How long have you held the stock?
We initially bought into BWX Limited, which makes the Sukin range of natural skin care products, in June last year. It was actually before its initial public offering in November.
We topped up our holding in the IPO. We have a 13% stake in the business, making us the largest shareholder.
What do you like about it?
It owns a strong brand in Sukin, its industry is growing fast and it is growing even faster.
It is only at the beginning of its push into large offshore markets such as China.
Where do you see the value?
The value is in its continued growth in Australia, including through product extensions such as the new Charcoal range, but larger yet, in the opportunity to push offshore.
The Chinese in particular have shown they love the brand, and needless to say, it’s a big market that BWX is only moving into now.
How is it better than its competitors?
It has a very popular brand in Sukin, which is a range of natural skincare creams that sell in the affordable price range. In Australia at least, it leads the industry, and out-sells global brands like L’Oreal and Nivea.
What do you like about its management?
The company has a fantastic CEO in John Humble, who is appropriately named given what he has achieved with the business so far.
He is the company’s founder, a substantial shareholder, and he has worked on the Sukin brand for almost a decade now. He is intelligent, practical and measured.
What is your target price on the business?
How long is a piece of string?
At what point would you sell it?
Once it has conquered the world. Offshore sales represent just 15% of the total, and we think that there is potentially a very long runway of growth ahead as it pushes into offshore markets, starting with China this year.
We are likely to hold on for so long as the global opportunity remains and it keeps growing strongly. We expect that to be a long time yet.
How much has it added (subtracted) to your overall portfolio over the last 12 months?
It’s been a good contributor given our large shareholding and its strong performance. We initially bought in at $1.10 pre-IPO and topped up in the IPO at $1.50 per share. It now trades around $4.50.
BWX
[1]Source: Yahoo!7 Finance, 5 May 2016
Julian Beaumont is an investment director with Bennelong Australian Equity Partners.
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