RE: GB pig price spiking up25 Apr 2023 14:34
Per Progressive Dev - 24/3/23
Positive surprises in year-end trading update Eco’s pre-close trading update confirms revenue and EBITDA are ahead of current market expectations for FY23 that had previously anticipated modest growth relative to FY22. The better-than-expected results are being driven by an unexpectedly strong final quarter for Aivlosin in China combined with continued growth in South/Southeast Asia and Latin America. We now expect FY23 sales of £84.7m and an adjusted EBITDA of £7.0m based on our interpretation of the statement.
With an EV of £66m, Eco currently trades on an EV/sales ratio of ~0.78 and EV/EBITDA of 9.4 – both well below norms for the animal health sector. • Year-end trading update: A surprise stronger final quarter (January to March) for its financial year, has led Eco to report that its FY23 revenue and EBITDA are likely to be above current consensus expectations (c £82.6m and £6.4m respectively). The statement is surprising as Chinese pork prices – which are normally a key determinant for Aivlosin demand in that market - have declined between November and February. However, we understand that demand for Aivlosin has been buoyed in recent months by use in managing porcine reproductive and respiratory syndrome (PPRS) outbreaks in China.
• Further update possible in April: As this trading statement is based on the February management accounts, we expect Eco to provide a further update to the market once it has closed the books on FY23, probably in late April. Audited results for FY23 are likely in July.
• Chinese pork market prices: Pork prices in China have been weak for most of FY23. There was some improvement in September to November, but prices seem to have fallen back over the last three months. Nonetheless, we understand at RMB15-16/kg they are currently still above levels where pork production is profitable for producers (this is a key determinant of whether producers will use Aivlosin on high value animals)
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