Dechra Pharmaceuticals Share Discussion Threads

[shuisky] 06/2/2011 00:21

Write up on a french animal health play, in case anyone is interested. Virbac are doing very well in the companion animal market so this augers well for Dechra in Europe too..

[sal2668] 01/2/2011 16:19

enviro - taken on its own merits you may have a point but it was designed to get a better foothold in the US for the more profitable lines

[envirovision] 01/2/2011 11:39

looking at this everything looks great, but that US takeover looks stupid, 16X earnings, crazy

[boadicea] 19/1/2011 10:03

Announced by VEC (Vectura) this morning that Neil Warner, an independent director of Dechra, has been appointed a director there.
An interesting connection?
Sal2668 in particular might like to note!

[nellie1973] 14/1/2011 16:21

Tipped in press today

[sal2668] 01/11/2010 15:26

Doesn't borrowing more than is necessary give positive signals of future intent?

[phillis] 27/10/2010 12:15

Questor says BUY

[apad] 25/10/2010 15:41

IC
Pet pharmaceuticals company Dechra has launched into an ambitious takeover of US company DermaPet for a cash total of $64m (£41m), or around 16 times the company's pre-tax earnings. Dechra's management hopes that the takeover will give it some traction in the US, a key area for pet pharma products where Dechra's development is at an embryonic stage.
Dechra has paid $42m upfront, with the balance dependent on sales milestones and the length of time in Dechra's ownership. The takeover has been funded by a re-financed £78m lending facility. Dechra should be able to combine its current operations in the US quite easily with DermaPet's and there is an estimated $1m in savings to be found.
Sell

[sal2668] 25/10/2010 09:51

The above is assuming that the portfolio won't be expanded into other territories. You keep the US Sales but the EU will be virtualy all incremental.

[phillis] 24/10/2010 20:11

Let's start again
Definitive consideration is $44m
Annualised pre-tax profits are running at $6m
It used to be the case that you structured acqs in the US so that the goodwill was tax deductible and there is $41m of goodwill, so a good few years before the losses are used up
so a P/E of 7+

[gopher] 22/10/2010 21:34

This looks a fairly expensive purchase based on Sales/Profits. $42ml for a company turnover of $10m albeit with profits of $4ml; also up to a further $20ml if sales increase.

Still what do I know as share price has risen but USA is a traditional acquisitions graveyard for british companies.

[cambium] 22/10/2010 15:11

no takers?

[frequentbuyer] 01/10/2010 15:32

"*Margins aren't high in the sales lost due to manufacturing."

Manufacturing will always be expensive, there are standards to be maintained and improved, especially when the plant is involved with products for the Human market too!

[shuisky] 01/10/2010 15:27

A nice dip to today which will allow some calm buying. I picked some up.

[mcartdon] 14/9/2010 16:37

sharp rIze could this indicate a deal or a bid?

[shuisky] 10/9/2010 09:45

APAD,

I don't have any great expertise in DPH or the industry.

However, IMHO, any company trying to establish market share in a new market will have hurdles to cross and, growth will not come in a straight line.

The reality is that the medical battles are won in the lab, but there is a lag before marketing efforts kick in.

IMHO, all the evidence points to Vetoryl being able to grab market share.

Lysodren is not FDA approved (actually its a human chemo drug) for canine cushings, has severe side effects, and needs careful monitoring. It can't even be handled easily. Google around if you don't believe me.

US Vets maybe currently conditioned to use home-brew (which involves importing trilostane ie Vetoryl from Europe) or Lysodren, but the clinical & professional evidence is in favour of Vetoryl.

One vet starts using Vetoryl, he tells another vet that it works etc etc.

NVS sales are slowing, but remember that they are a wholesaler so there numbers will lag the retail market. Retailers run down existing inventory before buying more.

With the economy improving in 2010 over 2009,IMHO, we can expect a lagged effect with NVS and sales growth (albeit small) should improve. Actually, they managed NVS margins very well in the recession.

I was worried about EU margins and new diets. However, they both came back strongly in H2.

[apad] 10/9/2010 07:55

Shuisky
I think the IC article is a little harsh, largely on the basis of the PE ratio. However, I am concerned about the US being the graveyard of many a UK company's ambitions. There are a lot of sales people over there and I don't like them being short of a product, even with lower profit margins.
You clearly have some expertise in the area. Do you have any views on these concerns?

[shuisky] 09/9/2010 23:54

The IC article is a load of garbage.


*The key profit driver is EU Pharma and actually the recovery in H2 margins there were very strong.

*Manufacturing problems are temporary

*Home brews are only made via vets importing Vetoryl ingredient trilostane, through a complicated process. This is not likely to continue when vets find out they can just buy vetoryl themselves.

*Lysodren can have nasty side effects. Again, once vets are educated, vetoryl sales should expand strongly.

*Margins aren't high in the sales lost due to manufacturing.

These are good results. I bought some after and am tempted to buy some more on any dip.

[cambium] 09/9/2010 20:48

Questor says Buy

Shares in veterinary products group Dechra have not exactly been a spectacular performer since they were recommended – and they are just a touch lower than their recommendation price last year.

In the 12 months to June 30, revenues rose 5.5pc to £369.4m and pre-tax profits rose 10.1pc to £17.7m. Net debt was cut to £6.7m from £15.5m at the end of the last financial year.

The full-year dividend was increased by 15.4pc to 10.5p, with the final payment of 7.2p being made on December 10. The shares trade ex-dividend for this payment on November 11.

US sales increased 37pc over the year, but this was from a low base, largely down to sales of its key Vetoryl product, which treats Cushing's disease in dogs.

The company also has a number of treatments in its pipeline.

Equidone, an endocrine product for horses, is now only awaiting final approval by the FDA.

Priority has also been given to an equine lameness product – the group says that the efficacy trials were making "excellent" progress with "good" results. The company is also developing a gastrointestinal and endocrine treatment for cats.

Questor first recommended the shares on October 25 last year at 427.9p and they are now 2pc lower compared with a market up 4pc. The positive stance was because of the group's move into the lucrative US market.

The shares are trading on a June 2010 earnings multiple of 13.4 times, falling to 11.6 next year. The yield is 2.4pc.

Questor believes that the US move will enable strong growth to be maintained over the next few years and the shares remain a buy after a period of underperformance.

[nellie1973] 08/9/2010 19:48

Tipped in press today

[apad] 07/9/2010 15:59

Dechra faces headwinds
Created: 7 September 2010 Written by: Julian Hofmann
Dechra Pharmaceuticals has struggled to maintain sales momentum this year after clear evidence that pet owners are economising on visits to vets' practices, while manufacturing problems in the US haven't helped either.
Breaking into the US animal pharmaceutical market is still proving difficult for Dechra. Sales were 37 per cent higher at £10.6m, driven by Dechra's Cushing's disease treatment Vetoryl, which faces competition from illegally copied product and unlicensed treatment Lysodren. In addition, manufacturing issues have hit Dechra's opthalmic products, which analysts estimate will chop around £2m from total sales next year. The company only holds the marketing rights so cannot directly deal with the problem. Expansion in the US is also getting progressively more expensive and the cost base rose by £1.1m after the company was forced to change its marketing strategy and expand its team.
Overall, European sales were stronger and grew by 9.3 per cent to £44.7m, while Dechra's specialist pet diets business, boosted by acquisitions, grew by 12.5 per cent to £25.6m. The slowdown in the services business, which supplies vets' practices and laboratories, continued during the year and sales rose just 3.5 per cent to £285m.
Broker Investec cut its forecasts for 2011 by 10 per cent to give pre-tax profits of £30.3 and EPS of 32.6p.

DECHRA PHARMACEUTICALS (DPH)
ORD PRICE:
434p
MARKET VALUE:
£287m
TOUCH:
435-442p
12-MONTH HIGH:
509p
LOW: 375p
DIVIDEND YIELD:
2%
PE RATIO:
22
NET ASSET VALUE:
130p*
NET DEBT:
£6.7m


Year to 30 Jun
Turnover (£m)
Pre-tax profit (£m)
Earnings per share (p)
Dividend per share (p)
2006
232
11.0
14.7
6.20
2007
254
12.6
16.9
7.50
2008
304
11.7
14.2
8.30
2009
350
16.1
17.3
9.10
2010
369
17.7
20.0
10.5
% change
+5
+10
+16
+15
Ex-div: 10 Nov
Payment: 10 Dec
*Includes intangible assets of £80.4m, or 122p a share

Guide to the terms used in IC results tables.
More analysis of company results
More share tips and updates...

TIP UPDATE:
Sell
The US is the key market that Dechra needs to crack but progress looks slow. A forward PE ratio of 13 is over-ambitious for what is essentially a mature business. Sell.

[apad] 07/9/2010 12:31

I reckon that's what IC will say.
Top up below 400?

[gopher] 07/9/2010 11:08

The company is trading on 14x current year earnings so in the context the results are OK but they need foreign expansion to justify any rerating

[apad] 07/9/2010 09:41

Not good.
USA only growing in pace with UK and some supply problems.

[cambium] 07/9/2010 08:33

preliminary results reporting a double digit growth in pre-tax profit for the fiscal year ended June 30, reflecting strong performance from the company's key products.

For the fiscal year, the company recorded a pre-tax profit of GBP 17.73 million, up 10% from GBP 16.10 million in the previous year.

Adjusted pre-tax profit was GBP 26.06 million versus GBP 23.41 million a year ago. Adjusted results exclude amortisation of acquired intangibles and exceptional costs.

Profit for the year attributable to owners of the parent increased to GBP 13.16 million or 19.89 pence per share from GBP 11.30 million or 17.13 pence per share last year.

On an adjusted basis, profit was GBP 19.44 million or 29.39 pence per share, up from GBP 16.76 million or 25.40 pence per share last year. Revenue for the twelve months improved to GBP 369.37 million from GBP 349.96 million a year ago.

Further, the directors recommended an increase in the final dividend to 7.20 pence per share, which will be paid on December 10 to Shareholders on the Register at November 12 .

Looking ahead, the company said its product development pipeline delivers new products year on year and international pharmaceutical and diets businesses are delivering good growth. In addition, established UK service business continues to increase its profitability. So the company said it remains confident about its future growth prospects.