At time of writing, the share price of Bubs Australia Ltd [ASX:BUB] is up a significant 5.2%, trading at $1.215 per share. Earlier it was up as much as 13.42%
It has been a scintillating past couple months for the Bubs share price, with it breaking sharply above moving averages recently:
The company has just released its quarterly activities report, which highlighted strong revenue growth and massive sales growth in China over the last year.
Bubs share price reacts to revenue & China sales
The Bubs share price flew up this morning, with the company releasing their quarterly activity report before trading commenced.
According to the report, domestic sales still make up a big chunk of the company’s revenue — coming in at 79% of Q3 revenue.
Perhaps most exciting for the company though, are its sales in China — these sales were up a whopping 884% on the prior corresponding period and accounted for 20% of Q3 revenue.
The report also detailed strategic developments such as the $31.44 million it raised through C2 Capital Partners which should underpin the company’s growth going forward.
It also acquired a 100% interest in Australia Deloraine Dairy, which is ‘a CNCA licenced infant formula manufacturing facility in Melbourne, including ownership of three brand slots with SAMR technical applications in process.’
CEO Kristy Carr hailed these achievements, saying:
‘Taken together, these developments have rounded out our foundation strategy, namely to build a vertically integrated business with key domestic and China channel partnerships in place. With our new strategic alliances to such renowned partners, Bubs is now in a very unique position and well placed to rapidly advance our business and operational performance.’
Are there any drawbacks in the quarterly activities report?
If there is one drawback in the report, it would be the cash position of the company.
Bubs noted that ‘the statutory cash reserves position at 31 March 2019 is $13.00 million and normalised cash position $21.12 million.’
If revenue keeps growing at its current pace, this is not too serious a concern, but it is definitely worth considering.
The company is still on the path to profitability and it is trading a lot like a tech stock, with investors pricing in future revenue growth.
With a rapidly growing middle class, the Chinese market is huge, and the company will be looking to make further inroads into the market.
For Money Morning