2 ASX beauty shares showing attractive growth September 11, 2021
Image source: Getty Images
Certain industries such as the beauty industry are exposed to continued strong global growth. Some ASX shares capitalize on it.
According to Frost & Sullivan, the Australian beauty and personal care market is worth $ 11.2 billion and is expected to grow at a compound annual growth rate of 26% through 2024. Online sales are only 11.4 billion. % of the beauty and personal care market. in Australia, which represents a lower penetration rate than other developed markets such as the United States, United Kingdom and China.
Adore Beauty Group Ltd (ASX: ABY)
Adore Beauty is the one who shares these interesting characteristics (above) in the beauty market. It is an e-commerce company that sells around 11,000 products through around 260 brands.
Due to the great opportunity that the management of Adore Beauty sees in the growth of the online beauty retail world, they will invest to increase their market share with a disciplined strategy to increase brand awareness of the brand, gain new customers and improve customer loyalty.
Beauty ASX stock believes that due to the predominantly fixed nature of the cost base, management expects the benefits of scale to increase and improve operating leverage and drive forward margin growth. long-term interest, taxes, depreciation and amortization (EBITDA). as it increases income.
Adore Beauty is experiencing strong revenue growth. In fiscal year 21, it experienced revenue growth of 48% to $ 179.3 million and EBITDA growth of 53% to $ 7.6 million.
While the number of active customers increased by 39% to 818,000, the growth of loyal customers was 64%. This led to an increase in annual revenue per active customer of 7% to $ 219, thanks to “strong” customer loyalty and an increasing average order value.
It is rated as a buy by broker Morgan Stanley, with a price target of $ 6. He expects strong revenue growth over the next few years.
BWX is a natural beauty company that invests in a number of different brands like Sukin, Andalou Naturals and Mineral Fusion. Nourished Life is another business owned by BWX, which is an e-commerce business that reported net sales of $ 25.2 million in fiscal year 21.
ASX beauty stock was busy in 2021. It announced a 5-year equity-linked strategic partnership with Chemist Warehouse.
BWX has also made two acquisitions in recent months.
He bought Flora and Fauna, an Australian online retail platform that focuses exclusively on vegan, ethical and sustainable products. Flora and Fauna’s net sales were expected to be between $ 16.4 million and $ 17.1 million in FY 21. This business will form an online retail group, 80% of which is not commercially available. consumer retail.
Finally, a few weeks ago, BWX announced that it was going to spend $ 89 million to buy 50.1% of Go-To-Skincare – it’s an Australian skin care provider with a range of products from skin care for the “masstige” market. In fiscal year 21, this company achieved sales of $ 36.8 million and EBITDA of $ 11.6 million.
ASX Beauty Stock’s core business grew in fiscal year 21. Underlying revenue increased 8.6% to $ 203.9 million, EBITDA increased 11.5% to $ 34.5 million (and ahead of expectations) and earnings per share (EPS) rose 44.9% to 17.1 cents.
The new operating and manufacturing facility is on budget and is expected to open at the end of calendar year 2021. This is expected to result in a “dramatic shift” in financial and operational performance.
According to Commsec, the BWX share price is valued at 17 times the estimated earnings for fiscal year 23.