Premier Veterinary Share Discussion Threads

[100michael] 31/1/2016 12:01

This comment in the 'Outlook' statement worried me - I would appreciate your views on it:

Progress in respect of Danish clinics has been slower than anticipated and no launches have been carried out in Sweden and Norway. However, we continue to work to fulfil the contract with the Nordic operator and to generate future benefits for the Enlarged Group.

[hydrus] 30/1/2016 21:24

Helpful calculation of the fee per pet plan thank you

[pet lover] 30/1/2016 20:30

2017 -2018 might start with 400,000 plans worth £7.6m plus a flat £1.2m from the buying group.By that time worldwide sales might have ramped up and if they,total uk and foreign sales, hit 400,000 for the full year half could produce another £3.8m during 2017- 2018. In all £12.6m.It's difficult to project a few months let alone the best part of 3 years so these numbers must be taken with a pinch of salt.
I am not sure what will slow down the sales rate.Basically any independent vet be it in the UK or Europe requires these Pet Plans just to stay in the game.Its tough out their and best practice is to at least keep hold the number of clients on your books.These plans help clinics to do just that while at the same time picking up regular monthly income.The pet gets what it needs to stay fit and healthy and the client gets discounts off other services and products.From the hound and myself goodnight.👀

[pet lover] 30/1/2016 18:46

Revenue growth takes a year to show up as each plan sold today produces just 1/12th of the income stream.
So investors should at this stage be looking at plan numbers sold. The revenues will look after themselves.
The wage bill can be found in these accounts inc directors of £1.56m and year. In the UK that may well stay flat or rise a little to account for the growth. Total revenues were up just 11% to £2.25m nothing to write home about.
I have spent a few hours trying to value each plan something I have attempted to do in earlier posts with mixed results.My long held view was around £21.00 to £27.00 pounds per year.Page 11of the accounts shows sales tax is collected and must be paid on these amounts. VAT is currently 20%.I have since played around with various net amounts starting with the one number that is set in stone the £1.034M of vet plan turnover in the year to Sep15.The other numbers set in stone our the 40,000 plans at the start of the year and the 79,000 plans at the end of the year. The common number I arrived at was £19.00 per plan. To get their/ 40,000 plans ran for 12 months = £760,000 17,000 plans ran for an average of about 8 months = £ 215,000 and 22,000 plans ran for an average of 2 months. = £ 69,000 Ajustments need to also be made as a plan sold this month will not see the first payment made for at least another month.
The upshot is we now have some real numbers to work on. If as current sales are projecting 200,000 plans are sold by SEP 2016 the new year 2016 -17 will start with recurring revenues of £3.8M.To this another £1.2M should be produced from the buying group. Then one can add a possible equivalent 100,000 plans that could produce income (out of a possible 200,000 over the full 2016 -2017 year) of £1.9M. 2016 -2017 total revenues could then be a mighty £6.9M. Costs off that are the U.K wage bill of £1.5M ongoing listing costs £400,000 and other UK overheads of at a guess a maximum of £1M. That would leave £4M gross to share between investment and profit. Absolutely astonishing results could come in 2017 -2018.☝㈷9;

[netcurtains] 30/1/2016 12:07

PL:
I don't think profit is the key point at this pre-dividend stage of development, but one would like to see revenue being generated. People can make rough calculations on future profits by looking at the companies revenue growth. For example, if you look at Amazon or the others, people know there is huge profits there somewhere as the revenues are also huge.
So, do you expect to see revenue growth this time around?

[pet lover] 30/1/2016 09:28

HYDRUS/ Directors will not waste cash as most of it is their own.I agree that investors should not be looking for the company to make a profit over the next 8 months to Sep 15. Investment will come first.The point to note is they could make a good profit if they choose to do so but it makes far more sense to grow the company. For a new company any profit forecast needs to be on the low to very low side from day one. That might be a large loss this year and a small profit next year in the opening coverage. These can then be adjusted as the growth appears. Over the years I have found a better guide is the valuation of a company set against its potential future profits.Instisutions do not want to be lead down the garden path nor to private investors.Its PVG'S recurring revenues that will over time light up the share price. My plan is to read the accounts in full today.

[hydrus] 29/1/2016 22:22

Thanks for highlighting it has been uploaded. It is evident from reading through the report that the company is strong on corporate governance which is reassuring. I am pleased they highlight the large holding by a Director in the risk section. Over time, as institutional investors want to get involved I imagine there is a good chance he will sell a portion of his holding. This happens frequently with growing companies with small free floats. Institutional investors certainly won't get many shares on the open market! The Directors are big shareholders and their interests are aligned to other shareholders which is the main thing.Clearly out of the existing overseas ventures the Netherlands is roaring ahead. Stumbling blocks in Nordic region will no doubt be used to learn what the best arrangements are for overseas ventures. Looking forward to hearing about where (USA highlighted as potential on this bulletin board) they are going next. The pet plan growth is roaring ahead - it's just a waiting game now to see how quickly they grow them.

[pet lover] 29/1/2016 20:29

Long week over home and dry with the hound. Results out full accounts can be found on the investor page this evening.The first thing that strikes me is the UK Pet Plan sales and the overseas Pet Plan sales are split for the first time see page 56.Over the next few years investors can follow the growth rates of the two areas. The buying groups revenue will not be growing by much bar contract wins.Best to assume they will be flat from now on £1.2m but still of great value that will absorb head office overheads.
The total worldwide Plan sales for the 11 weeks 30th Sep to 18th Dec 15 were 21,741.
That's 2,000 a week.If one removes a full two weeks to cover bank holidays we get 39 more weeks @ 2000 = 78,000 plans to add to the those sold to date.
Without ANY increase in the growth rate from organic clinics or ANY new Clinic contracts PVG is currently on track to see sales jump from 82,000 as of Sep 15 to 200,000 by Sep 16. 👏😯

[hydrus] 29/1/2016 07:39

For 'ortolans' read 'pet plan subscriptions' odd typo

[hydrus] 29/1/2016 07:29

'The Board believes that with this re-defined focus and continued investment a significant increase in shareholder value can be generated and that the Company is entering a very exciting phase of growth.'One can see why they are excited!

[hydrus] 23/1/2016 21:12

Thanks - my eye immediately fell to the future challenges part. 80% feeling lack of business skills was a problem plus concerns around weak marketing and IT skills makes me think that PVG are focussed on a sweet spot. Lots to digest but the size of the various markets in each country is helpful to know. Having said that a larger market doesn't necessarily mean a more profitable one.

[pet lover] 23/1/2016 20:36

This is the only lead I have found to learn about the European veterinary market. The hound has just blown off by the fire.The report is an eye opener regarding the size of veterinary practices 25% have just one vet with the next 20% having just two vets.The full report can also be read pages 46 and 49 are packed with knowledge.

[hydrus] 23/1/2016 20:14

Pet lover agreed we just don't know but think we are both confident that this is could be a highly rewarding investment opportunity. Results on Friday, should be some interesting comments on plans going forward. The prior year results won't be a priority for me due to the selling of the vet practices. However anything we can glean about admin costs going forward will be helpful.

[pet lover] 23/1/2016 14:16

HYDRUS

Fact is at this stage we just don't know.One thing is for sure it's getting tougher by the day for independent vets in the UK.Now more than ever they desperately need to keep hold of existing clients and try and grow revenues.Growing revenues is not a given for your average private practice.These health plans drive growth.
PVG show how this is done on their company page with Pet Plan sales getting into gear in year two. How can your local vet practise grow at very low cost.? It has to be low cost as margins per client are small after overheads.
A large number of clients will not go to a pets at home store vet for the same reason they would not buy carpets from Carpetright.
Those large groups are pushing their own health plans vigorously and they won't stop till they have pulled in just about every client on their books within ten years. Each new pet will be steered onto the plans at 6 weeks old during the owners first vacation visit.
I had a look at my bank account this week and noticed the amount of small payments I make each month for subscription services. None of these would have been on the statement a few years ago. Just this week I signed up to Amazon Prime.It was that sign up that drew my attention to Amazons sales and profit referred to in my last comment.

[hydrus] 23/1/2016 13:19

Pet Lover CVSG can probably get higher numbers of plans per vet because they are one company, with one culture and can prioritise selling of pet plans though incentives linked to KPIs etc. Therefore I suspect the number of plans sold per vet might be a bit lower for PVG.Having said that the individual vet owners of course have the incentive of much higher recurring revenues so it will still be a priority.At the stage hard to tell but I am pencilling in 500-600 plans per vet compared to CVSG's 800. Of course that number is still growing so I am being conservative.If PVG use the £4m to double the number of practices worldwide to 1200 or so then we could see close to 750,000 plans in the next few years so overall similar figures to you in any case.Who knows what the market cap of the company would be at that point. Many multiples of today I'm guessing.

[pet lover] 23/1/2016 10:28

As a footnote to the post. Amazon is growing sales at 25% year on year. PVG is growing it's pet health plans at 100% with over 600 practices under its belt. They have the ability to double sales each year from 100,000 to 200,000 this year and 200,000 to 400,000 next year. Those numbers exclude any new expansion around the globe from today. CVSG PLC have sold 850 plans per practice as a guide to sales rates. Any expansion around the globe would fill any shortfall in the above numbers and more importantly build a solid base for growth past 2018. Without intending to mislead it must be possible on paper at least to double the 400,000 to 800,000 in 3 years time if in 2016 very large numbers of vet practices were signed up around the world.

[pet lover] 23/1/2016 10:03

Getting lighter in the mornings at last so can walk the hound with less chance of us being run over.
PETS issued a trading statement this week that the market warmed to.Shop sales growth was just 1.7% but Services dog grooming and so on caught the markets eye expanding by 27%. The stock has had a good run since.This draws me back to PVG. Can't help thinking the business model now the vet practices have been booted out of the door is rather good.For starters it's simple with clean edges.Recurring revenues and very high margins come next.Compertition is weak in the UK that has enabled PVG to gain a large slice of the available veterinary practices from a standing start four years ago.Europe from my limited investergations is years behind the UK and offers a real opportunity for rapid growth. I would have thought the vet health plan could be designed,IT within the practice sorted and staff trained all within ten weeks.After that the cash starts to roll in at 1/12th of the yearly subscription.The FD knows each day how sales are doing against targets and with the aid of the other directors can adjust the growth rate at the front end of the business with absolute confidence.Sales growth will innatialy dictate the share price of PVG.Amazon is a prime example of this where investors have yet to see any meaningful profits yet the share price reflects megga returns.

[netcurtains] 19/1/2016 10:52

sounds promising, thanks

[hydrus] 18/1/2016 15:24

Who knows re today/tomorrow but in pretty confident that this will prove to be excellent value long term

[lauders] 18/1/2016 15:23

Been watching these amongst others. Perhaps a better opportunity tomorrow before the US markets open again Hydrus? Also watching TSTL.

[hydrus] 18/1/2016 15:21

A nice opportunity to add some more which I've taken advantage of

[ginger_ninja1] 17/1/2016 23:12

Stock investing strategy – Growth investingIn a nut shell....Growth investors, invest in companies that exhibit signs of above-average growth. They don't mind if the share price is expensive in comparison to its actual value. 'Signs of above-average Growth' is what growth investors try to spot. These signs gets revealed when you study the fundamentals. This is the exact opposite of 'value investing' approach. In a nutshell, the difference between 'value' investing and 'growth' investing lies in the methodology adopted by the investors. While the value investor looks for undervalued shares, the growth investor looks for shares with higher growth potential.What exactly is 'growth'?Benjamin Graham defined a growth share as a share in a company "that has done better than average in the past, and is expected to do so in the future." Any company whose business generates significant positive cash flows or earnings, which increase at significantly faster rates than the overall economy, can be categorized under 'growth'. A growth company tends to have very profitable reinvestment opportunities for its own retained earnings. Thus, it typically pays little to no dividends to stockholders, opting instead to plow most or all of its profits back into its expanding business. Software companies are examples of growth oriented companies.What's the concept all about?Investors who follow this strategy look for companies that exhibit huge growth in terms of revenues and profits. Typically, this set of investors looks for those in sunrise sectors (those in the early stages of growth) hoping to find the next Microsoft. A growth investor may look into the past year's data to recognize the past growth rates and based on his studies about the industry's potential and company's prospects; try to estimate the future growth of the company. Investors look to spot a company that grows at minimum 15% annually. If a stock cannot realistically double in five years, it's probably not a growth stock. That's the general consensus. This may seem like an overly high, unrealistic standard, but remember that with a growth rate of 10%, a stock's price would double in seven years. So the rate growth investors are seeking is 15% per annum, which yields a doubling in price in five yearsWhat does a Growth Investor look for in a stock?Low dividend yields, high price-to-earnings ratio or high sales-to-market capitalisation ratio or a mix of all. For identifying stocks with high potential, growth investors look at key variables such as rate of growth in per share earnings over the last five-10 years, expected growth in earnings over the next five years or so, operating and net profit margins and business efficiency. A growth investor would target a company that's growing at 15%-40% year on.On a macro level, factors such as the stage in business cycle in which the industry operates, its relative attractiveness, and the positioning of the company in the competition matrix form part of the investment analysis. They then look at the current price and determine if it reflects the growth potential of the company's business.What are the sources to find Growth shares?The best method is to do your own research. Most growth stocks can be spotted in the small cap and mid cap indexes. It is the growth rate that finally makes them large caps. Try to spot new companies that come up with innovative ideas – for example in medical Pharma industry. Watch companies that have grown from small cap to mid caps. Watch companies that breach all time high levels. Investigate why the prices sky rocketed. You may also validate shares of Industries that are currently facing market overreaction to a piece of news affecting the industry in the short term and try to spot one.

[netcurtains] 15/1/2016 08:27

According to the AVMA, 59.5 percent of the 14,815 households own pets, which means 8,815 households own a pet in this city being researched.
> 76.5 percent of households with pets take their pets to the veterinarian, which means 6,743 households—or 18,207 people—take their pet to the veterinarian.
> Each household spends $366 annually on veterinary care, which means $2,467,938 total is spent every year.
> Let's assume that a full-time equivalent FTE veterinarian generates between $500,000 and $800,000 in gross revenue annually. (Typically an associate veterinarian grosses approximately the lower number, while veterinary owners gross closer to the larger.)
> On the low-earning end of the earning spectrum, $2,467,938 ÷ $500,000 = 4.9, which means 8,815 households (or a population of 40,000) could support 4.9 FTE veterinarians. On the high end of the spectrum, $2,467,938 ÷ $800,000 = 3.1, which means a city of 8,815 households could support 3.1 veterinarians.

Summary: Based on $500,000 to $800,000 in revenue, this city of 40,000 people could easily support between 3.1 and 4.9 FTE veterinarians total.

[pet lover] 14/1/2016 18:47

Another day done and dusted. Valuations and comparables.


7:01am

UK Regulatory (RNS & others)

4 December 2015

CVS Group plc

("CVS", the "Company" or the "Group")

Acquisition of Albavet Limited ('Albavet'), The Pet Crematorium Limited ('The Pet Crematorium') and New Bank Facilities

Acquisition of Albavet

CVS (AIM: "CVSG"), the UK's leading provider of integrated veterinary services, is pleased to announce that on 3 December 2015 it acquired the entire share capital of Albavet and its wholly owned subsidiary, VETisco Limited (together the "Albavet Group" and the "Acquisition").

The Albavet Group employs some 34 professional vets and over 150 staff in total across three separate businesses: 11 veterinary surgeries; a veterinary buying group, trading under the name of Vetshare; and an instrumentation business trading under the name of VETisco.

The veterinary surgeries are well established businesses and are based in the Fife area (4 sites), Glasgow (1 site), Nottingham (1 site), the Stoke-on-Trent area (4 sites) and Wallington, Surrey (1 site). The surgeries perform small animal work.

The Vetshare buying group currently has over 400 members operating from over 500 surgeries across the UK. Vetshare negotiates supplier rebates on behalf of its members and generates its revenues based on commission on members' purchases from wholesalers. It also sources and negotiates other veterinary services for its members, including crematoria and laboratory work. In September 2014 members of the London Vet Forum buying group transferred to Vetshare, increasing the number of members by over 20%.

The VETisco instrumentation business is a small distribution business having commenced in 2012. It currently makes a small loss.

In the year to 31 October 2014, the last for which published accounts are available, the Albavet Group had turnover of approximately GBP6.6 million, of which GBP5.5 million was generated by the surgeries. Earnings before Interest, Tax and Depreciation and Amortisation ("EBITDA") was c. GBP0.8m million and profit before tax was GBP0.6 million (both after adjusting for rent that will be payable on properties owned by the Albavet Group pre acquisition but which will be leased post acquisition). As at 31 October 2014 net liabilities excluding goodwill of Albavet were GBP0.7 million.

The total consideration payable to the shareholders of Albavet is GBP11.3 million including costs. This figure is subject to adjustment based on the working capital and indebtedness of Albavet at the date of acquisition. In addition CVS will acquire net debt of approximately GBP0.1 million with Albavet. Intangible assets and goodwill of approximately GBP11.6 million are expected to arise on completion of the Acquisition.

The consideration for the Acquisition was paid out of the Group's new bank facilities.

END:



How do you value PVG without any broker forecasts?
In my earlier post I referred to the numbers of pet health plans that CVS Group had sold over the recent time frame. CVS Group is a consolidator in the veterinary sector buying up vets and linked businesses. Last month they bought a group of vets that included a buying group of similar size to that currently run by PVG. Just by absolute chance the number of staff 150 and the turnover of the group sold matched that of what PVG sold just before Christmas. CVS Group paid a total of £11.3M for the vets and buying group.By deduction the buying group was sold for £5.1m. PVG 'S sales of £1.1M a year through its buying group were again in line with the buying group CVS Group has just bought. PVG'S buying group appears to worth about £5.1M.It will never be worth much more than that in a trade sale at current sales rates as its income is not of the same quality of that of the pet health plans. A vet clinic can and will move suppliers for the best prices and service every few years so the income is choppy. PVG makes great margins but the market in the UK for buying groups is just not big enough to grow at much above 5% - 10%.P/A. PVG now commands a £22M price tag on the trading floor. If one removes the £4m cash and the £5m value of the buying group we end up with a £13m price tag for the pet health plans.If your in the camp that believes the company can grow those plans at 100 % compound for 2 or 3 years then the stock may well be ridiculously cheap on a 3 year time frame. Looking at the plan sales from MARCH 2015 and the 20,000 sold in the ten weeks to Dec18 2015 we just might be looking and plan sales growth of over 100%.