A clear growth path
Benchmark helps deliver improved healthcare products and services to the Animal Health industry (and the global aquaculture market). Recent interim results confirm the limited damage of a Salmosan generic launching in Chile this year. However, there is much more to the Group and, with the new Breeding & Genetics division (BBG) leading from the front, the opportunities for this broad-based animal health-to-sustainability science Group look set to deliver significant earnings growth. Revenues increased by 30% to £19.8m, with a significant contribution from BBG at both the revenue (£9.8m) and trading EBITDA (£3.1m) level. Ongoing core investment activity continues, to support R&D, vaccine manufacturing and its product pipeline. A strong component of Group revenue growth was the newly-formed aquaculture breeding and genetics division. Last year's major acquisitions are integrating well, enhancing key synergies and customer demand. Benchmark looks to have aquaculture's strongest new product and technology pipeline, with 61 products across addressable animal health markets totalling up to £603m pa. Our statutory forecasts remain unchanged since we see the changes made following the last trading update as reflective of the pressures on the business in the first months of 2015. Looking forward, there is a strong growth trajectory, with CAGR ('16-'20) in forecast revenues and adjusted PBT of 20%< and 60%< , respectively. Benchmark is unique with no obvious comparators, and we believe that for high-growth companies the valuation method that best accommodates this transition is a discounted cash flow. We maintain our fair value at 130 pence/share, twice current levels.
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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