The broker highlights material cost-outs and success in SE Asian markets as driving Blackmores’ result, but retains Sell. Increased distribution in Indonesia saw sales jump 73% and after two years of underperformance, Chinese earnings rose 26%.
Australian revenues fell -10%. While this reflects an impacted student/visitor market and a mild flu season, the broker notes industry feedback suggests competition in the space has increased.
The broker is also concerned over guidance to a slower second half. The broker cuts forecasts on this basis, and higher promotional spend, and adverse currency movement. Target falls to $59.20 from $50.60.
Sector: Household & Personal Products.
Target price is $59.20.Current Price is $78.73. Difference: ($19.53) – (brackets indicate current price is over target). If BKL meets the Citi target it will return approximately -33% (excluding dividends, fees and charges – negative figures indicate an expected loss).