Baby Bunting Group Limited

This report is an updated version of the report published on the 23^rdAugust 2022 at 3:55 PM GMT.

Section1: Company Overview and Fundamental Insights

1.1 Company Overview:

Baby Bunting Group Limited (ASX: BBN) is a nursery retailer and offers a one-stop-baby shop. The company operated into speciality baby goods and maternity retailing, catering for the parents of a new-born to children three years of age.  

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders collectively form ~40.16% of the total shareholdings. AustralianSuper holds the maximum number of shares with ~13.37% shareholding, followed by Bennelong Australian Equity Partners Pty. Ltd. with ~10.36%, as depicted in the chart below: 

1.4 Key Metrics:  BBN’s current ratio increased from 1.22x in FY21 to 1.26x in FY22.

Section 2:  Business Updates and Financial Highlights

2.1 Recent Developments: The below picture shows the recent updates:

2.2 Key Takeaways from Recent Results: In FY22, the core Australian business, which excludes the New Zealand start-up costs recorded a pro forma NPAT of AUD 31.1mn and a pro forma EBITDA margin of 10.4%.

The Below Picture Depicts BBN’s Expanding Total Addresable Market (TAM):

Section 3:  Key Risks and Outlook

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is August 23, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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