Sustainable solutions plus greater visibility
Benchmark helps deliver improved healthcare products and welfare services to the global aquaculture and livestock industries.The introduction by BMK of CleanTreat, an innovative and environmentally sustainable system to purify water used in prevailing sea lice chemical bath treatment, expands the suite of products available to salmon farmers to combat a major threat to the industry.
The sea lice threat is reported to cost the salmon aquaculture industry over US$1bn per annum worldwide, contributing to reduced production volumes, rising costs and subsequent price increases to consumers. The CleanTreat process is designed to work with most chemical bath treatment products, notably this would include BMK’s Salmosan and its successor, estimated peak sales of £25m (source: BMK). Removal of detached sea lice and chemical residues from treated fish prior to returning them to sea is a key factor in minimising the number of living sea lice returned, reducing the potential future resistance of the parasite to subsequent treatments.
That good news was followed by the renewal of INVE’s contract with Great Salt Lake Brine Shrimp Cooperative (GSL). This is a key symbiotic relationship and now provides greater visibility on long term Advanced Animal Nutrition revenues. The newly agreed long term distribution agreement is for current and potential INVE replacement diets and animal health products.
BMK shares have underperformed the market recently, and to us the current share price fails to reflect our forecast 2016-2019 revenue CAGR of a healthy 18% and a 39% CAGR in adjusted EBITDA over the same period. Clearly the long term contract with GSL increases our confidence in forecasts of growth. Our valuation remains £588m for the Group, or 112p per 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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