Anpario Share Discussion Threads

[pireric] 27/9/2024 08:21

No problem! I'm much more of the mindset that as long as companies don't bite off more than they can chew, the best companies have a plethora of high-return reinvestment opportunities at their disposal, and management target as many of them as are reasonable.

Thinking of the likes of Goodwin (GDWN) where you could probably levy a similar question over whether they're trying to do too much, but their future looks a lot rosier with some of those coming through. Although those opportunities have needed much initial higher capex-requirement. Capital Drilling (CAPD) arguably similar, but again high capex and execution has been less good (but in mining, so riskier, and less obvious jurisdictions). Given a choice, generally would prefer the low-capex nature of the sorts of market expansion ANP has in front of it.

I think it's a massive mindset difference between US and European/UK companies, where US management teams try to actually try to grow businesses at attractive rates (i.e. growth ambition). Could do with more ambitious (but grounded) management teams here I think. Too many UK companies just don't have those obvious reinvestment opportunities.

Eric

[shanklin] 27/9/2024 07:11

Thank you Eric, Fair points :-)

[pireric] 27/9/2024 06:45

Thanks, Shanklin

Would disagree personally on whether the strategy is right or wrong as I just think it's the nature of the markets they operate in. Some countries only have £Xm of revenue potential today. We've seen the effects of what can happen in individual species when there is something that is a bit more challenging one year to next. Doesn't matter if you have the world's best swine products if the entire swine supply chain is moderately screwed one year because of a type of flu, or pork prices are through the floor.

Agricultural markets almost by definition are a little up and down, but the brand aspect is maybe the bit that matters most for ANP. Once those brands have their market positions then they should be relatively more self-sustaining for re-ordering. The reasons certain geographies move one year to the next can be a whole host of reasons, as we heard, and ANP already has 80+ geographies presence. These are high value additives into niche areas of the market so £33m of revenue is not completely meaningless I would suspect in the scale of the growing global TAM; it's also why there aren't 500 competitors here.

They already have a solid level of diversification, but I'd argue:
- why shouldn't they tweak the core formulations they have to make them suitable for other markets? E.g. Orego-Stim Forte being an aquaculture version of the core Orego-Stim
- If you've got a winning natural pellet binder, why not try to sell into both aqua and on-land markets. And if it's really that good with fewer residues and parties are interested, why not hold those trials to test the waters in completely ex-animal markets (heating)
- Regardless of the above, not every trial/test will necessarily work, so there may sound to be a lot of trials at the moment, but maybe only a handful will reach prime-time and become meaningful
- Sales channels primarily for some of these new growth areas are to the leading producers or distributors rather than trying day 1 to mop up 1000s of small producers.

I just don't think most of these targeted initiatives are all that disruptive to management time in their early phases. They're trial-dependent, and then you just progress with the parties you've trialled with, and then go to major other producers. It's not like you need to establish a complex immediate supply chain, create completely different new manufacturing orientations, there's no need for aftermarket support for this type of product, or to go and do huge marketing campaigns day 1.

Or alternatively, entering the Saudi market... has that really required very significant heavy lifting from ANP? Appointing a couple of distributors and they've done the heavy lifting on market access. India definitely has taken more meetings with Saife VetMed and structuring the relationship, but that's now up and running and if anything, that's taking some of the strain/burden away from ANP in tackling that market

Also, flip the equation. £36m this year let's say, with 100 employees and not a whole lot of marketing cost at all reflects the strong efficiency of the business. The hope will be from me that this gets towards a £50m organic business without a commensurate increase in the employee base because of the operating leverage.

Eric

[shanklin] 27/9/2024 06:23

I am reposting this from Stockopedia, as I believe the author makes a very good point...

Lochinver

Anpario (LON:ANP) ( I hold)

Watched the Investor Meets session from yesterday today. Their first one I believe and it went well, so good for them.

I definitely feel they have got something there - some interesting products and markets.

But I do wonder if the current strategy is the right one. The CEO frequently mentions the need to diversify to reduce risk - more products, more geographic markets, more species to support. My concern is that this is a very small business - only turns over £33m with only 100 employees. Not a lot to properly tackle all the markets they already operate in across the globe, to develop new winning products and to target new animal species to support.

Maybe an alternative would be to do the opposite : focus on less, target resources to the known winners, massively invest in quality worldwide sales teams and turbocharge growth in only the best products and markets. Leave the others for now, they can be picked up in the future when the business is really motoring.

Easy for an outsider to say, of course, sitting in front of a computer screen !

[pireric] 25/9/2024 22:04

Video here:

The bit I missed at the end that they see as a binary bet but that could be significant and they don't see it valued in the share prce at all is Aquatice. Shore Capital in their Site Visit note gave the backstory

"Aquatice - a novel stimulant to improve feed efficiency and reduce waste in aquaculture. While this product was developed over 20 years ago (no further investment required), the commercial benefits have only begun given the increasing emphasis on sustainable protein and the need to reduce fish meal in aquafeed. However, other sustainable alternatives like soya or insect meal have palatability issues, which Aquatice can overcome. Trails have been planned in Brazil with a large aquafeed producer."

Eric

[dodger777] 25/9/2024 18:17

Hopefully this will be up on youtube on the investor meet company YouTube channel.
Thanks for the excellent summary Eric 👍🏻

[deanowls] 25/9/2024 18:09

Also for the Middle East it needs to be halal certified, this is also taken into account in farmed seafood and what feed they are given. It adds in another layer for them.

[pireric] 25/9/2024 17:49

Yes but they did also say there's nothing in the pipe of the scale of ANP or even half (revs), then later said bolt ons. So would interpret deal size as buying more like blocks of maybe £4-5m of revenue per Shore Cap's suggestions

Scale of revenue capacity at Worksop is clearly very significant (triple current levels) so need to drive volume through that and the operational gearing would be very substantial. If they can come close to their £50-70m aspirations over time you can imagine an EBIT number here which is very large given the high gross margins

Mastercube sounds like it could easily turn into 20%+ of the business over time if some of the initiatives come through (6% today). Arguably similar in aqua

Eric

[deanowls] 25/9/2024 17:42

Was a very good presentation and sat and answered every question.

Very positive here in my view.

Wouldn’t comment on the carrs question so wonder if there is something in there but looks like they are just selling off the engineering side but maybe synergies in the USA?

[cerrito] 25/9/2024 17:19

Thanks also from me.
I had to bail out at 345 for the school run but was impressed with what I heard and look forward to listening to the Q&A and the rest of the presentation.
A 90 minute IMC would be a record for me and interested in their answers to my questions.

[madmix] 25/9/2024 16:12

Great write-up, Eric. Thank you.

I'm also confident in the outlook here, especially at the current valuation.

[pireric] 20/9/2024 08:51

Can't say I subscribe to any technical analysis, Stonks! A continued work in progress which will change over time, but my forecasts here (See the image), which point to 30p of EPS potential for FY25 (vs. consensus around 23p) and justify my thoughts that the share price here will be materially higher in a year's time. Making no assumptions on them doing anything with the net cash balance, which would be accretive (buyback or acquisitions).

Posted enough for now so will report back after the IMC presentation next week.


Eric

[deanowls] 20/9/2024 08:04

Sounds lovely stonks, do I eat it with chop sticks?

[stonks394] 20/9/2024 07:56

Strong chart momentum with a strong Senkou Span Cross for the Ichimoku lovers. Can see an uptrend starting again target 360 pence

[pireric] 18/9/2024 19:16

I read the interim results several times but I actually missed this line, which is very important and is rather positive when the existing baseline is 11% growth and accelerating in H2

"However, our geographic diversity and business development initiatives offer several opportunities to accelerate organic growth in the coming year."

Eric

[pireric] 18/9/2024 15:45

Yes I'm relaxed this will re-rate over the coming weeks and months

Since the results, the share price is +16% yet its consensus FY25 EPS forecast is +37% compared to where it was, so the stock has materially derated (so far) to its trough long-term P/E, despite putting out the most bullish outlook it has it years. 14.2x NTM P/E is pretty much the absolute lowest levels over the past decade (13.8x in 2015, 13.7x in COVID) and it was at those levels only for around a week or so.

From tomorrow, the likes of Stockopedia should show this on about 14.2x rolling P/E, which in itself should attract more attention

And again, in my forecasts, all of these numbers will prove still materially too low. In my own numbers, I'm seeing this as a 425p+ stock on a 1-year view, and that's not assuming any upside EPS accretion from M&A

Urge everyone to attend or watch back the InvestorMeetCompany next week, which should be interesting for a business that has never really done this before.

I see a realistic world where this is doing ~30p of EPS in 2025...

Eric

[dodger777] 18/9/2024 15:43

Those figures you’ve posted makes a compelling and satisfying read Eric. I’m surprised share price hasn’t reacted more but it has had a good 15 to 20% rise in last month.
Still, I’m hopeful there’s a good bit more in the tank to go.

[pireric] 18/9/2024 09:23

Canaccord have materially raised their forecasts today

They now forecast 20.4p of EPS for 2024 and 23.6p of EPS for 2025

So on 2025 numbers now the consensus is 23.1p, which I think will still prove to be comfortably too low over the coming year.

At 315p the PE ratio drops to 13.6x FY25, with ~22% of the market cap in net cash. For context this has tended to be an 18x P/E stock, so it's (for now) trading at a meaty discount because the market has not yet adjusted for the earnings upgrades or the strong outlook. I see fair value much closer to £4+/share

Eric

[deanowls] 15/9/2024 18:10

Cheers Igoe, look forward to it.

[pireric] 15/9/2024 08:18

Thanks, igoe

I'm keen to ask them around what's driving an acceleration in the second half. Whether it's market conditions for producers continuing to improve, longer-term initiatives, positive implications from some of the field studies, or possibly also some regulatory boosts (e.g. the UK also brought in a ban on Zinc Oxide in the UK market for pigs, which should be good for Orego-Stim and pHorce from June onwards).

I get the impression from re-reading the interims that when we are talking about an acceleration in H2, it sounds quite meaningful, rather than minor (or you wouldn't call it out). So could e.g. H2 growth be closer to 20% so far? Bearing in mind that for FY24 Shore Capital's updated revenue growth forecast is only 9.8%, conservatively they say, which is actually H2 growth lower than H1, which is contrary to management commentary

So a positive setup

Eric

[igoe104] 13/9/2024 06:09

Someone was asking for a investor meet.

Anpario plc (AIM: ANP), the independent manufacturer of natural sustainable animal feed additives for animal health, nutrition and biosecurity, is pleased to announce that Richard Edwards, Chief Executive Officer, and Marc Wilson, Group Finance Director, will provide a live presentation relating to the Company's unaudited interim results for the six months to 30 June 2024 via Investor Meet Company on 25 September 2024, 15:00 BST.

 

The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 24 September 2024, 09:00 BST, or at any time during the live presentation.

 

Investors may sign up to Investor Meet Company for free and add to meet Anpario plc via:

 

hxxps://www.investormeetcompany.com/anpario-plc/register-investor

 

Investors who already follow Anpario plc on the Investor Meet Company platform will automatically be invited

[shanklin] 12/9/2024 07:08

As you state, Stockopedia consensus is currently rubbish, so SR should increase further when slightly less ridiculous forecasts are in place.

[pireric] 12/9/2024 06:43

Yeah those EPS numbers should move a lot further once Canaccord bother to update their numbers, hopefully by next week. They haven't even published a note yet

Eric

[shanklin] 12/9/2024 06:30

Stockrank at Stockopedia up to 91 from 82 with EPS forecasts having increased to 17p and 18.6p for FY24 and FY25 respectively,