Anpario Share Discussion Threads

[vprt] 08/10/2024 09:56

I am delighted with Anpario's capital allocation and focus on creating shareholder value - on a per share basis, as it should be. On the back of the recent excellent-looking acquisition and last year's cancellation of 4m shares at bargain price (the £9m TO), it is reassuring to now hear (on the IC podcast above) that the company stands ready to take advantage of any sudden crash that may affect AIM shares if/when the budget (likely) changes tax rules on 30 October.

Also kudos for taking a huge number of questions on the recent - first and hopefully not last - IMC. The openness is reassuring and helpful.

Otherwise I share pireric's excitement over the ongoing commercial and profit recovery. Revenue growth acceleration with operating leverage bodes well. So despite nicely and repeatedly increased forecasts from house broker Shore (which is the one to look at here), if recent trends continue (with management's limited visibility caveat noted), H2 should be excellent with a good chance for a beat.

[igoe104] 08/10/2024 06:07

Lord Lee talks about ANP in his latest podcast.

[pireric] 04/10/2024 10:59

The potential minor inconvenience over the rest of the year that ANP called out seems to have been resolved, in that the US East Coast dock workers have suspended their strike now after some further negotiations

Eric

[pireric] 01/10/2024 16:00

Rule number 1 of small caps, if you have conviction in your own thoughts and estimates, back them, because price discovery is usually very poor (unlike larger caps where I think that conclusion might be more valid). It was blatantly obvious at 235p that forecasts were too low, and yet it was like trying to sell a mouldy fish to some pretty smart investors.

It's equally obvious to me right now that this is undervalued from a multiple perspective (at trough levels by quite some margin) and that estimates are still far too low. So I'll keep buying. Yesterday was a 9% eps upgrade and the share price reaction so far has been low single digit %, so it has derated

Come back in 12 months, but all paths (barring an economic meltdown) lead to 450p+ on a 12 month view IMO. Very confident of that, which would put this probably in the top 5% of UK small caps for performance, I suspect

Also generally some buyers strike on UK small caps ahead of the Budget. Plus the overall market today was pretty uninspiring. Would like to think that investors can recognise that EAH is a very weak readacross but then again the average general small cap investor probably doesn't know the differences if they haven't looked at them before

Eric

[shanklin] 01/10/2024 15:49

More likely, faulty read across from EAH

[dodger777] 01/10/2024 15:43

Disappointing that we gave up a lot of yesterday’s gain after the news. Perhaps mr market isn’t as impressed with the deal as lot of posters here ?

[someuwin] 01/10/2024 08:29

Long term chart still looking hugely positive imo.

[cerrito] 30/9/2024 11:14

Thanks c3479z about the sad death of the founder.
I can well understand how the Executors of the estate sold to ANP-albeit not at top dollar-as ANP would retain management and the culture of the company rather than it being swallowed up by a larger company.

[rackersthedon] 30/9/2024 10:59

ok , who just bought £50k's worth ? ;-)

[pireric] 30/9/2024 10:33

Good spot on the founder dynamics that probably played into ANP being able to make the deal, thanks for pointing out. The US may also have similar CGT dynamics ahead of the election?

With this acquisition, the consensus 2025 EPS has gone from 16.85p to 24.6p (Shore Capital) now in less than 6 months. I think there is still a lot more to go, and even without further M&A the EPS next year will be closer to 30p.

The market has not been able to keep up with the pace of earnings upgrades, such that the PE multiple is now at historical lows (normally ~18x rolling forward earnings), which actually today would spell 450p... Not in a rush to get there, but the market is still sleeping on how good the setup is here over the coming year and I think this continues to move ahead over the coming weeks and months

Nothing is without risk, but the setup to me at 335p feels just as good as it was at 235p. And in some ways the story is derisked on top

Eric

[cerrito] 30/9/2024 09:37

Great that we were given the chance to buy at 250 odd a few weeks back.With those purchases I have enough so not buying more

[c3479z] 30/9/2024 09:26

looks as though the founder of Bio-Vet, ?majority shareholder sadly died last December aged 60 from a very rare disease, extra-mammary Paget's, only saw one or 2 cases in all my career and this might have prompted the opportunity to acquire the company at a very reasonable price for ANP?
wonder whether there is much competition in America in animal probiotics?

[cfro] 30/9/2024 08:16

This is a cracking acquisition if ever i've seen one. Richard certainly kept this under his hat last week. Some of us long-term investors have been waiting years for somethign like this to come along. As the saying goes all good things come to those that wait..

Not much more than £5m in cash paid which is incredibly cheap. ANP will make many multiples of this back over the next few years with the double whammy of leverging their products more into the US and Bio-vets unique products globally through ANP's distribution channels.

Worth having a gander at the website: [...]

Scroll down to see the excellent facilities in Barneveld WI (they will purchasing this with the cash on balance sheet, very clever!) . Note that they only recently employed a new DR in charge of R&D and a new CEO..

Plus another thing to note is that they now have a base in the US which will go somewhat to mitigate the upcoming port workers strikes over there..

[cerrito] 30/9/2024 08:14

Yes seems a v good deal and the premium to net assets paid seems very understandable.
At least protection against any Trump tarrifs and good that have caught the tide of sterling appreciation against the dollar.
I wonder why the sellers are selling at a valuation which is per Shore below the going rate.
Good that management staying and my impression-and hope-is that ANP senior management team is deep enough to handle this.
We need to brace ourselves for a charge for transaction costs in 2024 accounts.I am going on the basis that ANP uncovered this through their industry contacts and no broker's fee payable.
I ask myself if they can use thr capsule in a capsule technology in other areas.
I note without comment the very small decline in ANP cash in q3.

[partridge1948] 30/9/2024 08:00

Thanks for your efforts on this, Eric, nothing to add. Looks so much potential here, but always dyor.

[pireric] 30/9/2024 07:54

It sounds like this is less about manufacturing optimisation, and more about now having significant capacity to address the Americas. But really this deal is about a new product area

They could've done that already out of Worksop with the utilisation rates, but obviously less efficiently. I wonder if they'll do what they're doing with the Indian partnership which is to ship off the concentrated e.g. Orego-Stim over to the US facility and dilute it down to run a production line there. TBC. Would reduce some of the logistics/shipping hiccups that anyone selling into the US may get from time to time.

It doesn't sound like a small facility though: 25,000 sq FT, so imagine a lot of running room at the site. Usual benefits of being a US business where there is a lot of land!

The product/market fit seems very good. Looks a top deal. Financially attractive, and logically attractive. And it's not coming from a Private Equity company, but a long-term founder led business.

Eric

[deanowls] 30/9/2024 07:38

Good summary Eric. Now to get these sales guys out and about, the manufacturer if side has the capacity. Use it.

Does the US option give them a few % points of manufacturing utilizing the logistics over there?

[pireric] 30/9/2024 06:21

An acquisition announced this morning of Bio-Vet
www.bio-vet.com

Sounds like an interesting and good quality bolt-on deal. Lots of product and market synergies. EPS enhancing to boot. And paying a very good multiple.

- Bio-Vet is also very dairy/cows focused, which aligns well with their diversification objectives
- Bio-Vet has minimal presence outside of the US, so a chance to shove the Bio-Vet products through ANP's global sales channels
- 6.5x EV/EBITDA multiple paid looks very attractive
- "the global animal feed probiotic market is expected to grow at c.9% CAGR to CY28 (>$7bn market) and is >4x larger than the global phytogenic feed additives market (MarketsandMarkets)."

Shore Capital have boosted 2025 EPS forecast to 24.6p with still £7m of net cash at that point

This firmly puts my 30p potential EPS for 2025 into play, at which point I'd expect a share price much closer to 500p. Setup continues to look very attractive

Can see the stock up nicely today given the 2025 EPS upgrade is high single digit %. Forecast stacks that investors will see are now also projecting very healthy top and bottom line growth for the next 18 months which should support a return to historical multiples (high teens PE). Think its one of the most interesting and attractive UK small caps.

Eric

[rutlandram] 27/9/2024 19:43

I agree with this.
I also agree with the point made earlier that additional production resource is not currently required. Although if the right decisions are made in my view this business should be turning over well over £100m within 3 to 5 years. And capacity will need a rethink.
Where it is currently required is in sales and marketing imo.Exporting to 80 countries across pretty well every continent in the globe is a tall order for a behemoth like Astrazeneca. For a tiddler like Anpario it hardly makes commercial sense to even try.
Seems to me that Anpario could be primed to become a huge multi-bagger, but without a significant investment in the sales effort I cant see it happening.
I feel they need a bit of a bomb putting under them. Maybe some proven, dynamic, well motivated, industry knowledgeable leadership at the top end of the business is needed for the next phase in development.

[deanowls] 27/9/2024 19:07

Hi Igoe,

I mean r+d and onboarding if sales/distributors in order to get more sales out.

[igoe104] 27/9/2024 14:38

This is sort of stuff we want to see globally to drive growth for ANP.

USDA tightening standards for meat, poultry labeling claims.

The U.S. Department of Agriculture (USDA) has issued a new guideline for ensuring the truthfulness of meat and poultry products marketed as “raised without antibiotics,” “climate friendly,” and other animal husbandry- and environment-related claims.

[igoe104] 27/9/2024 13:17

ANP don't need to ramp up manpower.( I've been around their factory facilitiey personally, )and they have the machinery to pack anything, and doesn't require alot of manpower... over the last several years they have spent well over million quid on machinery ready for substantial growth...

[deanowls] 27/9/2024 13:06

I think they have plenty of options it just the time taken to see where they can be realized. With so few people it’s important to prioritize or ramp up the manpower in order to accelerate the opportunities before them.

[shanklin] 27/9/2024 09:42

Funnily enough GDWN is by far my biggest holding. They are world leading in some areas so their investment has been highly effective