BWX Ltd (BWX): Number 1 player in Pharmacy Skincare yet growth is still accelerating

All about Sukin – Domestic and International growth strong: The BWX interim result (NPAT up 30% to $8.2m vs BP estimate of $8.5m) served to highlight the investment appeal of the stock based on the following key factors: 1) Sukin Domestic still appears to have plenty of growth left in it – Sukin Domestic sales increased 49% on pcp which we view as an excellent result given the brand already occupies the number one position in the Pharmacy Skincare category; 2) The Sukin International opportunity has the potential to move the dial – Sukin International sales increased 116% in 1H17 to $6.7m with existing markets including the UK, USA, China, Canada, NZ, Singapore, Hong Kong and Malaysia; and 3) Investment for future growth adversely impacted margins in 1H17 – The key reason for the miss at the EBITDA and NPAT line in 1H17 was higher than expected operating costs based on a deliberate and considered investment in additional staff, marketing and promotional activities to enhance domestic and international capabilities. Despite this, the Company re-iterated FY17 EBITDA growth guidance of 30%.