|Cerrito, thanks for extra ANP comments. Unfortunately I can't make ANP's AGM on June 29th which is being held at its brokers office in Central London. Listened again to Lord Lee's Shareradio podcast(many thanks to Jockthescot) where he outlined all the reasons why ANP should be a good long-term investment. However, I would like to get a feel for the new CEO, and also the long-term commitment of the chairman and Peter Lawrence both of whom have been on the board for over a decade. Would appreciate any reports after the AGM.|
|Thanks for that Bottomfisher
Also note that on the website news of several overseas hires they have made-all appear to have impressive backgrounds- but as they do not date their news articles not sure when made.
An increase in fixed costs and also requires a good investment of management time.
Be interesting to discuss at AGM|
|Regarding earlier comments on the relative attractions of Anpario (ANP) versus ECO Animal Health Group (EAH) there is no question that EAH, which is roughly twice ANP’s size in terms of revenues, is the much faster growing business.
According to Stockopedia, EAH’s revenues have been growing at a compound annual rate of 11.7% over the last five years - more than twice as fast as ANP. The same goes for EAH’s eps which have been growing at a compound annual rate of 26.3%. At current prices ANP is trading at around 20 times forecast earnings, according to Stockopedia, compared with EAH’s multiple of 32.6 times forecast earnings. On paper, at least, both shares seem over-valued at current prices.
ANP’s shares may be being propped up by a hope that its pedestrian revenue growth will soon start to accelerate under a new CEO and a strategy of getting much closer to its customers in the field. But what if these plans do not fire up ANP’s revenue and profit growth?
Interestingly, Peter Lawrence, the founder of EAH, its executive chairman and biggest shareholder, has been an ANP non-exec for more than a decade. Along with Richard Rose, ANP’s chairman, he is the only non-exec on ANP’s board. He is better placed than anyone to know what ANP is really worth.
ANP and EAH are relatively small global players serving similar markets. ANP provides natural food additives to the live stock industry and EAH provides pharmaceutical products for global animal health markets. Perhaps EAH could emerge as a suitor for ANP if its revenue and profit growth fails to take off.|
|Bit severe that chopping of s.p.....??|
|Why are we talking down ANP, the price has been going up so all shareholders should be happy. If you think it's overvalued bank a few profits. I can't understand when there's such dross around the markets.|
|Cerrito, you just may be right about ANP being too small, at 70m, to attract a really major company, but EAH is a 320m company and growing quickly, so I can't think it would apply there.|
I am not in EAH at the moment and never have been and I was wondering if they used distributors and I note your comments that they do.
My understanding of why ANP is moving from distributors to their own people is not the margin/cost avoidance per se but rather to increase sales and getting a better understanding of what drives demand for their product by having close contact with the end user.
Be interesting to chat with the CEO at the AGM on this.
I take your point about a large company taking over EAH to use its own distribution network; the same comment applies for ANP, especially for getting buy in with the big US producers. When ANP's price was in the 240p area I was half expecting a takeover..perhaps big companies find ANP too small...and indeed EAH.|
|EAH has been and is increasing t/o, profit and eps rapidly and can be expected to continue to do so following recentl regulatory approvals and others in the pipeline and expected fairly soon. Increasing dividend payments too. It has very high barriers to entry for any would-be competitors. Currently it largely uses distributors to achieve sales, which is costly. EBITDA would be much higher in the hands of a big company with it's own distribution network already in place, so takeover is possible - or the company will develop it's own sales forces around the world and increase margins.
P.E. more like 25 or less for the year just started.
Anyway, enough said. If it doesn't appeal, based on past cash flow, it doesn't.|
|Although ANP earnings have trodden water, op cashflow per share, perhaps a better measure have continued to increase.
.......adj EPS....OP C/F PS
Free cashflow per share has been flat due to increasing capex. (Source stockopedia)
There are unfortunately no predictions for 17/18.
EAH is on a PER of 37 this year and has had negative free cashflow for the last 2 years, so don't see why that is better value.
All the best, ottrott|
|Glasshalfull, I've never been in this one, though I have looked into it as the sector is interesting. I fully agree with your conclusions and feel that Eco Animal Health, (EAH), offers far better prospects. It's share price has flatlined for around 6 months and is due a rise ahead of, and through, what will undoubtedly be excellent results for the year recently ended.
Take a look if you're not already familiar with it.|
|Very comprehensive GHF. One of the first prerequisites for me to buyin to a new company is a growing EPS so despite the many appealing qualities of #ANP I won't be buying in at this point. GLA|
Share price still defies gravity despite earnings downgrades.
I saw martinthebrave's post looking for clarity on earnings for the coming year and revisited my detailed post on earnings in March 2016 (post 910) where I talked of earnings stalling & intimated that I felt the share price was up with events at c.250p at the time.
Shares are (+67p) since my post...so what do I know!!!???
The share price was 134p in March 2013 when they released 2012 figures, and had risen to 305p when they released 2016 results on the 8th March 2017, or rise of 128% in 4-years. This is during a period when earnings have only risen marginally and are forecast to tread water this year & next.
Worth clarifying that I still believe Anpario is a quality company & hope to reinvest at some point. Just don't feel I should be paying up in anticipation of growth 18 months away, especially when earnings have been fairly static for the last 4 years which I describe below.
Looking back to post 910 a year ago, Peel Hunt lowered 2017 estimates from £5.3m PBT to £4.6m which translated into the forecasts for adj EPS falling from 20.7p to 18.1p. PH indicated that this would result in ANP achieving 12% earnings growth in 2017.
In a March 2017 PH lowered 2017 estimates yet again, this time from the £4.6m to £4.3m or 17.7p adj EPS to 16.9p. So we now have a (-4%) earnings contraction in 2017. Singers has an even lower forecast of 14.7p adj EPS for 2017
My point is that ANP has essentially treaded water - in terms of earnings - for a number of years now whatever way one cares to look at it, with forecasts suggesting that earnings will continue in a similar vein for the next 18 months.
Adj EPS: -
2012 - 15.1p EPS
2013 - 13.1p EPS
2014 - 14.8p EPS
2015 - 16p EPS
2016 - 16.6p EPS
Consensus forecasts: -
2017 - 15.8P EPS
2018 - 15.4p EPS
Worth pointing out that cash has risen from £3.7m at year end 2012 to £11.1m at end of 2016, but the dividend has only risen a meagre 2.5p (from 3p to 5.5p) in 4 years.
So in conclusion, I recognise the steps management are taking to invest in subsidiaries & build relationships that will hopefully drives sales & earnings in the future. However, as I've discussed above, I happen to believe that the current 317p share price & PER of over 20 is simply too high. If ANP was churning out consistent 10%-15% earnings growth YoY then I would agree with the current rating, but in 2016 they produced marginal earnings growth with a dividend yield of only 1.7% despite strong cash generation.
Earnings are forecast to fall back this year and next, so paying up 18/24 months in advance for growth doesn't appeal to me.
Hopefully I'll join shareholders again as growing earnings materialise, or in circumstances where I consider that the share price has fallen back to a reasonable rating.
Only my tuppenceworth FWIW.
Best wishes to holders.
|srichardson.8 Much appreciated. It is the one think that puts me off buying in. I will take another look.|
|I think - only think - that it is largely down to this (from the full year commentary)
'We expect to incur further exceptional costs in the early part of 2017 as investment in the regions continues and new subsidiaries are established in Thailand and Indonesia.' (clearly deducted when they present adjusted numbers)
'Operating expenses increased from GBP6.9m to GBP7.6m, partly due to additional costs of new senior recruits.'
If you look at the results by half there is a notable uptick in SGA costs in the second half of last year which they suggest is largely being driven by hiring more local sales staff (second comment above) to sell directly to larger manufacturers overseas. And there is input cost pressure partly down to weaker sterling though this is offset by better translation of overseas sales into pounds.
And S America esp Brazil is an important producer of feedstuffs and is having a really rough time still which doesn't help.
Or at least that is my impression.
Frankly they need to do better on sales and hopefully are shaping themselves to do so but only time will tell.|
|Just researching #ANP. Can anyone tell me why the Normalised EPS is forecasted to decline in 2017 by C:13% from 18.3p to 15.8p, falling again in 2018 to 15.4p? Thanks.|
|I did a back-of-the-envelope estimate for this year (Dec 17) using £27mn revenues, gross margins 47% (as this year), SGA up 8% based on fewer new management appointments, and finally £0.5mn exceptionals. That gave me around £4mn pre-tax and assuming a higher tax charge I reached £3.4mn net, or 16.4 pence per share using 20.7mn as ballpark weighted issued shares. That is about x17 p/e which is not cheap for a steady eddie but I like the management thinking and underlying earning look OK and not volatile. It happens to be in the upper middle of the Peel Hunt (17.5p) and NI Singer (14.7p)range and if achieved will look quite good against the 2016 outcome.
On a general point the profit growth was pretty much all from Asia, Americas was disappointing presumably on Brazil. If the US is getting bigger and is more profitable than SAm we could see Americas overall segment margin considerably better.
Frankly I wouldn't expect too much upside for a while but am comfortable as a holder.|
|That pretty much sums this up I think. The only thing I would add is that Oryx describe themselves as activist investors. I would think that they wouldn't be happy with so much cash sitting around doing nothing. That may spur some action but I'm only guessing.|
|I have had a good look at the results and note that as anticipated H2 revenues at £13.6m were well up from those of H1 of £10.7m.
Not all that much caught my eye; I see the reference to legal costs for abortive acquisitions which suggests activity in looking at acquisitions and begs a question for the AGM as to their current thoughts for what to do with the cash which stands at almost half of tangible assets.
As signalled capex was £729 k compared to £301k in 2015 and £289k in 2014
I went through the Principal risks and uncertainties and nothing surprised me.
Geographic analysis was very useful. Shows importance of Asia and despite gloom in Middle East profits only went down from 1.6£m to 1.2£m.
I hope to see some of you on June 29 when I plan to get clarity on the use of the word twice of challenging
There is the Middle East and they had the specific issue in Brazil, but not sure what else was especially challenging; that said, I would have thought the devaluation of £ would have helped more than it seems to have done- I see from note 15 that a third of the receivables are in £.
As previously discussed not a great deal of change in shareholder composition in last twelve months. RBC Custodians go up from 8.4% to 11.2%; the current second largest shareholder Unicorn increased it's holding as did several other of the larger holders and as noted Oryx have come in with 3.8%.
I have noted down from last year that the Employee Trust had 8.5% but cannot see where that came from. Anyone have any ideas?
I note the share price increase this morning; not sure if there is much more upside but downside limited and I do not see myself as buying or selling in the immediate future.
The concentrated ownership means that there is not all that much liquidity and hence relatively wide bid offered spread.|
|Yeah..... that deal does seem v strange...... but they must have reasons....... but a bit miffed they have created another tier of managers in the loop...... again they must know good reason.|
|Agree that U.S will be huge for us..... hopefully it will happen this year...... It's a tremendous market for us in all respects!!!!|
|Steady as she goes.....USA is going to be huge but can't say I fully understand the Cobbet acquisition,especially if it's going to have no material impact (in 2017 ).|
|Well...... I dunno what to make of these figures...... not losing money, but not making millions either...... kinda steady Eddie style of operations...... Maybe it might be wise to cease Middle East operations till things improve in that region..... but what do I know?!?..... lol Have been invested here a long time..... I like the company, and will continue to buy when I can......|
|Yes, the very large purchase I referred to on 24th, which matches their declared date of purchase
As you say, good news!|
|And now we know who it is. An institutional growth fund. Nice!|
|We've still got our buyer, although there is clearly a price limit.|