Why These Small Cap Stocks Are Gaining Investors’ Attention – BUB, BAL, FOD

  • Apr 27, 2019 AEST
  • Team Kalkine
Why These Small Cap Stocks Are Gaining Investors’ Attention – BUB, BAL, FOD

Bubs Australia Limited (ASX: BUB)

Bubs Australia Limited (ASX: BUB) announced about entering into a binding agreement with the Chemist Warehouse Retail Group with four years of the alliance for the purpose of sale and promotion of Bubs® products in Chemist Warehouse stores, to commence from 1 June 2019. Including its domestic and Tmall online stores, as per the agreement, Chemist Warehouse will sell Bubs® products in retail stores throughout Australia.

Chemist Warehouse is the largest pharmacy chain network in terms of total sales in Australia. With brands like ‘Chemist Warehouse’ and ‘My Chemist’, Chemist Warehouse enjoys 450 franchised stores throughout Australia and New Zealand.

Under the agreement, Chemist Warehouse, in two tranches, will purchase an initial issue of 12,356,627 fully paid ordinary shares of Bubs out of the promotional and marketing fee. For the second tranche at its AGM 2019, Bubs will seek shareholder approval.

Chemist Warehouse, subject to conditions, will use the promotional and marketing fee to purchase a maximum of 37,069,881 additional Bubs shares. The purchase will take place in three annual tranches with 12,356,627 shares each year, subject to achieving the sales performance targets. The company will have provision to adjust the number of shares to be issued if there is a reorganisation of the capital of Bubs or equivalent, on terms broadly consistent to those applying to options.

At the current market price of $1.075, the stock gained more than 10% today. The market cap for the stock stands at $495.88 million. The stock has moved sharply in the last three months with the gain of 121.59% as on 26 April 2019.

Bellamy’s Australia Limited (ASX: BAL)

Bellamy’s Australia Limited (ASX: BAL) announced in its earlier updates that JPMorgan Chase & Co. and its affiliates has increased its voting rights from 5.01% to 6.71% via the purchase of 1,921,443 additional shares of the BAL.

A normalised H1 ‘19 group revenue of $130m in 1H FY19 was lower as compared to $174.9 million in H1 FY18. EBITDA at $26m in H1 FY19 against $34.9 million (pcp) was largely attributed by the lower revenue on account of delay in SAMR registration, reduction in trade inventory prior to the rebrand and slowdown in the category performance. Going forward, the management aims total sales for FY19 at $275-300 million with an improved performance from March. The expected normalised EBITDA for FY19 is at 18-22% of sales on the back of lower revenue forecast and higher investment in marketing and the China team.

At the current market price of $10.990, the stock is available at the multiple of 44.66x of its earnings as on 26th April 2019.

The Food Revolution Group (ASX: FOD)

The Food Revolution Group (ASX: FOD) announced that it has signed an agreement with ICC Global Pty Ltd. As per the agreement, ICC Global will order at least $8 million of FOD products by 2020. ICC Global order will comprise of both existing as well as future product range with a specific curiosity in FOD’s upcoming range of sachet and gel products, which are planned to be launched early in FY20. ICC is in the process to place its first order for a minimum of 10,000 units of orange juice with a quantity of 1-litre and 2-litre. This order is expected to be shipped by FOD to Shanghai in June 2019.

This Memorandum of Understanding will establish a long-term strategic cooperative business relationship between FOD and ICC.

At the current market price of $0.099, the market capitalisation of the stock stands at $50.29 million as on 26th April 2019.


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