Anpario Share Discussion Threads

[pireric] 11/9/2024 17:54

OK I've re-run my estimates to levels which I think are reasonable and still leaves room in the tank depending on how much better H2 is than H1 on revenue growth (am assuming ~12% in H2 compared to 11% in H1 and they were talking about acceleration, which could imply a better than that result). No real credit being given to any of the larger growth initiatives paying off over the next 15 months

12% growth in FY24 with revenues of £34.6m
£5.7m of adjusted EBITDA
23.2p of adjusted EPS, 16% above the raised Shore Capital forecast

6% growth in FY25 with revenues of £36.8m (possibly conservative but comfortable for now)
£6.8m of adjusted EBITDA
27.9p of adjusted EPS, 23% above the raised Shore Capital forecast

The business would have more than £15m of net cash by the end of FY25

So plenty in the tank on earnings upgrades IMO

Eric

[drsous] 11/9/2024 15:33

Added 5000 just before bell at 314.

[someuwin] 11/9/2024 09:37

Nice looking recovery type chart

[solooiler] 11/9/2024 09:16

The definition of STONKING results

[pireric] 11/9/2024 09:10

I've actually added to my position today.

Pretty sure they will deliver at least 25p of EPS in 2025, which puts this on 12.4x P/E here. And then you have the £13m+ surplus net cash position on top for buybacks or capital returns or acquisitions to enhance the EPS further

With the momentum in the business, I'd say that's still too cheap. Hence the view this can move towards 400p+

Eric

[pireric] 11/9/2024 08:05

This is why Shore Capitals 20p for 2024 and 22.6p for 2025 are conservative, in my view.

ANP are calling for a H2 acceleration and thst operating leverage should flow strongly into profitability.

But Shore Capitals 2024 forecast is just an annualisation of 1H EPS

So expect a beat at the next update IMO, and maybe something to use that large surplus net cash for. Any profitable acq or buyback would be purely EPS accretive

Eric

[deanowls] 11/9/2024 07:58

Anyone know if they do a investor presentation for the interims?

[deanowls] 11/9/2024 07:58

Bear in mind we are actually 2.5 months into the second half. With current shipping times to their markets of 45-60 days to end customer they will have a very visible line on this year already.

More to come I’m sure.

[partridge1948] 11/9/2024 07:41

No nasty surprises in the results, quite the reverse and the outlook comments very promising.Hopefully some recovery in the USA to come and if we can get firing on all cylinders there should be plenty to come. Always dyor.

[nivison] 11/9/2024 07:16

The numbers do look very appealing. Cash balances increasing by £2.9 million in 6 months.Prior to opening this had a market cap of just £46 million. That just doesnt make sense. Especially when there is £13 million in the bank.....

[yasrub] 11/9/2024 07:03

Congrats Eric your research has proven to be spot on.

[pireric] 11/9/2024 06:41

Other forward looking snippets

- "Similarly, our natural pellet binder, Mastercube®, which accounts for 6% of Group sales is increasingly used for several applications from aquaculture through to pet food and is being trialled in a number of new markets, which if successful could present significant growth opportunities."

- "Meat protein producers are still under pressure, especially in the United States and China swine markets, as high feed and overhead costs and weak consumption impact producer margins. We expect these headwinds to alleviate in the coming months with a corresponding increase in the demand for our specialty feed additives."

- Americas: "We are working with a large veterinary group who intend to recommend pHorce® to their clients and so we are hopeful of recovering some of the lost volume."

- "Commercial trials of Orego-Stim® Forte have been successful for a range of applications which have specifically been shown to inhibit the growth of Vibrio species, an aquatic borne bacteria, in the absence of antibiotics. We have achieved initial sales in the region during the period and received strong interest from large aquaculture groups. Sales of our Mastercube® pellet binder increased by 130% as demand for natural and environmentally friendly pellet binders grew for aquafeed purposes where certain export markets restrict the use of harmful alternatives, such as urea formaldehyde, in the food chain."

- "There are clear signs that the pig market is improving in China, which should lead to a positive effect for specialty feed additives as the pressure to remove additives wanes."

- "Orego-Stim® Plus was also approved for use in organic livestock production by the Research Institute of Organic Agriculture FiBL Germany and Demeter International. Satisfying the rigorous certification process to ensure compliance with EU regulation, the complementary feedstuff is now available for organic producers to help support optimal production. Organic production across Europe continues to grow at 5-8% per year and fast approaching half a million organic producers."

Eric

[pireric] 11/9/2024 06:19

New Shore Capital forecast for 2025 is 22.6p, a 15% upgrade. I'd say that's actually conservative still as they're saying H2 is accelerating on H1 and so 20p for 2024 could actually be beaten.

Bear in mind the 10.4p in 1H is ignoring 146k of interest income because that's the policy the company chooses to use, so it's not an aggressive number at all (nets off SBC). Can argue it's low

Consensus for 2025 is 16.85p.... so this is a 34% higher estimate than consensus....

I'd say this is heading towards 350-400p on the back of this over the coming months. And that the next time we hear from ANP there is every chance of another earnings upgrade.

Eric

[igoe104] 11/9/2024 06:14

Yeah I agree. Margins improving, double digit growth. 13.5 million in cash. Definite turn around on the cards..

[pireric] 11/9/2024 06:08

Fantastic results for the first half, and should drive significant upgrades to consensus today

And the outlook is even better; they are calling out "Strong start to the second half of the year with an acceleration in sales and volume growth."

And even more... "The Group has made a strong start to the second half, and we are confident of building on this momentum and maintaining it into next year."

This should easily be 300p+ today, in my view. As the bull case of this doing closer to 26-30p of EPS next year is not completely out of the question.

Eric

[pireric] 08/9/2024 10:01

If Canaccord aren't forced to raise their revenue and EPS forecasts and therefore drag up consensus estimates materially, I may have to eat my hat, and that's without a big change to what we already know from the AGM statement

I stick by their forecasts making absolutely no sense. That's not realised by 99% of the market and investors that look at the stock, so we should be getting headline consensus EPS upgrades as Canaccord move towards Shore Cap... And that should be well received

A capital return on top of that would be the icing, but not baking that in myself

As a reminder of the estimates for 2024

Revenue
Canaccord = £31.6m
Shore Capital = £33.0m
Consensus = £32.3m
2023 result £31.0m

EBITDA
Canaccord = £4.7m
Shore Capital = £5.0m
Consensus = £4.85m
2023 result = £4.5m

Adjusted EPS excluding finance income
Canaccord = 13.9p
Shore Capital = 17.2p
Consensus = 15.55p
2023 result = 15.31p

Eric

[deanowls] 08/9/2024 09:48

Dependent on the outlook statement here next week should be positive.

I’d like to see them but back a few more shares.

[pireric] 08/9/2024 08:19

Thanks, Cerrito

The landscape on the regulatory front continues to change in Europe but seemingly less so in the US at present. Some of the supply chain crunches over 2021-23 led to some US producers or buyers of that produce (which have lax regulations) switching back to more antibiotic use. Long-term, I doubt that's the status quo

Meanwhile the UK and EU continue to get tougher on antibiotics use - the UK lagging behind the EU for stringency, but there was some tightening of UK-level usage in the food chain that only came into force in the middle of May 2024, so that may at the margin be a helpful factor moving forwards.

At the EU level there is a decently important ban coming into place in September 2026, which is a ban of imported animal foods that used antibiotic growth promoters

Eric

[cerrito] 03/9/2024 09:33

First para of an article in the FT today on dangers of antibiotics in the food chain.
An encouraging-albeit blue sky-pointer for us ANP shareholders
Quote
Investors representing more than $13tn in combined assets have urged policymakers to help curb the spread of drug-resistant “superbugsR21; by cutting the excessive use of antibiotics in the food supply chain
Unquote

[pireric] 20/8/2024 07:16

Hopefully the IMC can shed light. I get the sense its a few things in the mixing pot

1) general demand bounceback after a soft industry demand year, pockets of distributor destocking. Also price normalisation in some raw materials areas which would've priced out demand last year. E.g. check out formic acid
2) new products ramping up, such as those mentioned. Algae, Mastercube etc
3) mix shift towards the champion brands in the mix like Orego-Stim which continued to grow well last year but were offset by other areas
4) lower raw mat prices enabling ANP to be better price competitive in some lower GM areas
5) potential for new volume ramps in lower margin gear like what the note mentions in China contingent on positive outcomes of some of those fields trials

Hopefully some of that will be evident in the first half numbers

Pleased that the management team are being proactive on building shareholders and analyst relations with the site visit and now IMC. CFO Marc Wilson is (outside of quiet period as youd expect) also quite easy to liase with. Still have the sense that ANP is well off the radar and am very confident in what the next year will bring for shareholders from these levels

Eric

[cerrito] 19/8/2024 22:48

Thanks pireric for alerting me to the Shore factory visit note which escaped my radar.I got the message about the high operational gearing and only 30% of capacity being utilised. Noted the 4 engineers who are a fixed cost .Interested that bottling plant only at 5/10% capacity.Also good to be reminded about new products and optomega Algae caught my attention.All good stuff but I want more clarity what exactly in the short(ie 9 months)
term will cause volumes to increase.Given the operational gearing no idea if it makes sense for them to drop prices and in fact have no idea how price sensitive their sales are and the competition dynamics. Also good to know when some of the v interesting potential products will generate revenue.Hopefully the anticipated IMC meeting will throw some light on this.Have to consult with my pillow if I buy more.PSI saw the comment about warehouse capacity and they have little finished goods as they produce on a bespoke basis. I checked the figure for finished goods and goods for resale and they were £3.2m and £5.2m at 31.12.23 and 31.12.22 respectively ... not all that.low.

[pireric] 18/8/2024 07:53

As we head into the results in a few weeks time, I'm actually rather positive about the results setup alone.

- Just Canaccord shifting up in-line with Shore Capital would drive consensus EPS for 2024 from 15.55p to 17.8p which would be a 14% upgrade. Canaccord's analyst here is being incredibly lazy/clearly has not put enough thought into his ANP forecasts for this year (Which is a good thing for buyers at these levels IMO). His forecast is 13.9p of EPS which is dragging down on consensus, and would be EPS 10% lower Y/Y, despite the setup being higher sales, higher margins, and a lower share count....

- I suspect there is scope for upgrades on Shore Capital's 2024 numbers anyway, and possibly a little bit on 2025 (But maybe they will keep that in the tank for later on)

- Potential for a new capital return if they're not feeling anything short-term on the M&A front, given the cash balance is very significant

Within 12 months, I think the consensus EPS forecast is going to be much closer to 25p than 15.55p, at which point this can easily be a 350p+ stock. Last time it delivered that, it was closer to 500p.

Eric

[pireric] 16/8/2024 07:20

And SPSY yesterday. The large block trade I think took out whoever was the seller on a few of these small cap names.

I would reiterate that the Site Visit Shore Capital note was excellently written, and worth seeking out if you're an investor that can qualify for sign up. It's quite a detailed note with a lot of things you won't necessarily see in an RNS

Here was one section:

"If we assume a 50% gross margin in FY25F, it could imply a >30% upside to earnings if that is achieved. We would also highlight that post the FY23A £9m tender offer, our FY25F adj. dil EPS (also taking a conservative view on the effective tax rate) is still below its FY21A peak but would surpass if the above is achieved. In our view, Anpario is a high-quality business with market-leading brands, a very well-invested facility (with FCF set to improve given less capex requirements) and a strong balance sheet (net cash c.18% of its current market cap)."

Eric

[cerrito] 15/8/2024 17:38

EAH getting hammered as well

[pireric] 15/8/2024 14:53

Just a sloppy seller on the bid from what ive been observing in the trade action. Which is fine by me.

Eric