Eco Animal Health Share Discussion Threads

[aimingupward2] 30/6/2017 23:18

I agree, Au. It's just plain daft, too, to quote an eps for the year to March '18 of barely a penny above the figure just announced in today's results when the company says it has started the year strongly and recent marketing approvals will be at the early stages of generating income.

Moreover, EAH itself says that EBDITA should be taken as the prime measure of performance, not eps, since the company is obliged to write off development and registration costs each year, thus reducing eps, whereas each new marketing approval achieved improves the scope for future earnings and enhances the company's value. A bit too difficult for Fools to
cope with, perhaps.

[audigger] 30/6/2017 22:09

The Fool article illustrates how applying fundamentals to a share like this is flawed (in my opinion). To base on investment decision on PE ratio alone is somewhat missing the point with respect to the business model. The investment and time to get their key product to market, their patents, low residue profile, complexity of manufacture, resistance profile, efficacy and ease of administration mean that they effectively have no serious competition in the space they are operating. Put all of this together with the ability to raise prices and increase margins and you have a highly cash generative business. If, as stated, they use the cash to fund organic growth, in addition to the strong growth in business for the older chemistries, then PE is meaningless! Waiting for a pull-back may not be wise.....though would be a great opportunity to add if it happens.

[eddyeagle1979] 30/6/2017 17:33

Decent results here today!

[audigger] 30/6/2017 15:21

That"s a serious chunk of cash! I could retire on that!

[hydrus] 30/6/2017 15:11

Lawrence down to about 12% of company now. One wonders whether he is looking to pass on the reigns to someone else.

[aimingupward2] 30/6/2017 14:33

And - "Peel Hunt today reaffirms its buy investment rating on Eco Animal Health Group PLC (LON:EAH) and raised its price target to 725p (from 650p)."

[crazycoops] 30/6/2017 14:13

N+1 Singer have upgraded their EBITDA forecasts by 7% to £18.1m for 2018 FY and £19.9m for 2019.

[tanners] 30/6/2017 12:23

Thought worth a small top up with a couple of million ;-)

[topvest] 30/6/2017 09:12

Yes, all very promising. Happy to hold.

[tanners] 30/6/2017 08:25

At the top end of my expectations....the sign of a peerless product is when profit growth is favourably disproportionate to growth in revenue.

And they've started the year with record sales (yet again)....bit of a muted reaction but plenty of growth left imo, and interesting to note the bit above that you've highlighted AuDigger.

[audigger] 30/6/2017 07:39

Further digestion of results....I am really encouraged by this statement...."As the global animal health industry continues to consolidate, we are actively seeking to acquire drugs that fit comfortably in our portfolio and serve the specialised markets that we serve. Our ability to generate cash, together with our cash balances, places ECO in a strong position to take advantage of any opportunity that may arise."

They are clearly looking to diversify their product range reinvesting their large pot of cash. So far from thinking that they would be more minded to be acquired by a bigger player, I sense they may now be thinking that they themselves can become a big player. Its also very reassuring to see that their Ecomectin product is growing strongly and that they have increased margins across the board.

All of this points towards significant potential for much more growth to come.

[audigger] 30/6/2017 07:12

Well this is the kind of news shareholders lover to hear! Interesting to see some new messaging in the results narrative particularly with regard to the favourable positioning of Aivlosin in the eyes of regulators with respect to residue profiles. Also they make a play on the ever-increasing market cap. I wonder if they may be thinking about FTSE listing rather than AIM? It will be very interesting to see the post-results revisions to broker targets. My sense is that £10 must be a realistic proposition within the next 12 months. They have more approvals to come, new markets to play in and a product profile which appears to be ahead of the competition in terms of its techno-regulatory profile. I wonder where the share price will land today? Not long to wait!

[hydrus] 29/6/2017 21:23

Tanners I'd certainly be interested Looking forward to tomorrow

[tanners] 29/6/2017 20:58

Panic Investor - IGR and EAH are very different businesses.

EAH has as deep and wide a moat as you'll find.....it would take a competitor a long time to gain all the regulatory approvals, though I will confess I don't know whether others are attempting to develop rival products.

The key is the fact that further authorisations are gained with comforting regularity; the difficult bit as I posted a few weeks back is trying to estimate what each might be worth in terms of revenue.

To that end I'm compiling a spreadsheet of approvals, and attempting to link that via results to segmental revenue growth in different markets......I've gone back 5 years and whilst not entirely straightforward, I'm happy to share the results when I'm done; if anyone is interested and I think they are meaningful.

In the meantime there will be periods when the share price will stagnate or even drift a bit, these movements do not concern me as long as the approvals keep coming and revenue keeps growing.....my view is that we are in the infancy of a growth Company so until that story changes I'm staying invested, which hopefully will be for some years to come!

PS Off topic - hadn't looked at IGR for some time but gotta say the current management are doing a fantastic job...no real protection of product but impressive all the same, and I'm going to do some further research.

[panic investor] 29/6/2017 17:17

Sadly IGR was so who knows ! :-(

[audigger] 29/6/2017 16:48

Topped up today. Be interesting to see what the share price does in response to results. Are the exceeded expectations already priced in? Or are we due for a real bumper set of record breaking results that will propel the share price towards £7 and beyond. We shall see!

[audigger] 29/6/2017 16:48

Topped up today. Be interesting to see what the share price does in response to results. Are the exceeded expectations already priced in? Or are we due for a real bumper set of record breaking results that will propel the share price towards £7 and beyond. We shall see!

[aimingupward2] 15/6/2017 08:17

Thanks for that, Au - an interesting read. We can't know when a take-out of EAH might occur or quite how much further growth potential can be realised. What we do know is

1) A number of marketing authorisations are relatively recent and resulting sales will increase for several years ahead.

2) "Numerous" further authorisations are being applied for. No doubt some will lead to relatively little additional sales but this surely won't be the case in aggregate.

3) An important one, for swine respiratory disease inthe U.S. Is expected in the next few months.

4) There is the possibility/probability(?) of one or two additional species coming within the orbit of approvals for Aivlosin in due course (cows, sheep?). If so this would add hugely to future revenues.

5) The whole climate of wanting to reduce antiobiotic usage plays into the hands of EAH as Aivlosin is used in low dosage, is fast acting and is quickly eliminated thus having little effect on meat and egg production.

6) EBDITA in the hands of an international major with it's own sales forces would be some 2-3 times higher than EAH can achieve using distributors.

All of which says that there is plenty to look forward to in the way of future growth and, as you say, we could see £10 being reached, either in near/ medium term in a buy out, or longer term anyway.

[audigger] 14/6/2017 21:25

What I think I meant was that as time progresses the impressive rate of rise in share price will likely slow (i.e. less capital gain) and the dividend will progressively increase such that dividend income may become a more important reason to hold. Of course I think most of us view the end-game being a take-over by one of the big guys in animal health and that this will likely happen when PL decides its time to retire. The fact that there are no signs of this happening soon, suggests that PL thinks there is a lot more upside to come before he gets out. I really have no sense of how much more upside is to come but £10 has to be on the cards and perhaps it could go well beyond this. Its a difficult business model to value especially as its dominated by one active ingredient. I sometimes forget about their other product lines such as mectins. Old chemistry but still effective. I decided to buy some today to put in my kid's ISA accounts ahead of June 30th and managed to get them for 595 which was good as they soon jumped to 600-604 on the ask. This is definitely one of the best investments I ever made. My big mistake was selling (at significant profit mind) immediately post Brexit vote. I soon realised my error and bought back in!

[aimingupward2] 14/6/2017 17:53

Au, the capital gain is surely going to way outweigh the dividend income, significantly increasing though that will be. So why focus on income - unless by 'income' you mean the profit from the shareholding?

[audigger] 07/6/2017 20:11

Bit of a pull back in last couple of days, first for a while. Think I may top -up with a view to this becoming a good income share until PL's exit strategy is executed.

[aimingupward2] 05/6/2017 13:39

Not only is "Malaysia ranked as a global top twenty egg producing country and home to four of the ten largest egg producers in Asia", but 'numerous' other approvals are expected in due course. So, excellent progress!

Chart looks great - full of promise.

[tanners] 05/6/2017 08:24

Indeed......very difficult to guestimate what each approval might add in terms of revenue/profit, but a 2% increase in the share price would appear modest!

[audigger] 05/6/2017 07:36

More great news....the success story continues.