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Growth Portfolio: Noni B Limited (ASX: NBL)

Published 02-AUG-2018 00:00 A.M.


2 minute read

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Overview: Noni B Limited ("Noni B", "the Company") is an Australian retail company focused on women’s clothing apparel and accessories. Noni B owns a portfolio of retail clothing brands distributed via a network of 1,350 stores as well as an online presence. Earlier this year, Noni B announced the acquisition of five additional brands - including Millers, Katies, Crossroads, Rivers, and Autographs – expanding its total portfolio to 9 brands. The Company was founded in 1977.

Catalysts: The recently acquired brand portfolio significantly increases Noni B’s footprint and the Company is now focused on replicating the successful integration of Pretty Girl Fashion Group in 2016. Realising synergies and expanding margins could drive returns and add to recent earnings momentum with the Company on track to announce substantial EBITDA growth for a second consecutive year. A strong balance sheet and continuation of the recent trajectory could trigger further capital management initiatives.

Hurdles: The acquisitions have incurred combined EBITDA losses totalling

$6.2m for CY17 and there is no guarantee that projected synergies can be realised. While most retail providers continue to downsize their store footprint, Noni B’s expansion strategy could be a risk as ongoing like-for-like sales growth is not assured. The Company operates in a highly competitive sector and may be subject to increasing competition.

Investment View: Noni B offers profitable exposure to demand for clothing apparel. We are attracted to the Company's recent growth trajectory and track record of turning around underperforming assets. Hurdles include integration risks and competition. Following a period of sustained headwinds, dividend distributions were reinstated in FY17 as restructuring initiatives delivered tangible results. Backed by major shareholder Alceon, the successful integration of recently announced acquisitions is projected to treble revenues in FY19. Continuation of the recent growth trajectory could result in further capital management initiatives and drive shareholder value. We initiate coverage with a ‘buy’ recommendation to monitor the Company’s ability to ‘buck the trend’ of underperforming retailers.


General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

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The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

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