A leading edge in aquaculture
Benchmark helps deliver improved healthcare products and services to the Animal Health and Aquaculture industry. Rising demand from clients for its products and services to manage sustainability practice in worldwide production and supply chains underlines BMK’s opportunity for significant organic and external growth.This week it reported an overall positive H1’17 trading statement, demonstrating that it is leveraging its expertise across its Breeding and Genetics, Animal Health and Animal Nutrition platforms. Highlights of the H1’17 include formation of a new JV with SalMar ASA, the third largest salmon producer in the world. Meanwhile, softness in the shrimp markets continued, as flagged at the FY’16 results.
Looking forward to H2’17, launch of a novel sea lice treatment is anticipated leading to significant revenues. The treatment, a follow up to Salmosan, will be an important addition to the company’s suite of sea lice control products to address this ongoing marine disease challenge.
The company is on track to deliver new products from its Animal Health pipeline which will contribute significantly to long term value creation. Notably the launch of an innovative and environmentally sustainable sea lice treatment is anticipated in H2'17. Meanwhile, the Braintree vaccines facility is expected to become commercially operational in H2'17, providing the flexibility to develop and manufacture vaccines at an optimal pace and cost; the company has a combined vaccines and animal health pipeline of over 90 products with serviceable markets worth over £750m.
We leave our forecasts unchanged and maintain our DCF valuation of £628m or 120p per share. Although significantly above the current share price, that value seems to us increasingly well supported by the strong outlook and demand for aquaculture technologies.
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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