Eco Animal Health Share Discussion Threads

[rmillaree] 16/9/2021 12:04

Wish i had cashed in my chips here - thanks to bods who were highlighting specific issues here previously - i had enough clues to tell me to get out when the going was better and i didnt.
It is a tricky one as i like the long term potential of wahtb they do - it is coming home to roost thoiugh that the murky dealings of china and the commodity type going on with regard to pig welfare and the like make this a company that simply tries my parience too much.
As wad collector has summarised

"Hard to interpret the sentiment behind that statement" - exactly and brutal market reaction is always the same when communication of what being said is poor. Market will rightly (hopefully wrongly here though) presume the worst

[tradertrev] 16/9/2021 11:37

I am hoping for some decent director buying.

[wad collector] 16/9/2021 09:45

Hard to interpret the sentiment behind that statement. On the one hand..

[1aconic] 16/9/2021 09:20

I guess it depends when the budget was set. If it was prior to the start of the financial year then they may simply be saying that they're encouraged with performance in the context of the market issues that have transpired since.

Generally speaking though, to me it seems utterly meaningless to talk about (internal?) budget rather than market expectations given that nobody outside the company has the slightest idea whatsoever what that actually is!

[aimingupward2] 16/9/2021 08:47

The initial drop in the share price seems to be an over reaction which I would expect to recover to some extent during the day.

[cerrito] 16/9/2021 08:12

Yes comments on China revenues no surprise to me.
Confused by their comments on ex China revenues. They are below budget but the CEO is encouraged by their performance.

[1aconic] 16/9/2021 07:33

Quite a negative general tone to the trading update today but revenue only 6% behind a very strong five months to August last year was actually quite a pleasant surprise to me this morning. Given the pork price weakness I expected it to be much worse.

[cerrito] 09/9/2021 09:02

I note that in today's annual results, GNS refer to volatility in the Chinese porcine markets producing short term headwinds.
There was a big article in the FT about 10 days ago on this volatility.

[1aconic] 01/9/2021 14:55

It seems to be based on news that China pork prices are rising through state buying for frozen reserves: Beijing bought more than 50,000 tonnes of meat during July, after pork prices fell below the cost of raising pigs.

The National Development and Reform Commission said in a statement on its official WeChat account that it will "once again launch the purchase work of the central pork reserve within a year."

[aimingupward2] 01/9/2021 12:37

- and again this morning.

[aimingupward2] 31/8/2021 13:11

Good to see this rising strongly today. I doesn't take much buying to do it!

[cureboy] 13/8/2021 19:02

A lot of mates rates 310p buys this week. Has to be a good sign longer term.

[farnesbarnes] 12/8/2021 16:39

Beer, bicycles and tax too.

[tradertrev] 12/8/2021 12:12

Nice to see the increase in the Danske Bank holding. If there's one thing the Danes know about, it's pigs :-)

[cerrito] 09/8/2021 21:57

A much delayed comment on the July 26 results . My issue is that while I have zero intention of selling especially at the current prices, I am hesitating to buy more and perhaps will wait till we see if we have a face to face AGM.
Given the strong semester ending in March somewhat counter intuitive that the price has fallen since the announcement, although perhaps we have now reached bottom.. Yes they did say that China had a slower start to this financial year but to me not realistic to think that China was to continue to go hell for leather.
One reason must be the lack of Financial PR and the other the mystery of China. Given the actions of the Chinese government over the last month this has become more topical. I take the view that EAH is small beer and more important there can be few western companies whose activities in China are as aligned to those of the CCP-keeping pork prices low- as EAH,. I guess the ongoing issue with ASF does not help sentiment and there are the issues raised in my 1273.
Good that little activity from major shareholders with last change of holdings RNS in mid February.
I have had a good run through the accounts
On matters China, note 15 tells us that the equity of Zhejiang ECO Biok Animal Health Products Ltd was £27m compared to total consolidated equity of £97m,
The currency risk section of note 32 is striking. It tells us that a 10% movement in the FX rate £:RMB produces an effect of £2.9m. We are not told how they define this. This reflects the increase in cash and receivables denominated in RMB from £9m to £26m in the twelve months to March 21. I am going on the basis that as EAH owns 51% of these the effect on our funds is half at £1.45m but please double check my logic.
Incidentally the £:RMB rate is relatively stable. It has moved from 9.03 at March 31 to 9 today. 11 months ago it did move from 9.16 on August 29th to 8.64 on September 23rd.
As the fixed assets including leased ones of the Chinese operation is £1.4m it begs the question of who owns the Chinese factory
It would be good to know about the dividend policy for the Chinese JV in light of dividends received in the last FY being per note 31 £585k compared to £1007k. the year before .though there do seem to be different figures.
Anyone know who the Chinese partner is? I suppose it is somewhere in the accounts. Would be interesting to know why they are OK with their 49% sub having the equivalent of £13.6m in cash.
Other questions
Why did wages and salaries go up from £10.9m to £14.9m-note 30. Note as per note 31 £170k of this increase was director’s emoluments.
Note 12 We need to note that intangibles represent 37% of net worth and so merit study. I go on the basis that the new auditors have had all the manholes up on this and the discount rate of 8% is for me appropriate
Note 17 While amount of inventory overall was in line with what I would expect interesting to know increase in raw materials section.
Note 18 Good to see receivable quality good

[cerrito] 05/8/2021 22:12

Alleluia, EAH had its first up day since the results release

[cerrito] 03/8/2021 16:36

Got a write up of last weeks financials which is stuck in my drafts box.
Was interested to read the following in hxxps://www.feedstrategy.com/business-markets/rabobank-chinas-hog-prices-to-affect-global-markets/?utm_source=Omeda&utm_medium=Email&;utm_content=NL-Feed+Strategy+eNews&utm_campaign=NL-Feed+Strategy+eNews_20210802_1600&oly_enc_id=8786C7274956B8R

quote
A sharp decline in China’s hog prices in the first half of 2021 will affect the global market, according to Rabobank’s Pork Quarterly report from July.

Hog prices in China fell to levels lower than imported pork prices “at an unexpected and unstoppable pace from mid-February to mid-June,” the report said. This was due to outbreaks of African swine fever (ASF) and subsequent herd liquidation.
However, Rabobank said China’s hog price forecast is expected to rebound in the third quarter.

“Given the large slaughter of hogs and liquidation of three-line-crossbred sows, we expect slaughter to decline in Q3, compared with Q2,” the report said. “Average hog slaughter weight will also go down, as it’s not profitable to raise oversized hogs at the moment. Reduced supply will support a hog price rebound in 2H.”

Rabobank added that July flooding in Henan, one of China’s largest pork-producing provinces, adds to new disease risks for the rest of 2021 and into early 2022.

China’s pork imports are expected to decline further in the third quarter, with full-year imports down 10% to 20%.

“This will still make 2021 the second largest year on record for imports, but the change in China’s import demand will affect all exporters,” the report said, adding that increased demand from other markets such as the Philippines and Vietnam could partially offset China’s lower demand.
unquote

[1aconic] 02/8/2021 13:23

Historically director ownership here has been a bit poor (excluding Lawrence family interests). However, if you look closely at the FY20 report new targets for director ownership were set of 100% to 125% of salary. Expect more director buying as moving forward.

The company has done some great things sales wise but there's no secret that have definitely been some governance issues here in the past... my personal view is that if they can continue on the path to rectifying some of those (the new CFO seems pretty intent on doing his bit and it remains to see what the new CEO will be like) along with getting a fairer share of the Chinese profits, the future could be very, very bright here.

[cerrito] 28/7/2021 17:31

A 3 minute interview with the CEO on Directors Talk, which covers quite a bit of ground.
I hope this does not constitute the totality of their outreach to private shareholders.

[jagworth] 28/7/2021 16:10

At least the directors are paying market prices for shares.
This is different from the award of options that are often priced at zero.

May be just gambling money for the directors.

[boonkoh] 28/7/2021 15:24

£25k, £25k, £10k. Significant when compared to their annual renumeration...? Up to you to decide.

[tradertrev] 28/7/2021 15:02

Nice to see some director buying at 330p. They evidently don't agree with post #1266.

[1aconic] 27/7/2021 08:53

It's probably worth pointing out for the benefit of others that EAH refers to the second half weighting regularly, including last year when they went on to fulfill the promise and also smash smash market forecasts...

I'm not sure personally I'd call a PE excluding early stage R&D development expense of around 14 particularly lofty. DYOR

[boonkoh] 26/7/2021 22:04

Q1 revenues marginally below YoY. And that's before the plunging China pork prices. Expect Q2 profits to be even worse. Look up when lean hog prices in China went South.Hence why they mentioned the dreaded reminder of "second half weighting". Ever see a trading outlook with those keywords that went on to smash the second half?At best they're going to match FY21 revenues, and profits. And in that case, there's going to be some serious questions asked of their high PE rating currently. IMO in the absence of growth newsflow till Q4, I suspect this will drift to circa 250p.

[topvest] 26/7/2021 21:59

Strong results, but half of the profit disappears in the China minority interest. Its very unfortunate that nearly half of their Chinese profits do not belong to shareholders!