Eco Animal Share Price (EAH)

Could get a holding notification soon given the volume of trades going through today !!

Eco Animal Health has announced the disposal of its treatment for equine parasitic infections, ECOmectin® Horsepaste, to its long-term Italian manufacturing partner, ACME Drugs S.r.l. ACME will acquire all ECOmectin® Horsepaste intellectual property, manufacturing and inventory, distribution and marketing.

Our Fair Value range remains 137p-146p which contrasts with the current share price, suggesting that the potential contribution to earnings from the product development pipeline deserves far closer attention.

https://www.equitydevelopment.co.uk/research/disposal-of-non-core-equine-treatment-operation-for-1.3m

For the year ended 31 March 2024, Eco Animal Health reports progress in both the second half and Q4, underpinned by demand for the Group’s proprietary Aivlosin® antibacterial treatment for gastrointestinal and respiratory diseases in pigs and poultry. The Group reports sustained demand for Aivlosin® across the territories it targets, which we note are worldwide: China, Japan and SE Asia, the Americas and Europe. The Group expects FY24 revenue to be in line with a market consensus estimate of £88.7m.

Following the November Capital Markets event we reviewed the contribution to valuation of the product development pipeline, particularly in light of the strong track record established by Aivlosin® . Our resulting Fair Value range was 137p - 146p. This contrasts with the current share price, and suggests that the potential contribution to earnings of the product development pipeline deserves far closer attention.

Link to research note: https://www.equitydevelopment.co.uk/research/sustained-demand-and-continuing-progress

New research report & audio summary here: https://www.equitydevelopment.co.uk/research/interim-results-generate-more-cash

For the six months to 30 September ECO Animal Health reported revenue of £38.0m, +9%YoY, and (adj.) EBITDA of £0.7m (H1 22: £1.7m). Underlying currency-adjusted revenue growth was 15%YoY. Cash generated by operations of £4.8m compared to £3.0m a year earlier resulting in a period-end cash balance of £20.6m (H1 22: £12.9m). The loss per share was (1.93)p; (H1 22 1.95p). The gross margin at 40.8% contrasted with 45.3% in H1 22; we expect an H2 improvement based on sales mix and clarity of revenue outlook (the Group notes that 94% of market consensus outlook is covered by the order book and stock run rate), abetted by the traditionally strong demand in the northern winter months.

The combination of strong H1 performance in key markets (combined +19.6%YoY), continued strong cash generation and the seasonal nature of second half performance means that our full year FY24 and subsequent FY25 outlook is maintained.

On the basis of our FY24 and FY25 ECO Animal Health EBITDA outlook, and the peer group average EV/EBITDA multiple, the Group Fair Value indicated range is 137p – 146p per share.

The management discussed their 9% revenue growth, despite currencies headwinds for a large part of the first half, and strong visibility over second half revenue. The team talked about their expectation of H2 gross margin improvement, the new Aivlosin® claim approved in the US & Canada, and the exciting prospects for their R&D pipeline as highlighted in the recent Capital Markets Day. They also explored the topic of M&A and the opportunities for both product and regional bolt-ons. Management answered a wide range of questions asked by viewers.

ECO Animal Health Group (AIM: EAH) is a leader in the development, registration and marketing of pharmaceutical products for global animal health markets, Interim Results were for the period to 30th September 2023 and presented by David Hallas (CEO) and Chris Wilks (CFO).

The full video has been divided into chapters, as below:

0:00:00 Introduction and Strategy

0:01:30 Highlights

0:05:15 Revenues

0:10:06 Expenditures

0:12:36 Gross margin & EBITDA comments

0:19:10 ESG Summary

0:20:24 Balance sheet & cashflow

0:23:04 First approvals

0:26:05 Conclusion & Outlook

0:28:00 Questions & Answers

Link to video here: https://www.equitydevelopment.co.uk/research/eco-animal-health-investor-presentation-interim-results-29th-november-2023