Trading on track and prospects exciting
Benchmark (BMK) helps deliver improved healthcare products and services to the Animal Health and Aquaculture industry.BMK has updated on overall FY17 sales being c. £138m – in line with market expectations and equivalent to 26% growth over FY16. Across the Group it has been a mixed year with strong sales performance from two divisions, including at its largest - Advanced Animal Nutrition (AAN) up 21% (8% on a constant currency basis) during the year and at Benchmark Genetics (BG), where demand for salmon eggs was a key driver of 49% like-for-like growth (or +23% at constant currency).
Good news for the BG division included delivery of the first batch of broodstock to the BMK’s new SalmoBreed facility in Norway. This world class facility is anticipated to enable the delivery of disease-free ova on a year-round basis, and the Company expects it to reach peak yearly capacity of 150 million ova in 2019.
Another positive development for the genetics division was the announcement on 7 December of BMK’s participation in a three-year research collaboration funded by a £500,000 Industrial Partnership Award from the UK’s Biotechnology and Biological Sciences Research Council (BBSRC) – exploring the potential of gene editing to help overcome disease challenge of infectious salmon anaemia (ISA). Additionally, tangible returns on BMK’s £17m investment in its state-of-the-art vaccines facility in Braintree Essex are nearing a realisation, as it reported that the first commercial scale batch of antigen had now been produced at the plant.
We have adjusted our FY17 forecasts in line with guidance, slightly reducing our revenue estimate from £141m to £138m. Earnings guidance being ahead of our estimates, we increase our estimated EBITDA to £10m.
BMK’s market cap has fallen almost 50% from the 2017 share price high of 105.5p due to prior uncertainty on revenue projections – hopefully now alleviated by this trading update. Indeed, adjusting for forecast changes our revised DCF valuation is £521m, or 99.8p per share, a shade higher than our previous valuation of £517m.
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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