BWX Ltd. (ASX: BWX) is a vertically integrated developer, manufacturer, distributor and marketer of branded skin and hair care products with an emphasis on the natural segment of the beauty and personal care market. The Sukin brand is its most well-known product in Australia. BWX was listed in November 2015 and has a market capitalisation of $303 million.
BWX’s shares hit an all-time high of around $8.00 in January 2018 and then slumped to a low of around $1.30 in January 2019. The sharp fall in the share price reflects an earnings downgrade in December 2018 and the company losing focus on its business during the period of the failed takeover led by BWX’s former CEO which was finally resolved in September 2018. The company also had another earnings downgrade in May 2019.
Since early June 2019, BWX’s share price has rallied from around $1.60 to $2.20 (18 July 2019) on the back of positive news. First, BWX’s major shareholder (Bennelong Australian Equity Partners Ltd) announced on 13 June 2019 that it has increased its interest in BWX from 20.7 per cent to 22.2 per cent. Second, BWX announced on 12 July 2019 that it has extended the term on its debt facility from June 2020 to July 2022 and cost of this finance has been reduced.
Investors may be interested in BWX as a potential recovery stock at the small-end of the market. The annual results due to be released in August 2019 may provide evidence of a recovery in earnings going forward into 2019-20.
This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978) (“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
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