Benchmark Share Discussion Threads

[timp230] 08/12/2014 09:54

Yes - SCSW.

[phowdo] 08/12/2014 09:27

Have we been tipped over the weekend?

[simon gordon] 27/11/2014 12:42

Cenkos - 24/11/14:

09/15
T/O - 63.8m
PBT - 4.4m
EPS - 4.2p

09/16
T/O - 87.8m
PBT - 8.8m
EPS - 6.6p

Exbroker does that tally with your Cenkos broker note? Are the EPS forecasts adjusted because there will be 219.3m shares in issue post the placing?

[simon gordon] 25/11/2014 11:58

Hi Exbroker,

It's looking fandabidozi.

I'm getting quite excited by the story, real quality with many catalysts.

Cheers!

[exbroker] 25/11/2014 11:37

This is the front page of a note from the broker Cenkos.

Industry Transformative Deal Announced
Benchmark is undertaking two highly transformative acquisitions that
will, when blended together, create the foundations of a global
business at the forefront of salmon genetics and primary breeding. We
believe the opportunity for Benchmark to become a world class player
across several animal health segments is readily achievable led by a
highly capable management team. Our valuation of the enlarged
company suggests a share price of 140p based on 2016 industry
EBITDA multiples (including Zoetis) applied to our forecasts. We have
therefore set our price target at this level. BUY.
 Forecasts The year ended 30 September 2014 has been a year of strong delivery
led by robust sales of Salmosan. We are upgrading our revenue forecasts for the
base (pre-acquisition) business from £42.2m to £44.4m in 2015E and present
revised forecasts for the new group (post acquisition) driving trading EBITDA from
£11.8m to £21.9m in 2016.
 Consolidation in salmon genetics Combining Stofnfiskur (FY14F T/O: £6.6m based
Iceland) and SalmoBreed (FY14F T/O £9.8m Norway) will produce a global number
2 player. The key here is not strengths of the individual companies, but the strong
synergies created by combining them. Marrying multi-decade development of male
genetics with multi-decade development of salmon eggs, and leveraging the
combined qualities on land-based bio-secure salmon farming to produce very high
quality salmon ALL year round, is a unique global proposition. With salmon
consumption growing at 7% per annum and supply barely achieving 3% - there is an
opportunity to grow both pricing and volume dynamically in the near-term.
 HypoPet opportunity compelling We have created a model to reflect the potential
for the HypoPet cat vaccine and see £15m peak sales in the UK valuing the business
at £55m (which is not included in our valuation as it is outside the forecast period).
The potential sales for the product could significantly exceed the forecasts in our
model with international sales likely to be in multiples of those achieved in the UK.
 Pipeline progression and Outlook Benchmark has an industry leading pipeline (47
small molecules and vaccines – compared to 30 a year ago with the addition of the
Zoetis vaccines business); a sector leading sustainability business and strong
foundations in science (publishing) – coupled to salmon egg production using
leading genetics, we see a strong future for the business.

[protean] 25/11/2014 08:59

Chart looking more positive than it has in a while. Sideways for a few months but now looks like it might be starting to trend up again.

SCSW's last update was in September and concluded:

"At some point in the not too distant future, these shares are set to catch fire. Buy for that."

[exbroker] 24/11/2014 23:26

Hi Simon
Yes Aqua Gen are the number 1 in the sector and they tried to mess up the Icelandic deal, they now have a fight on their hands.
You might have had the same thought as me..... buy lots of extra stuff if you buy the whole company, the management will be diluted as they are not taking up any stock... I do own a decent number of these I am glad to say.

[simon gordon] 24/11/2014 20:58

Fish Update - 2007:

EW Group acquires majority shareholding of Aqua Gen

EW GROUP GmbH, the holding company of the world’s leading poultry genetic companies, has concluded an agreement to take majority ownership of the shares in Aqua Gen AS, the Norwegian-based salmon breeding company. The sellers are Verdane Private Equity AS, the Norwegian Seafood Federation (FHL), Biomar AS and Eidsfjord Sjøfarm AS.

Aqua Gen has become the leading supplier of genetic material to the global salmon farming industry, and currently has just over 35 per cent of the world market. The company develops, produces and sells genetic material tailored to the aquaculture sector’s requirements for farmed Atlantic salmon and rainbow trout. With its head office in Trondheim, Aqua Gen has production facilities at Hemne and Tingvoll plus a research department in Hamar. It is also represented in Chile through Aqua Gen Chile SA.

“Our entry into Aqua Gen represents an important milestone, which extends our priority areas into the expanding aquaculture industry,” says Erich Wesjohann, president of EW Group.

“The position Aqua Gen has built up and the results, which have been created document that this company has unique expertise and a strong technological edge. A big potential exists for Aqua Gen and EW Group to join forces in securing interesting synergies through the exchange of experience and closer collaboration.”;

”We’re impressed at the progress Aqua Gen has made, and believe it can continue its positive development and acquire new opportunities through a principal shareholder, which is so strong in developing and producing genetic material,” says Arne Handeland, a partner of Verdane Capital Advisors.

“This transaction assures Aqua Gen’s continued independence, and I believe it will create an even stronger community of experts and an even better supplier to the aquaculture sector,” adds Trond Davidsen at the FHL.

A number of suitors have expressed interest in acquiring the shareholding, which was offered for sale earlier this autumn. After a comprehensive bidding process, an agreement has been concluded on today with EW Group. The share purchase is conditional on the approval of the Aqua Gen board and the Norwegian authorities. It will also depend on existing shareholders waiving their pre-emptive right.

“I’m pleased at the interest shown in Aqua Gen, and very satisfied that we’ll be affiliated to a long-term player like EW Group,” says Odd Magne Rødseth, CEO of Aqua Gen.

“To be a part of a team with the world leading poultry breeding companies will make important genetic knowledge and research resources available to Aqua Gen. Our new relationship with the EW Group will contribute to further genetic progress in our breeding programmes, and strengthened Aqua Gen position as a trusted and independent supplier to the aquaculture industry”

With its head office in Germany EW GROUP is the holding company of a number of independently operating poultry breeding companies in the area of broiler, turkey and egg layer breeding. These companies have a worldwide leading position in their specific field and sell through a network of extensive international operations products to more than 100 countries. EW Group employs 4.000 people worldwide.

[aishah] 24/11/2014 13:56

"By combining Norwegian-based SalmoBreed and Icelandic company Stofnfiskur, Benchmark will bring together the strengths of SalmoBreed in genetics with Stofniskur’s unique capability to supply fertile ova 52 weeks of the year to create a world-leading salmon and aquaculture breeding business, expected to be the world’s second largest salmon egg producer."

See more at:

[nw99] 24/11/2014 13:53

When do we expect shareholder approval and the new shares to hit the market

[simon gordon] 24/11/2014 13:06

Undercurrent News - 24/11/14:

Benchmark eyes big share of £160m world salmon egg market

Benchmark Holdings, a diverse UK group looking to expand in aquaculture, hopes to grab a big chunk of the world market for salmon eggs with its planned double deal for Norway’s SalmoBreed and Iceland’s Stofnfiskur.

The deals, which the company announced Friday, brings together the strengths of SalmoBreed in genetics, with Stofnfiskur’s biosecure production facilities capable of supplying fertile eggs all year round, as well as a complementary geographic footprint, said Benchmark, in a statement.

The global market for salmon egg production is estimated by Benchmark to amount to £160 million.

Benchmark believes these strengths will accelerate growth in the combined business and expand its international market share and increasing its utilization of production capacity, which is currently at around 35%. This will, in turn, enhance margins and profitability.

“In addition, the technology held within the two companies will provide an excellent platform to build into new and emerging markets for aquaculture breeding across different species,” said Benchmark.

The acquisitions “represent a long-term platform to expand into other aquaculture markets such as tilapia, catfish, grouper, sea bass, sea bream and shrimp”, the company, which listed on the Alternative Investment Market (AIM) of the London stock exchange in December 2013.

New model for SalmoBreed will up earnings

SalmoBreed was one of the first animal breeding companies to introduce the use of genetic marker and typing tools in its selection programs and to launch salmon eggs with QTL (qualitative trait loci) for resistance to two of the key diseases in salmon.

Benchmark said its model will significantly increase earnings before interest, taxes, depreciation and amortization (ebitda).

In the year ended Dec. 31,2013 SalmoBreed generated reported ebitda of £200,000.

SalmoBreed was founded, and is still owned, by a consortium of Norwegian salmon farmers who have operated it primarily as an internal supplier of genetics for the production of salmon eggs for their own farms and for distribution to third parties.

The consideration for SalmoBreed comprises an initial payment of NOK 205m (£19.5m) and up to an additional amount of NOK 30m (£2.9m) under an earn out over three years upon the satisfaction of certain performance conditions.

Historically, SalmoBreeds’s revenues have been derived from the royalties paid for its genetic material by salmon egg producers being, up to completion of the SalmoBreed acquisition, solely SalmoBreed’s existing shareholders.

Benchmark, however, will operate SalmoBreed under a different business model.

“Going forward, SalmoBreed’s revenues are expected to derive from the sale of salmon eggs produced from its genetic material by third party contract producers,” Benchmark said.

As part of the deal, Benchmark plans SalmoBreed to enter into commercial arrangements with a number of its existing shareholders to produce eggs.

Benchmark projects the company would have had an ebitda margin of 14% in 2013 with its model, compared to 2%.

High margins in Stofnfiskur

Stofnfiskur, which Icelandic fishing company HB Grandi plans to sell its 64.94% shareholding in, generated an ebitda margin of 17% in 2013, with a forecast of 20% for 2014.

Benchmark plans to acquire 81.84% of Stofnfiskur, with an upfront payment of ISK 4.10 billion (£20.7m) with up to an additional amount of up to ISK 1.63bn under an earn-out over three years. Benchmark may seek to purchase additional shares in Stofnfiskur to increase its shareholding, is said.

Stofnfiskur, founded in 1991, is able to supply eggs outside of the natural salmon-breeding season, which allows the major salmon farming operators to improve the efficiency and the utilization of their high capital processing operations by running at stable and managed volumes throughout the year.

“The ‘out of season’ salmon eggs required to fuel this year-round production can only be produced in land-based controlled environment facilities. Iceland has a unique geology, which permits high volumes of biosecure water from deep bore holes to be drawn at high volumes and at a range of temperatures and salinities,” said Benchmark.

Stofnfiskur has the capability and capacity to make use of these natural conditions to produce eggs on a significant scale, it said.

In the year ended Dec. 31, 2013, Stofnfiskur generated reported revenues of £6.1m with ebitda of £400,000.

Benchmark is the placing of 82,353,000 new ordinary shares at £0.85 per share, raising gross proceeds of approximately £70m to fund the acquisitions and to increase the vaccine manufacturing capacity of its BioCampus facility in Edinburgh.

A circular will be sent to shareholders shortly giving notice of a general meeting of Benchmark to consider, and if thought fit, approve the allotment of the placing shares. The General Meeting will be held on Dec. 17, 2014.

[nw99] 24/11/2014 12:15

I like the fact the stock has done nothing every dog has it day

[phowdo] 24/11/2014 10:18

Looks expensive but sometimes the best ones always do?
Took a small stake today.

[montynj] 24/11/2014 10:11

I bought too

[boros10] 24/11/2014 08:22

Great video on the homepage showcasing SalmoBreed and Stofnfiskur acquisitions.

[nw99] 24/11/2014 08:10

Mkt likes it

[simon gordon] 24/11/2014 08:03

I have bought back in this morning, like the multi pronged growth strategy which has now become ultra dynamic with Friday's RNS.

[exbroker] 23/11/2014 19:45

This is a very good industrial fit and links in well with the other divisions. The number 1 player tried to stop the Icelandic part of the deal, they did not know about the other bit. There will be some strong operational gearing to come through as well as the price rises agreed. The placing was oversubscribed the book was over £100m.

[briangeeee] 23/11/2014 18:52

Simon, the historic earnings multiples are high. To see value in the deal, you have to buy into substantial top line growth and operational gearing. It's certainly towards the edge of my comfort zone, and relies on Benchmark management and their advisers delivering on indications.

[simon gordon] 23/11/2014 16:04

Just some rough calculations:

Paying £40.2m upfront for £2.1m EBITDA with potential earn outs of £11.2m.

Shares in issue = 219.4m x 90p = £197.4m

Y/E September 2015 forecast prior to deal:

EBITDA - £4.4m

Adjusted EBITDA - £8.9m

With new deals, say Adjusted EBITDA = £11.2m.

=====

Benchmark Chief Executive Officer, Malcolm Pye, commented:

"We are delighted to be making today's announcement. The Acquisitions represent a unique opportunity for Benchmark to enter the animal breeding and genetics industry at an exciting time in the development of the global aquaculture industry. Bringing the capabilities and expertise of SalmoBreed and Stofnfiskur into Benchmark significantly expands our activities in aquaculture; strengthens our position as a leading international supplier to the industry and creates a substantial platform for future growth.

"Animal breeding and genetics play a primary role in the development of production efficiency and sustainability in the global livestock and aquaculture industries. It is particularly important in the high volume production systems that supply the world's poultry, pork, dairy and fish (aquaculture) markets. It is a great fit with the existing business as breeding and genetics function within the same fundamental biology as is being exploited in Benchmark's Animal Health and Sustainability Science divisions, thus creating numerous opportunities for synergistic development and combined approaches to solving key industry problems, including disease, metabolic disorders and nutritional efficiency.

"The allocation of £10m of the placing towards accelerating the development of the Company's BioCampus in Edinburgh is also indicative of the increased demand for capacity within Benchmark's vaccine division as it continues to grow. The development of the BioCampus was always a core component of our strategy, with the addition of the HypoCat production and increased demand from our existing customers moving that process forward faster than initially anticipated."

[briangeeee] 21/11/2014 21:47

Two points made in that article are interesting and positive for the innovative participants in the fish/salmon farming business. Firstly, salmon feed conversion rate seems incredible at just under 1.5 units of feed per unit of fish weight. That compares with a rate of over 8 for beef, 6 for pork, and 2 for chicken. Secondly, the fish farming industry is very young in comparison to land based farming of beef, chicken. Hence innovative participants in fish farming are likely to see much more rapid growth opportunities than companies like Genus.