Billabong International
Business Description
Billabong International Limited (BBG) produces surfwear and sports apparel and accessories for the surf, skate and snowboard markets. BBG now has a presence in more than 60 countries. The Billabong brand is targeted to both active participants in surf and extreme sports and people who desire to be identified with its image. BBG supports the promotion of the Billabong brand through the sponsorship of athletes and events.

27 July 2012
Recommendation
Recommendation: Relative to: _BLANK_ Small Ind (ex Fins)

Investment Fundamentals
ASX code: Stock price: Market cap: Y\E 30/06/2012 Reported e $m Adjusted e $m EPS adjusted ¢ EPS growth % PE x PE relative x DPS ¢ Yield % Franking % 2012e 39.3 39.4 14.5 -68.8 9.3 0.6 3.0 2.2 0.0 2013e 315.6 60.6 16.5 13.6 8.2 0.8 0.0 0.0 2014e 66.2 66.2 13.9 -16.1 9.7 1.1 0.0 0.0 BBG $1.35 $647m 2015e 81.7 81.7 17.1 23.4 7.9 0.9

Strategy Analysis
BBG´s strategy is to differentiate its products through quality, novel designs and branding. Management aims to initially build up a core niche brand then slowly differentiate products to appeal to a broader market without diluting this core. This strategy has been successful in moving designs away from men´s surfwear to the broader general apparel market. Management is duplicating this strategy with its less mature skate brand. This strategy aims to tap latent demand for products within a broader international market.Billabong International reported NPAT down 18.4% to $119.14m for the year ended 30 June 2011. Reported NPAT was significantly adversely impacted by the unfavourable effect of the appreciation of the AUD, in particular against the Euro and the USD relative to the pcp. Revenues from ordinary activities were $1.69bn, up 13.5% from last year. Diluted EPS was 47.0 cents compared to 57.8 cents last year. Net operating cash flow was