Why has the BWX share price crashed
Even ahead of today's slide, shares in the beauty products maker had lost 78% of their value over the last 12 months.
Shares in BWX Ltd (ASX: BWX) are among the worst-performing on the ASX on Tuesday after crashing more than 40% in early trade to a record low of 69 cents.
That comes on top of the stock already losing more than two-thirds of its value over the last year.
Why has the BWX stock price been hammered?
Investors are reacting on Tuesday after the maker of skin and hair care products under the Sukin, Life Basics and Nourished Life brands outlined an earnings downgrade and launched a discounted capital raising to shore up capital for the tough times ahead.
BWX now expects full-year earnings before interest and taxes, depreciation and amortisation (EBITDA) to fall by 76% to between $6 million and $10 million. The group is likely to post a net loss of $10–$14 million for FY2022.
The company had posted a $2.3 million loss for the 6 months to December amid disruption related to the global pandemic. However, it told investors in February that it hoped to deliver strong underlying revenue and EBITDA growth in FY2022. Those forecasts have clearly not gone to plan.
The group expects FY2023 revenue to come in between $260 million and $270 million with EBITDA recovering to $45–$49 million. It has also flagged price increases and reduction in trade spend next fiscal year to ensure "consistent sales and cashflow through the year".
As a result, BWX is now raising $23.2 million through an equity raising to shore up capital and avoid breaching its banking covenants. This includes a $13.5 million through a placement to professional investors and $9.7 million through a 1-for-10 entitlement offer.
Shares will be issued at just 60 cents each, a hefty 48.7% discount to Thursday's closing price of $1.17 a share.
The decision comes just about a week after billionaire Andrew Forrest's Tattarang investment vehicle took a 17% stake in BWX.
Bennelong Australian Equity Partners (BAEP) also has a similar holding in the company.
BWX's market value has crumbled over the last 6 months, reflecting the underperformance of its recent acquisitions and also a higher operating cost base amid supply chain disruptions. The company is also in the final stages of commissioning a new manufacturing facility in Victoria, pushing its debt level higher.
"As we head into an environment where marketplace conditions are more uncertain, we believe a focus on profitability and balance sheet improvement in the short and longer term is the right course of action and will allow BWX to get on with delivering our previously announced strategic plan," CEO Rory Gration said in a presentation on Tuesday.
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