Anpario Share Discussion Threads

[partridge1948] 07/4/2021 10:14

An attractive acquisition at sensible price would be another route to growth. ANP sell in I believe over 70 countries, historically through distributors, but in more recent years they have had more success after setting up subsidiaries. They have improved operational performance considerably, so should now be able to cope with sales growth and from what I recall on AGM visit to the factory several years ago there is plenty of room on their site should they want/need to expand. Legislation over use of growth promoting antibiotics should be a good sales tool and we will hopefully see it reflected in the top line numbers this year.

[aringadingding] 03/4/2021 15:54

5 year revenue growth rate of 5.5% per annum is slow, for sure. I am not an expert but are their end markets policy-driven to some extent?

Is it fair to hope that e.g. China introduces anti-antibiotic policy? After all antibiotic resistance is a massive global health issue and tangentially but certainly (as a microbial public health issue) related to zoonotic emerging viruses (mentioning no names).

I guess there are 3 hopes:

1) They do some good old fashioned business building and marketing and beat a path to their customers' doors

2) Countries introduce policies as per above

3) They get acquired by a company with strong distribution / spare production capacity / threatened by ANP (but not for a few years I would hope)

Like I say I'm not an expert but I'm pretty happy to put money into a company with these potential upsides. If others have comments then great.

[redwing1] 03/4/2021 08:50

Anpario is a very solid company producing reliable profits and impressive cash flow. The issue has always been revenue growth. Sales have stubbornly refused to move at a pace that justifies such a high rating.

Maybe the very resilient performance in a pandemic year is a good omen, but to make meaningful share price progress from here surely requires a prolonged top line surge. It is long overdue.

[aringadingding] 31/3/2021 19:09

Good points, and much appreciated, all round. I note without too much judgement that the CEO is mid fifties years of age!

Overall I see what everyone is saying that these share sales do not really impact the fundamentals of the business. I can certainly see that changing the board structure could refresh and energise things just by being a change.

In my numbers above I have realised that 11m fixed costs for 50m of revenue was optimistic... anyway 100m of revenue would be a lot better.

Seems a bit harsh to say the shares have got ahead of themselves. 27x is not a sky high multiple... If growth in EPS happens over time then I would not expect the price to go down so selling now has risk really.

Tough call and related to one's investment approach. They might not fit the bill for a pure value investor, but in the long term looking for substantial EPS growth must trump other approaches.

[cfro] 31/3/2021 18:16

Worth noting that according to the final results statement the CEO - Richard Edwards - was paid a bonus of 250k against nothing the year prior. So i would assume he has a chunk of tax to pay on that which might go some way to explaining the share sale.

Personally i wouldnt read too much into the director share sales. This is a market after all and every shareholder is entitled to buy or sell accordingly. (Past experience has taught me never to sell on director share sales as it usually is always a costly mistake)
What we have is a new BoD and change round. Out with the old and in with the new so to speak. I wouldnt be surprised to see the new directors and board members picking up shares in the weeks and months ahead.

[partridge1948] 31/3/2021 15:36

Karen Prior has been FD since before I first bought 2011 and I have seen her at a number of AGMs. She has been a safe pair of hands,but has perhaps been looking to reduce her commitment for some little time (has I believe a contract for four days a week; myself of a vintage where I would never guess a lady's age). Her replacement Marc Wilson knows the business well and should blend in seamlessly. With a largely new board of directors this will hopefully give the business an enhanced sense of urgency.Always been impressed with the CEO - maybe covid issues globally will have improved the prospects of picking up another complementary business at a sensible price. Possibly looking through rose tinted spectacles, but I do believe that barring ongoing/new covid problems we will see a decent rise in top line revenues this year,irrespective of any acquisition, which should lead to greater percentage rise in profit, but always dyor.

[bottomfisher] 31/3/2021 15:02

As a long term shareholder in Anpario I think the recent shares sales by senior executives confirm my view that the current share price has got ahead of itself. Richard Edwards, chief executive, has raised £725,000 selling more than half his stake, at £5.80, and last Autumn, Karen Prior, who is stepping down as finance director but remaining an executive director, raised over £500,000 by selling nearly two thirds of her shares, at around £4. Even Peter Lawrence, who steps down as chairman at the next AGM, has been trimming his stake, selling 5,400 at £4.34 earlier this month.

The three directors still retain sizeable stakes: Edwards (88,396 shares), Prior (around 74,000) and Lawrence (57,950), and Anpario has the makings of a great company - all it needs is to start growing much faster than it has done to date. The director share sales make me wonder whether there is any point topping up my own minor stake at current price levels. Let’s hope that Ian Hamilton, Matthew Robinson and Kate Allum, the new non-executive directors, set an example by buying enough shares to at least match one year of their annual directors’ fees.

[aringadingding] 31/3/2021 13:19

The 800p could be a bit conservative as well actually. The P&L in say 7 years could be (£m):

Revenue 50
Variable costs (25)
Gross profit 25

Fixed costs (11)
EBITDA 14

Depreciation (2)
PBT 12

Tax at 22% (guess) (2.6)
NI 9.4

#shres 21m
EPS 45p
Multiple 25x (could debate for a long time or better really to do a pro-forma P&L post acquisition where the 11m fixed costs it a bit lower but anyway).
Target price 1125p/shre

I won't repeat the full above analysis but the JSOP value calculated in same way as above would be: 1.35m x (1125-685) = £5.9m. So that is a lot more. Given they have 30m today then growing revenue to 50m is basically exactly what a business like this should be trying to achieve.

[aringadingding] 31/3/2021 13:06

partridge1948, I had not thought of that, thank you. Do you have any view on Karen Prior stepping back as FD?

[partridge1948] 31/3/2021 12:40

CEO probably has most of his wealth tied up in ANP and I think has not sold any for 5 or 6 years, but I was rather disappointed to see the size of the sale. Clearly, however, someone was prepared to pay 580p for a decent slug of shares, so I would not read too much into the sale.

[aringadingding] 31/3/2021 10:55

Hi all I'm new to the thread but have held this for about a year.

I am pretty spooked by both Karen stepping back and the CEO selling over half his stake.

Anyone have any views or knowledge on why Karen is stepping back?

Below are calcs how how much additional value the CEO would gets for an exit at 800p in 5 years versus 550p, based on shareholdings in 31 Dec 2019 Annual Report:

EMIs:

At a share price of 550p I make the value of options held £443k.
If the share price was to rise to 800p they would be worth £765k.
So a difference of £322k.

JSOP:

CEO 'owns' 1.35m of shares under the JSOP. We are not told the initial market values in the annual report. If the price went from 550p to 800p over 5 years the cost including 4.5% rolled up over 5 years is 685p/shre. Profit is 800-685=115p/shre. 1.35m x 1.15 = £1.55m. (Actually I'm not sure whether the employee is required to purchase these shares when they are issued, and subsequently held by the JSOP, but anyway that's a detail.)

Simple shareholding:

88k of shres (as per RNS yesterday not 2019). So £220k of upside between 550p and 800p/shre.

Total: 0.322 + 1.55 + 0.22 = £2.092m

It's not bad but not amazing either - ? If the company gets acquired he stops getting his salary. Maybe he could time it with his retirement. I do appreciate that with his sale now he may want to e.g. buy a house - thus making him happier to go to work to build company value!

With regards to share price valuation and PEG ratio:

If one was happy to buy a company on a PE of 16x with 7% EPS growth that is PEG of 2.3x.
For Anpario if PE is 27x (=550/20) and growth was 18% (total guess) then that is 1.5x so quite a lot lower actually.

So in summary valuation is ok for a growth company but I'm not sure management incentivisation is enough.

[cerrito] 30/3/2021 16:17

No surprise that the price dipped with news of the CEO selling comfortably more than half his holding.
I note that in closing days of the tax year, so there must have been tax reasons and for all we know he may be buying a large house and/or have family reasons.If he wanted to diversify his financial position, I would be sympathetic. He has a large holding in the JSOP.
My feeling is that it has no real impact on my propensity to hold shares in ANP.

[cerrito] 27/3/2021 18:47

Just seen that Questor in the Telegraph featured them yesterday and rated them a hold. Peel Hunt have raised their target price from 650p to 685p, citing increased restrictions on antibiotics.

[cfro] 17/3/2021 22:26

That is a mighty fine feat holding for ten years partridge1948, well done. Me, im a much more recent shareholder being slow to see the opportunity here but invested with the very long term view right from the start. I think all of us here are or will be long term investors and, like you, see the potential of the company over this next decade.
Only snag to that might be a predator pouncing but if so then hopefully that will be more towards the end of this decade as opposed to the beginning.

[partridge1948] 17/3/2021 17:01

Agreed. This is still a very small company with lots of room to grow in vast global market. I like the way it is run and prospects improving because of new/enhanced products and regulatory requirements. High operational gearing should help if they can get the top line really moving. I have held nearly ten years and expect next decade to be even better, but always dyor

[cerrito] 17/3/2021 16:35

Comfortable is a good word partridge1948
I was surprised at the initial strength in the share price given the increase we have seen in the last fortnight and the price at the close seems about right.

[partridge1948] 17/3/2021 11:14

Had hoped for more top line growth, but operational improvements clearly seen in enhanced profits and with strong start to 2021 these have comfortable feeling. Could do with a nice acquisition at an attractive price, but that has been the case last few years. Always dyor.

[nivison] 17/3/2021 10:22

I think if you were to search for a guide entitled 'how a business should negotiate a global pandemic coupled with Brexit' you would come up with the result - 'see Anpario'. Very impressive. 22% increase in pre tax profits in the 12 months to Dec 2020. How many other companies could match that?

I am glad that Karen is remaining on the Executive Board and the internal promotion of Mark Wilson just seems eminently sensible. Growth remains steady and the future looks bright. Increased regulation (worldwide) surrounding antibiotics in the food chain will bring yet more opportunity.

[igoe104] 17/3/2021 07:42

Very Good results, and I can only see the company going from strength to strength. Definitely a longterm hold for me.

[cfro] 17/3/2021 07:20

Good results as expected.

Pleased to see a 6.25p final dividend - a 12.5% increase

Lawrence standing down at the AGM.

New board will be advised by the experience of the Non-execs for next stage of exciting growth.

[cerrito] 14/3/2021 22:02

Is it your understanding that Lawrence and the Genus chap will be standing down from the Board at this AGM ad we will have the three recent appointees as directors? Robinson seems most likely to be Chairman.
Anyway I would not expect there to be anything dramatic like a special dividend till the new board have played themselves in.
I well remember the comment at the first AGM I went to 4 or 5 years ago when we were told that valuations in the sector were so high that difficult to make an acquisition work.

[nivison] 12/3/2021 12:10

Anpario have been talking about strategic acquisitions for a few years now. It will be good to have some expertise in the area at board level. Got to do something with the large cash pile.

[cfro] 12/3/2021 07:16

New appointment of a non-exec with some important experience and contacts:


"We are delighted Ian will be joining the Board as a Non-Executive Director bringing valuable commercial experience and an extensive network across the global animal production and agri-tech industries. Ian's appointment reflects Anpario's strategy to build strong commercial relationships with key producers through our regional sales structure and enhance our organic growth with complementary acquisitions."

[from8to800] 01/3/2021 12:04

Cool £1.5m buy has just gone down.

[partridge1948] 04/2/2021 11:32

Results from EAH today reinforce positive news on pig herd restocking in China (perhaps more important market to EAH than ANP, but still significant). USA also improving. Results here 17th March.