Vitamins group, Blackmores has been a headline grabber in the past year as its shares surged past $220 at the start of the year on strong demand for its products from Chinese buyers and moves by the company to enter the baby formula business.
And then there was some second thoughts among the previously crazed investor buying and the shares came off – down 25% up to the close on Wednesday night, ahead of the release of the 2015 interim earnings and dividend report yesterday.
That sell off in 2016 trimmed the gain in the shares in the past year to ‘just’ 291% and yesterday saw a mixed reception to the very strong interim and jump in dividend – the shares rose more than 6% in early trading, then retreated to be down 4.8% at $157.07 each.
The interim result was solid, but not that good to justification many of the sky high valuations of the stock
Yes, booming vitamin sales to China helped Blackmores to more than double net profit in the December half year to $48.3 million, from $18.62 million in the year-earlier period.
And yes, shareholders will get an interim dividend of a juicy $2 a share, almost triple that of a year ago.
And yes, revenue jumped 66% to $342 million in the six months ended December 31, from $206.7 million in the year-earlier period.
And yes, direct in-market sales in Asia rose 73% in the December half-year to $61 million, while sales of vitamins in Australia also jumped by 73% to $238 million, helped by demand from local Chinese and other Asian buyers, and tourists. Sales of so-called Bioceuticals rose 24% to $33 million and earnings of $5 million.
Costs jumped 53% to $273 million, which seems to have been a bit of a concern for some in the market. But the company had net cash of $23 million at the end of December.
CEO Christine Holgate reaffirmed the group’s guidance for “strong profit growth” for the full year.
“Our core business in Australia, New Zealand and the ASEAN region continues to enjoy double digit growth, while our emerging business in China has further propelled our success,” she said.
“We have strong, experienced leadership in China and have structured our operations to ensure a sustainable future,”she said in yesterday’s statement.
But a price earnings ratio of more than 40% seems sky high for the moment.
