Anpario Share Discussion Threads

[martinthebrave] 16/4/2017 15:49

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

[glasshalfull] 16/4/2017 13:29

ANP

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.

Anpario
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.

Kind regards,
GHF

[martinthebrave] 14/4/2017 10:38

srichardson.8 Much appreciated. It is the one think that puts me off buying in. I will take another look.

[srichardson8] 13/4/2017 18:45

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)
And
'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.

[martinthebrave] 13/4/2017 12:25

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.

[srichardson8] 13/3/2017 13:24

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.

[nivison] 09/3/2017 14:19

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.

[cerrito] 08/3/2017 19:52

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.

[tailgunner2] 08/3/2017 10:30

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.

[tailgunner2] 08/3/2017 10:28

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!!!!

[spekky] 08/3/2017 08:18

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 ).

[tailgunner2] 08/3/2017 07:34

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......

[truffle] 01/3/2017 16:22

Yes, the very large purchase I referred to on 24th, which matches their declared date of purchase
As you say, good news!

[hiddendepths] 01/3/2017 14:49

And now we know who it is. An institutional growth fund. Nice!

[hiddendepths] 01/3/2017 09:38

We've still got our buyer, although there is clearly a price limit.

[truffle] 24/2/2017 15:44

Meanwhile over 1.6 million shares have traded today.
Rather more than the usual ANP daily volume

[cerrito] 24/2/2017 14:01

Very odd that it has taken such a long time for such a simple mistake to be spotted, especially as on this board we were all somewhat surprised at the low cash level.
This does not impact well on management but more important to me is that it suggests that the Broker is asleep....Not only would they have vetted the release but their analyst should-like us- have suspected that something was wrong.

[nivison] 23/2/2017 09:11

Looks like they found another £700,000 down the back of the sofa.

[nivison] 03/2/2017 10:02

Yes, that's about £420,000 (plus stock)spent on buying the Australian distributor. Why pay someone else to distribute your product if that is really all they actually do, so not so much adding revenue as reducing costs I suppose and getting direct access to the end user with a possibility of more direct sales across the product range. A shrewd, positive, perhaps opportunistic move, but not game changing is my take.

[spekky] 03/2/2017 07:38

AN ACQUISITION (at last).........not sure it will add much profit,time will tell.

REBRANDING........probably the right thing to do but farmers are a strange bunch.

[cerrito] 02/2/2017 16:58

Remember in the interims they said
quote
We continue to invest in plant automation with expenditure this year to date of £0.4m and further expenditure of £0.6m committed in the second half of the year.
unquote
This capex expenditure explains a bit of why cash decreased in H2.
Indeed full year capex one reason for fact that 2016 cash increase at £0.9m was down from the £2.8m and £1.8m on 2015 and 2014.
Possible-but unlikely-that some of the new overseas trading arrangements have had a negative impact on working capital

[nivison] 02/2/2017 10:40

I think on balance anp will come out the right side of the poor value of the pound since most sales are via export. Financial performance is apparently improved on the last quarter, so just spending a lot of money on the business, hope it pays off.

[spekky] 02/2/2017 09:48

I seem to recall that they get raw materials from Europe.....perhaps the poor exchange rate is partly to blame?

[nivison] 02/2/2017 09:02

And improved financial performance apparently, which suggests a lot of money (perhaps as much as £1.6 million) has been spent somewhere......

I hope the management is doing what it stated it would do in the last interim report and is investing in order to grow returns organically.

[zipstuck] 02/2/2017 07:36

No cash improvement from the half year