing to think about it being a relatively small slice of my portfolio.

At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.

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