Eco Animal Health Share Discussion Threads

[ariane] 23/2/2022 08:26

Delayed London Stock Exchange - 02/23 03:08:58 am

170 GBX +4.62%

[ariane] 23/2/2022 08:24

A jump above 170

[aimingupward2] 23/2/2022 08:02

Some encouraging news for Eco this morning - 2 new marketing authorisations for Aivlosin in China. Should help sentiment a bit.

[cerrito] 03/2/2022 18:50

Given that he has 5.12% of the shares he seemed rather uninspired by EAH...though nothing recently for him to get inspired about.

[brummy_git] 03/2/2022 05:22

Paul Jourdan of Amati Global talks positively about ECO Animal Health here (starts 36:35)

www.youtube.com/watch?v=0nJJIpsI9Uo

[aimingupward2] 28/1/2022 13:21

Yes, indeed. Encouraging to see people waking up to the value here and buying in to the recovery.

[value hound] 28/1/2022 11:56

Well it's doing the trick today!

[aimingupward2] 26/1/2022 17:43

Well, it has prompted some buying and a bit of a move up in the share price, Cerrito.

[cerrito] 26/1/2022 16:34

A good if not very good presentation today on Equity Development and good that unlike IMC they were no time pressures and all questions answered.
Well worth a listen.
That said nothing there that will move the share price in the short term.
2 questions I should have asked.
The first is that I got a sense that given the investments in R&D they are not likely to be paying dividends of note and I should have checked that.
The second was that we were told the best way to get a feel for the economic health of the Chinese pork market one should look not at the price of pork but rather the price of piglets and I should have asked where you get this info from.
It could be argued that given the current share price and the £/$ tnat if the pipeline is as promising as they say why are they not being bought out.

[1aconic] 14/1/2022 12:54

Hi Cerrito - he didn't directly say it wiped it out but the figures he gave suggested it. He said that dividends have a 5% withholding tax but the royalty tax rate equates to 41%

Therefore, he implied that for every £1 repatriated as dividends (split 51:49) EAH would get 48.5p and the JV about 46.5p (assuming local dividend taxes are about the same as the withholding tax) but for each £1 repatriated with a Royalty payment EAH get 59p and the JV partner (Huge Leaf?) zero. Therefore, seemingly EAH doesn't gain a whole lot for penalising HugeLeaf massively.

The bit on that I wasn't clear on (and that would change the maths entirely) was whether the 41% for royalties included the 25% headline tax rate or not (the 5% on divis seemingly does)...

However, according to my notes he did say that going forward divis would be the method of choice. I was disappointed by that at the time because obviously a fairer share of the JV profits could be absolutely massive for EAH's own bottom line. That's why I was surprised when the RNS mentioned a royalty payment. Maybe it was just a one off or perhaps since the H1 call they've found a less tax punative way to do it.

[cerrito] 14/1/2022 08:36

1aconic
I clearly remember it being said that dividends are more China tax efficient than royalty payments but cannot remember it being said that taxes wiped out the payment.
I will not be able to organize myself to listen to the replay of the recording. My eyebrows did not go up with the reference to a royalty payment as they get 100pc of a royalty and 51pc of a dividend.

[aimingupward2] 13/1/2022 10:25

That’s a substantial and encouraging vote of confidence in EAH.

Strong upward price movement shows that a number of investors feel that what's good for George Soros is good for them too, even if they did have to pay a bit more.

[typo56] 13/1/2022 09:32

Soros fund acquires 11.39% !

[1aconic] 12/1/2022 11:57

From recollection, I think the share ownership targets are new - perhaps even as recently as last year when Wilkes purchased. I was surprised Marc Coombes bought this time round as he's no real need to fulfill that given he's leaving - although at the current share price it does seem a bit daft not to, despite the remaining underlying areas of concern here. I'd trimmed about half my holding in the upper 300s but have been adding back since the pull back.

Echo your irritation with vague references to market expectations Cerrito.

Didn't really understand the royalties section of the RNS - in the report last year they said they were looking at royalties as an option due to the unfair split of profits with the the Chinese JV however on the latest webcast they went to great lengths to explain how the tax penalties are significant and it wasn't a good option! From my understanding of what he said, the upshot was that if EAH took royalties the extra they'd receive (compared to paying dividends and splitting profits equally) would largely be swallowed up in Chinese taxes and there was little point to it. Anyone got any further insight there?

Looking forward to the CMD and getting a deeper insight into the research programmes. Past communications in that regard haven't been the greatest.

[cerrito] 12/1/2022 08:15

At least the RMB/£ FX rate has been relatively stable over recent years.. Certainly more stable than the UD/£ rate

[cerrito] 12/1/2022 08:07

I am irritated when a company says that they will meet market expectations without giving us their understanding of what market expectations are.
No idea why they need 3 joint brokers.
Good that they are getting cash out of China.
I noticed no mention of CEo replacement but then checked that he plans to be around for some time yet so no surprise that there is no mention.
I do not see anything in the RNS that will influence the share price as much as the removal of any overhang will.

[typo56] 11/1/2022 19:43

That's likely to be Canaccord's holding. Perhaps an overhang cleared.

With regard to the director buys a few weeks ago I note in the annual report:-

"Executive directors are subject to share
ownership targets to achieve over time. These
targets, in line with market guidance, have been
set by the Remuneration Committee at 125% of
basic salary for the Chief Executive and 100% of
salary for the Finance Director."

Marc Loomes basic salary was £306k. Christopher Wilks was £236k

Marc Loomes holds 33,244 shares (none prior to 30 Nov 2021)
Christopher Wilks holds 24,095 shares (7,500 on 28 Jul 2021 and 16,595 on 30 Nov 2021)

Marc Loomes has been CEO since 2010.
Christopher Wilks has been CFO since 3 Sep 2019.

They haven't been rushing to meet that share ownership target!

[1aconic] 15/12/2021 13:59

Hi Cerrito - they did say all manufacturing (except China) and most R&D is outsourced. However, as I remember it they explicitly confirmed that, as you'd expect, they have very LOW fixed costs as a result. If you heard high that might clear up why it seemed counter intuitive to you... or maybe I misheard myself and just heard what I expected to hear...

[cerrito] 02/12/2021 22:08

www.hugeleafgroup.com is the website of the Chinese JV partner whose current shar price is in the middle of the 52 week trading range.
Its main business seems to be media and online games and indeed is involved in squash and has a biotechnology division.
Hopefully will organize myself to do more work on them.

[cerrito] 02/12/2021 21:58

I would encourage everyone to invest almost an hour in listening to the recording of the Equity Development presentation.
In retrospect I have not spent enough time on the R&D programme. They rather raced through the slides of this and hope to revisit and will be interesting to hear what they have to say on this at the Capital Markets day and I am going on the basis that this will be webcast.
I see that over the last 3 days trading volumes have simmered down but are still high by normal EAH standards and am somewhat surprised that we have not had a change of holdings RNS.
I thought I heard them saying that as they outsource all their R&D and manufacturing (apart from China) that they had a relatively high fixed cost base. This seemed counter intuitive to me. Any comments.??
Rather kicking myself that I did not ask to them being taken over in a world where the cable rate is $1.33 and the share price-despite its modest increase- so low. Of course they could not comment directly but would have been interesting for me to get their take about worldwide corporate activity in their industry over the last 18 months and who they see as their peers/competitors.

[edmonda] 30/11/2021 15:53

ECO Animal Health’s shares currently stand at a 52-week low, likely on concerns over its exposure to the unpredictable Chinese pork market. Sales of the company’s main product, Aivlosin, are highly exposed to the economics of the pig farming sector in China, which has moved from an unusual situation of shortage in 2020 to one of over-supply this year. Thus, the investment proposition is currently geared to a recovery in Chinese pork prices and rebalancing of supply and demand, something that should occur - not least because of State intervention in the market designed to bring this about.

In the longer term, ECO offers investors exposure to a niche within animal health characterised by favourable economic drivers (demographics, good practices in farming) in which it enjoys a strong market position.

Equity Development is in the early stages of formal coverage, so is not publishing forecasts at this point; a comprehensive initiation should be published in due course. Consensus FY22 forecasts suggest sales of c. £81.5m and adjusted EBITDA of £9.4m. The enterprise value is £113m, which based on consensus FY22 figures, suggests an EV/sales of 1.5 and EV/EBITDA of ~12, both well below the average in the animal health sector.

[aimingupward2] 30/11/2021 15:35

It's good to see a couple of fairly sizable director buys yesterday. At least that gives some confidence here.