The last six months have certainly not been pleasant for shareholders of skincare company BWX Ltd (ASX: BWX).
After reaching an all-time high of $5.70 in August, the company behind the Sukin brand finds its shares trading 22% lower at just $4.39 today.
The sell-off began in August after the company released its full year results. Although BWX smashed its prospectus forecasts by delivering a 19.7% jump in sales and a 25% increase in net profit after tax, the market was seemingly unimpressed.
I think the sell-off that ensued was an overreaction which has left BWX's shares at a great price for a buy and hold investment.
Whilst at 23x estimated FY 2017's earnings it shares may not be cheap, I feel they are great value for money when you factor in the company's strong growth prospects in China and the United Kingdom.
In FY 2016 sales of the Sukin natural skin care range grew by over 40% year on year. The majority of this growth came from sales in Australia from stockists such as Priceline, which is owned and operated by Australian Pharmaceutical Industries Ltd (ASX: API).
Also contributing to its sales growth were sales into China via the grey export market. Pleasingly management has attempted to capitalise on this growing demand by launching stores on Chinese e-commerce platforms Tmall.com and JD.com.
Furthermore, BWX launched the Sukin range in Boots pharmacies in the United Kingdom at the end of last year. I believe the brand has a great chance of replicating its Australian success in the UK market, which could provide it with significant growth over the next few years.
Although I think BWX is a buy today, it may be prudent to wait for the company to release its half-year results in mid-February before taking the leap. That way investors can assess how its international sales are tracking before deciding what to pay.
