Reaping the 'Fruits de Mer'
​Benchmark (BMK) 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.
After an acquisitive year, Benchmark has the structure in place to provide access to high growth aquaculture markets across hemispheres with breadth and critical mass to provide synergies across its Nutrition, Health, Genetics platforms. BMK’s $342m acquisition of INVE Aquaculture in December 2015 diversified the company’s activities and more than doubled its revenue base: group revenues increased 148% to £109.4m in FY16 (£44.2m), up 20% to £29.8m (£24.7m) stripping out acquired businesses in both years.
Despite previously flagged headwinds in shrimp markets, pricing, sales and margins on core products held firm. Animal Health sales rose from £21.1m in FY15 to £24.8m, driven by a rebound in Salmosan/Byelice sales. FY16 group trading EBITDA rose from £2.4m in FY15 to £22.3m in FY16. After a £31.7m August placing, end of September 2016 gross cash stood at £38.1m.
INVE integration is well on track, with further potential synergies from the North-South complementarity. A key account management process is being implemented to optimise cross-selling opportunities for BMK’s existing platforms, notably in China and Asia.
The company’s development pipeline of 90 plus products is set to be a driver of medium to long term growth, enhanced by the combined expertise of INVE. The launch in July of a novel seabass Nodavirus vaccine into commercial field trials, illustrates BMK’s capacity to rapidly develop products in-house and launch into high demand markets.
After adjustments to our forecasts, we roll forward our DCF valuation which increases from 110p to 120p/share.
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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