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If Mars wanted to buy CVS Group the deal would go through.
There are still plenty of competition in the UK and globally.
Examples:
INDEPENDENT VETCARE LIMITED = 2,500 locations across 20 countries
LINNAEUS VETERINARY LIMITED = 75 loctions
BOEHRINGER INGELHEIM ANIMAL HEALTH UK LIMITED = 176 affiliates worldwide
Mars may have a problem with the CMA though if they take over CVSG - what % share would their group then have ?
All the CMA can't really do anything, CVS prices have gone up due to the macro economic situation.
CVS are looking at reducing this costs over the next year, and will be yielding better profit margins.
CVS have developed a great international presence, and this would be a great takeover target now.
In 2017, VCA, which owned more than 1,000 vet clinics in North America, was acquired by Mars Inc,
Mars paid $9.1 billion including $1.4 billion in outstanding debt.
Zoetis: Revenue: $7.78B, Market Cap: $71.33B
MSD Animal Health, Revenue: $5.57B, Market Cap: $276.18B
Boehringer Ingelheim, Revenue: $4.89B
Elanco, Revenue: $4.76B , Market Cap: $5.96B
You have to wonder about the CMA and whether there's a political motive behind the investigation. They already know the answer to increasing prices, and they can't actually do anything about those prices.
Looking forward to £20 even.
Looking forward to this moving back to the 20's fast over the coming days on the way to the results.
From the July Trading statement:
FY23 Financial Highlights
Continued organic revenue growth with a 7.3% increase in like-for-like sales2 (FY22: 8.0%), consistent with the Group's organic revenue growth ambition of between 4% and 8%;
Adjusted EBITDA3 margins also expected to be within our stated ambition of margins between 19% to 23%
Response to CMA review into the veterinary services market:
As the CMA have recognised, there continues to be a significant shortage of vets in the UK and employment costs represent the most significant proportion of our cost base. Our pricing reflects this and other inflationary pressures experienced in recent years
We have a clear strategy to continue to expand our network and to improve clinical care through investment in facilities, equipment, technology and our people.
Based on new value?
Most analysts were saying strong buy at £21!
hopefully I will be back in the black today, though it's still struggling to get through £15
There’s been updating this morning for CVSG group.
RBC Capital Upgrades CVS Group Plc. (CVSG:LN) (CVSGF) to Outperform
September 13, 2023 1:44 AM
RBC Capital analyst Charles Weston ...
I really don't understand the continued fall. The promise of a little bit of wrist slapping for lack of opaqueness on competition from the CMA doesn't knock a third off the value of a company...
And the CMA can't make vets cut prices. They can only consider where there is an unfair monopoly (with different brands as part of the same group not being apparent enough).
Forward looking it should be good news for all vets as pet ownership has increased - and lots of pets bought during Covid are still to get to an age where things start to happen more frequently.
I think I need to buy some more... whether straight back to £21 happens next week - I am a bit more doubtful. Didn't manage to buy right at the bottom, but in the low £15s so sitting on a very small loss atm.
Very good point. I agree CMA regulations don’t happen overnight - it’s time consuming and years away.
This company trades globally and not just UK. CMA will take time…..
Next week’s trading statement is going to be very profit positive with strong forward guidance.
Heading back to £21 and beyond next week. Don’t forget this sought after company only has 71 million scarce shares. This is why it’s very volatile. Already made good profit when it dropped to £13.65 and then recovered to over £17.
Market traders have engineered this drop but can only do so much. It can only go back up by close of today.
Only one largeish sell recently (10,000 shares)...
Lots of playing about. Surprised it's going any lower - if the fundamentals were OK at £21 (of course they may not have been...) then they'll be more than fine at £15 - any CMA ruling cannot knock that much value off a company. Of course it may take 2 or 3 years to rule, and results out next week may tell a different story about the underlying...
Now assuming it's an ii selling off (though the trade volume is v low so might just be being played for bigger buys in the background (don't think that's just wishful thinking?)
Interesting. Not sure why 6 out of 9 analysts summarised on the MSN money pages recommend "strong buy" at the price a week ago (with a 12 month target of £24). Yes analysts seem to always be on the high side, but they must see something... (but most shares are a "Buy" at the moment...)
Not sure about the uncertainty - I can't see how the CMA investigation have that much effect. The problem is supply of vets and nurses; yes some groups are bad at disguising who owns what (OH says IVC are the worst at being very economic with who owns what with apparent independents not being independent).
Results out next week will be interesting...
People won't stop taking their animals to vets, and there are many more animals now, and fewer vets...
A review of the financial statements suggests this is still overvalued given the uncertainty in the outlook.
Balance sheet looks distinctly unattractive - £85m term loan repayable on 31/01/24, net debt of £35m
P&L - £42m in operating profit last year, so it's still trading at around 21x OP - not cheap at all
Basic EPS 36.2p, so again it's still really expensive on a PE basis
In terms of technical support, below £13.70 I don't see anything significant until the £7-9 range. £4 was reached in Jan 2019 on a materially below expectations trading update, EBITDA has roughly doubled since then so a current equivalent of around £8 would start to become attractive.
One for the watchlist, but no interest at the current valuation.
Seems to be a floor - got some right down there
Apologies for being a bit defensive of my OH - she's seething - as is her practice with this latest round of "bash a vet" - she thinks the BBC have been awful.
One thing - vets are NOT overpaid - she's probably on about half what she'd get as a GP (and the first two years of university are the same for medical and animal doctors). She's at a hospital praxtice (which she prefers) so lates and some nights involved
I think part of the problem in the UK is we get healthcare "free", so people don't appreciate healthcare costs for animals
It hasn’t dropped below 1500p this time around, I am hoping it does to fire off a few stop losses.
As for teeth... that's my OH's specialty - something few vets want to do (which may be reflected a bit in the prices you see). She's finding a huge variation in what has been considered good and appropriate work carried out at other practices that she has subsequently seen - which may also be reflected in the prices you've seen!
However it indys are cheaper, then people will go there. That's what free markets are about; you've gone to the independent
All CMA can do - as I said - is address any hidden monopolies like you suggest. CMA can't and won't address pricing.
Many vets are closing books to new clients as there are not enough vets, so companies are having to pay more (thankfully, at last my OH is starting to be rewarded a little better for a poorly paid job given her qualification, experience and responsibilities). She's worked off her feet as hers is one of the only vets in her area still taking on new clients.
CVSG won't be reducing prices - so the outlook for them is little different than a week ago (she doesn't work for CVSG BTW, or one of the big groups like Mars!!) - plus they operate in 4 countries. How are they worth 70% of what they were a week ago. It's nonsense!
Because independent vet charges seem to charge much less ..also the perception is many of these vets owned by CVS are seen as independent when in fact they are not. I know this from my own personal experience whereby I was given an estimate of £1089 to clean the cat’s teeth and then only £350 from an independent vet…..
Find it hard to believe that these are still profit takers from the dip as it wasn't exactly at 1400 for long? most of the trading was happening on the rise.
the repeat 1000 trades feels like an ii but?!?!
assuming 1500 is support but (again) putting cash to the side in case it breaks for 1450. that said, even from 1600 it's only down 6% at 1500.
Not sure what people are expecting from any investigation. Veterinary Services are privately owned and apart from where there may be monopolistic activity the CMA have no right to tell vets what to charge - this is leaving out the obvious reasons why prices have increased as I've mentioned before
Yet a sell off of well over 25% of share price...seems rather mad
Have been picking up small volumes on the way down
It looks like an II is dumping, I will be back in below 1500p rinse and repeat.
If the price stays at this level (would be BERY surprised) then assum that's when they'll buy.
Volumes are very low though- sales are for tiny amounts. Who is selling at these prices - that's just daft. Any lower and I will be buying more. (have a kill order at 1450 just in case it goes that low and I'm not around)
My OH is a vet - I know why their costs are increasing (shortage of vets). They cannot be forced to charge less as they won't be viable businesses - and it's not as if people aren't paying the prices; she consistently works non stop for 10+ hour days. Many practices have closed their books to new clients as demand - a lot down to new fancy breeds with lots of inbuilt problems - bought during Covid - exceeds supply. Vets still paid a fraction of what doctors are paid though - she should have gone down that route...