Re-energised and set to deliver
Benchmark Holdings is now leveraging its unique aquaculture platform that spans Advanced Nutrition, Genetics and Health. That means targeting greater penetration in existing markets, further diversification and advancing its product pipeline. Our forecast of a FY18-21 revenue CAGR of 12% and adjusted EBITDA of 37% is driven by organic growth across each division.Highlights of FY18 were growth momentum in Genetics, with revenue up 17% and adjusted EBITDA margin that expanded from 19% to 22%. In Advanced Nutrition, demand for BMK’s higher margin artemia replacement diets and health products serving the higher value farm segment meant that margins improved on the product mix from 49% to 52%. Animal Health revenues rose 7% from £15.1m to £16.2m including from commercial field trials of its next generation sea lice treatment combination. Outcomes to date are highly positive resulting in close to 100% efficacy.
Group revenue grew 8% on a reported basis to £151.5m, 13% (CER) taking gross margin to 49% vs 45% in FY17, driven by an improved product mix in Nutrition and Genetics and sales volumes in Health, which benefitted margins across the Group. Adjusted EBITDA rose 68% (86% CER) from £10.1m to £17m on a margin of 11% (7% in FY17).
Multiple product revenue streams and upcoming launches mean that organic revenues are estimated to continue to grow strongly beyond the forecast period, with the late stage pipeline peak sales estimated at over £178m. These products alone have the capacity to double revenues by 2025. News flow in 2019 and beyond includes potential detail on commercial strategy for the SPR Shrimp, further expansion of field trials for the Company’s next generation sea lice treatment plus vaccine trial results and partnering news for the non-aquaculture pipeline.
We increase our DCF valuation of BMK to £585m or 105p per share (from £573m).
Benchmark Holdings is principally engaged in the provision of technical services, products and knowledge that support the development of sustainable food and farming industries. Co.'s reportable segments include: Animal Health Division, which provides veterinary services, environmental services diagnostics and animal health products to aquaculture, and manufactures licenced veterinary vaccines and vaccine components; Genetics Division, which harnesses salmon breeding technologies combined with production facilities to provide a range of high genetic merit ova; and Advanced Animal Nutrition, which manufactures and provides nutrition and health products to the aquaculture industry.
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