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Is the Bubs Australia share price on the rise?

The Bubs Australia Ltd (ASX:BUB) share price could be on the rise after reporting a strong first quarter update and its presention at the Select Equities Conference today.

What did Bubs present?

The Select Equities Conference is an investor conference with a focus on ASX-listed companies doing business and building trade relationships with China. Bubs chief executive officer and founder Mrs Kristy Carr highlighted the company’s performance in the first quarter of FY20 and detailed how it is building brand momentum in China.

The first quarter of FY20 saw Bubs generate consistent, quarterly growth momentum with gross revenue improving 58% to $14.2 million. For FY19 Bubs saw gross revenue up 154% to $46.8 million for the year, with Chinese net revenue growth improving 209% for the year.

Carr highlighted that 22% of Bubs’ group revenue is from direct export sales to China, reflecting the company’s focus on building momentum with Chinese consumers. According to the company, strategic partnerships with leading industry retail giants provides Bubs with key routes to the Chinese market.

An equity linked agreement with Chemist Warehouse gives Bubs significant sales and marketing exposure to the domestic market. In addition, a partnership with Alibaba‘s (a Chinese business-to-consumer platform) allows the company to take advantage of cross-border e-commerce. Bubs also has a joint venture with Beingmate, a Chinese-owned enterprise specialising in infant nutrition with a network of 30,000 Mother and Baby stores.

What is the outlook for Bubs?

Bubs is the market leader in goat dairy, providing more than 65% of all Australian goat milk products. The company’s product portfolio is primarily targeted to infants and children with products including organic toddler snacks and instant milk formula made from goat milk. As part of the S&P’s quarterly rebalance, Bubs was added to the ASX300 on 23 September this year.

The company released its report for the first quarter of FY20 yesterday, with a 113% increase in direct Chinese export sales driving sales and revenue. Carr stated: “our China route-to-market platform capability has advanced significantly through our new strategic and venture partners.”

At the time of writing, the Bubs share price is relatively flat, sitting around the $1.12 level.

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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BUBS AUST FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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