Positive outlook in uncertain times
Benchmark’s results for the FY22 Q3 (April-June) period showed robust sales plus adjusted EBITDA (AEBITDA) growth and confirm a positive outlook, particularly in the important genetics and advanced nutrition businesses. Medium-term financial guidance, issued only in May, was reiterated, something that represents a positive element in the investment case given current heightened economic uncertainty. Benchmark’s status as a key player in the global aquaculture industry should be a defensive attribute and it also confirms low exposure to spiking utility costs - an additional attractive feature in the present energy crisis.We recently revised our valuation principally to reflect the changed macro-economic (inflation/interest rate) environment and, while this has deteriorated further since this was carried out in June, we do not consider there is yet a need to change the valuation.
Thus, we are maintaining the current valuation of £478m (or 68p/share), which is struck on the basis of a 12% weighted average cost of capital and 3% long term growth rate.
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