BBN: Model Update

研报英文原文证据摘录

BBN: Model Update

Baby Bunting Group Limited

Target/Upside/Downside Scenarios Investment summary

Despite operating in the less-discretionary baby goodsBaby Bunting Group Limited

category, BBN's customer base has not been immune to cost of

4 125 Weeks 01FEB24 - 24JUN26 living pressures, which has weighed on revenue growth. While

3.5 we are encouraged by improvements in macroeconomic

3 indicators and company-specific growth drivers such as 1)

entry into New Zealand, 2) increasing online sales capability,

2.5 TARGETTARGET 2.302.30 and 3) the maturation of the BBN store network, we remain

2 cautious on the near-term outlook for BBN given recent sales

1.5 CURRENTCURRENT 1.471.47 volatility and sensitivity to the macroeconomic environment.

20m 15m Risks to rating and price target

10m 5m 1) Better/worse-than-expected macroeconomic conditions,

2024 2025 2026

F M A M J J A S O N D J F M A M J J A S O N D J F M A M J 2) faster/slower-than-expected store roll outs, 3) success of

BBN AU Rel. AUSTRALIAN ALL ORDINAIRES MA 40 weeks entry into New Zealand, 4) execution risk, 5) product sourcing

Source: Bloomberg and RBC Capital Markets estimates for Target risk, 6) inventory risk, 7) store cannibalisation, 8) competition

Valuation risk, and 9) unfavourable FX movements.

Our $2.30/share 12-month price target is based on our

Discounted Cash Flow (DCF) analysis using a 11.2% WACC (1.45

Beta and a 3.0% terminal growth rate). The implied return to

our price target supports our Sector Perform rating.

Upside scenario

Our $3.20/share upside scenario has the following

assumptions vs. our base case:

• Faster-than-expected sales recovery.

• Higher-than-expected earnings growth rates and

profitability with a lower WACC.

• Greater-than-expected store net adds and revenue per

store.