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H1 growth was solid, although the recovery in LatAm was offset by delays to European orders due to distributor restructuring and challenging market conditions in the US (expected to reverse through H2). Meanwhile strong cash generation and a special dividend of 3.5p/share, in addition to a 20% underlying YoY dividend increase, provide strong investment appeal. We continue to view ECO Animal Health as a core holding in the Animal Health sector, with a solid balance sheet, a positive outlook for Aivlosin® and an attractive medium-term opportunity in swine vaccines.
The agreement with the Hebrew University of Jerusalem will allow ECO to develop a novel formulation of florfenicol, for the treatment of respiratory diseases in pigs. Subject to successful development, the programme could offer an exciting portfolio addition to Aivlosin®, offering single-dose, injectable administration and a complementary spectrum of anti-microbial activity. We reiterate our positive stance.
Greenfields Petroleum (TSX-V:GNF) production focused company with operated assets in Azerbaijan seeking AIM dual listing including $60m private placement. Mkt cap $12.6m CAD Wentworth Resources— oil and gas exploration and production company, with assets in the onshore Rovuma Basin of East Africa. Introduction only. Mkt Cap c £50m . Due today Finncap—proposed acquisition of M&A adviser Cavendish Corporate Finance and AIM admission. Offer TBA Kropz PLC—an emerging plant nutrient producer with an advanced stage phosphate mining project in South Africa, a phosphate project in the Republic of Congo and exploration assets in Ghana. Looking to join AIM, offer TBC, market cap TBC. Due Late October. Crossword Cybersecurity PLC* (NEX:CCS)—the technology commercialisation company focusing exclusively on the cyber security sector is exploring its options in relation to a potential move to the AIM market of the London Stock Exchange which, if it were to proceed, would likely take place over the next few months. The Panoply parent company of a digitally native technology services group founded in 2016 with the aim of identifying and acquiring best-of-breed specialist information technology and innovation consulting businesses across Europe, is looking to join AIM. Offer TBC, expected late November 2018.
Following another strong set of FY results, we have revised our forecasts for Aivlosin® and ECO Animal Health as a whole, resulting in an upgrade to FY2019-20e adj EBITDA of 5.5% and 10.5% respectively. We continue to view ECO Animal Health as a core holding in the Animal Health sector, with a solid balance sheet, a positive outlook for Aivlosin® and an attractive medium-term opportunity in swine vaccines. Our valuation implies an intrinsic value of 584p/share.
ECO Animal Health Group (EAH LN) Margin beat drives EBITDA upgrade | Summit Therapeutics (SUMM LN) Microbiome preservation data on ridinilazole published in PLOS ONE | Verona Pharma (VRP LN) Conviction Opportunity in Pulmonary Disease
Abzena (ABZA LN) Telix Pharma deals highlight an increasingly integrated offering | Best Ideas 2018 - H1 Review 9% outperformance for our picks YTD | Carclo (CAR LN) Non-binding proposal from consort | ECO Animal Health Group (EAH LN) Another good year: EBITDA and dividend ahead of estimates | Ergomed (ERGO LN) CFO appointed | First Derivatives (FDP LN) Acquisition of remaining minority stake in Kx Systems | Sigma Capital Group (SGM LN) Site delays could impact short term, 6% reduction to FY18e PBT | St Ives (SIV LN) Change complete – focus moves to growth | StatPro Group (SOG LN) Acquisition of regulatory risk services bureau | The PRS REIT (PRSR LN) Hits target yield, sees some construction delays
1Spatial (SPA LN) £1.6m contract win shows further Geospatial momentum | Advanced Medical Solutions (AMS LN) Royalties flatter underlying progress, FX to impact top line | Augean (AUG LN) Update from HMRC on potential landfill tax liability | Avon Rubber (AVON LN) Disposal of AEF Inc | ECO Animal Health Group (EAH LN) ECO-Pharm Limited enhances Group offering
ECO Animal Health Group (EAH LN) Marketing authorisations for Aivlosin® in Argentina | Ergomed (ERGO LN) FY trading update: revised EBITDA guidance | Microsaic Systems (MSYS LN) Challenges in traditional markets but new strategy progressing well | MySale Group (MYSL LN) Record interims, a sixth successive half of T/O and margin gains | St Ives (SIV LN) A great step forward
The marketing authorisations in Ukraine (the 16th largest egg producing country worldwide) represent an important step in the global rollout of Aivlosin® as a treatment of choice for a variety of respiratory and enteric infections in pigs and poultry. We reiterate our positive stance and continue to expect Aivlosin® to generate strong growth in multiple geographies.
boohoo.com (BOO LN) Buy into derating as brand momentum increases | Carador Income Fund (CIFU LN) Q4 dividend of 2.25c, total of 9c for full year | ECO Animal Health Group (EAH LN) Marketing authorisations for Aivlosin® in Ukraine | Elementis (ELM LN) Strategic progress not yet reflected in share price | Goals Soccer Centres (GOAL LN) 2017 falls short of expectations but turnaround green-shoots in evidence
Hydrominer GmbH, An Austrian cryptocurrency miner, is considering an initial public offering (IPO) on the London Stock Exchange AIM during 2018 according to an article on Bloomberg. Block Energy—a NEX Listed UK based oil exploration and production company whose main country of operation is the Republic of Georgia, looks to join AIM end of February 2018. Offer TBC Cradle Arc—holding company of a group of companies focused on the exploration and development of precious and base metals projects in Africa. Offer raising £2.4m with market cap of £20.13m. Expected 24 Jan 2018 OnTheMarket—Intention to float on AIM to raise c.£50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m.
ECO Animal Health has received its seventh Aivlosin® marketing authorisation of the year with the most recent being in the Philippines in chickens laying eggs for human consumptions in a water soluble formulation. The Philippines is the fourth most important egg producing country in South East Asia and seventeenth globally. ECO Animal Health continues its global roll out of Aivlosin® for commercial layers after it was first approved in a water soluble formulation for the treatment of layers in Europe in 2016. We re-iterate our positive stance and continue to expect Aivlosin® to generate strong growth in multiple geographies.
Curtis Banks Group (CBP LN) IT platform selected, positive development – reiterate our BUY | dotdigital Group (DOTD LN) Positive AGM statement | ECO Animal Health Group (EAH LN) Marketing authorisation for Aivlosin® in the Philippines | Microsaic Systems (MSYS LN) Appointment of Non-Executive Chairman | Nichols (NICL LN) 2017 – A positive year tempered by recent Yemen developments | River and Mercantile Group (RIV LN) Research costs to be absorbed under MiFID2, not a material impact | Springfield Properties (SPR LN) Strong progress in H1, in line with expectations
Erris Resources PLC—a mineral exploration and development company currently focused on two geographic areas. Offer TBC, expected 21 December 2017 CIP Merchant Capital—Closed ended investment Company. Sector focus oil & gas, healthcare, pharma, and real estate. Raising £55m. Due 21 Dec Panthera Resources— The Company was established to act as a holding company for Indo Gold Limited, an unlisted Australian registered company. The Company aims to explore and develop gold assets in India and West Africa. No raise. Expected 21 Dec Sumo Group—one of the UK's largest independent developers of AAA-rated video games providing both turnkey and codevelopment solutions, including initial concept and pre-production. Raising £38.45m and vendor sale of £39,7m. Mkt cap £145m. Bushveld Minerals—RTO of Bushveld Vametco and therefore 78.8% of Strategic Minerals Corporation, the intermediate holding company that owns a 75 per cent. interest in the Vametco Vanadium Mine. Eqtec—Company with access to a proprietary advanced gasification technology used in industrial size power plants to convert waste into synthetic gas to generate electricity. Raising £1.6m. Mkt Cap £8.7m. Due 21 Dec. Volex VLX.L—The global provider of cable assemblies is proposing to move from the main market to AIM on 19 January. £71m market cap. FYMar18E rev £241.5m and £7.19m PBT OnTheMarket—Intention to float on AIM to raise c.£50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m.
The approval of water soluble Aivlosin® for swine respiratory disease in Canada is very encouraging, albeit expected. The approval strengthens Aivlosin®’s presence in North America and follows the US marketing authorisation for the same formulation and indication in swine in July 2017. We continue to believe North America will be one of the key territories for driving growth where Aivlosin® currently has a 11.5% share of the targeted branded market (group is targeting a 25% share). The recent interim results (announced 6 December) highlighted continued growth and reported that H2 had started well with a strong and growing order book. We reiterate our highly positive stance.
Curtis Banks Group (CBP LN) Upside from strategic initiatives not yet recognised | ECO Animal Health Group (EAH LN) Marketing authorisation for Aivlosin® in Canada | IDOX (IDOX LN) Year end update and Board change | Microsaic Systems (MSYS LN) New phase of research agreement with global partner in biopharma | Safestyle UK (SFE LN) Tougher trading & further margin pressure drives another 10% d/grade | Zotefoams (ZTF LN) Strategic partnership with Nike
ECO Animal Health’s interim results highlight continued growth, with Aivlosin® generating strong demand. Sales of the antimicrobial increased 18% and is on track to meet our full year estimate of £53m. EBITDA and EPS increased by 36% and 13% respectively. The balance sheet remains robust (£20.3m net cash at period end) and the interim dividend of 3.2p is 28% higher than last year. H2 has reportedly started well with a strong and growing order book. Our EBITDA forecast is unchanged and we upgrade our dividend assumptions. We remain positive on ECO Animal Health and look forward to additional marketing authorisations of Aivlosin®.
Avon Rubber (AVON LN) Mask order for US DoD | ECO Animal Health Group (EAH LN) Aivlosin® demand continues to grow | Oxford Metrics (OMG LN) Strong FY’17, strategy on track
Panthera Resources— The Company was established to act as a holding company for Indo Gold Limited, an unlisted Australian registered company. The Company aims to explore and develop gold assets in India and West Africa. Offer TBC, expected 20 Dec 2017 Sumo Group—one of the UK's largest independent developers of AAA-rated video games providing both turnkey and codevelopment solutions, including initial concept and pre-production . Offer TBC. Due late Dec Pelatro—provider of proprietary software solutions to enterprise-level customers for various aspects of precision marketing for use in B2C applications. Offer TBC, expected 19 December 2017 Fusion Antibodies—Belfast based contract research organisation providing services to biopharmaceutical and diagnostics companies that are involved in the development of antibodies for both therapeutic drug and diagnostic applications. Offer TBA. Due Mid Dec. Sirius Petroleum—RTO. Becoming an operating company in the Ororo Field in Nigeria. Raising £7.2m/ Mkt Cap £35.6m. Due 19 Dec. Bushveld Minerals—RTO of Bushveld Vametco and therefore 78.8% of Strategic Minerals Corporation, the intermediate holding company that owns a 75 per cent. interest in the Vametco Vanadium Mine. Range Resources— oil and gas company listed on the ASX plans to admit to AIM on 13 Dec with market cap of £17.4m. Also acquiring Range Resources Drilling Services Limited, an oil services business based in Trinidad & Tobago with extensive drilling capabilities. Eqtec—Company with access to a proprietary advanced gasification technology used in industrial size power plants to convert waste into synthetic gas to generate electricity. Raising £1.6m. Mkt Cap £8.7m. Due 21 Dec. Volex VLX.L—The global provider of cable assemblies is proposing to move from the main market to AIM on 19 January. £71mmarket cap. FYMar18E rev £241.5m and £7.19m PBT Belluscura— Provider of premium medical devices at value prices to address part of the global unmet need for affordable, premium quality medical devices. Raising £7.5m to £10m. Offer TBA. Due early Dec Miriad Advertising—Global video advertising company incorporated in 2015 and is engaged in the development of native invideo advertising. 2016 rev £0.7m and £7.3m operating loss. Offer TBA. Expected 6 Dec. OnTheMarket—Intention to float on AIM to raise c.£50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m.
ECO Animal Health has received its fifth Aivlosin® marketing authorisation of the year with the most recent being in Egypt in chickens laying eggs for human consumptions in a water soluble formulation. Egypt is the second most important egg producing country in the Middle East and just outside the top twenty globally. ECO Animal Health continues its global roll out of Aivlosin® for commercial layers after it was first approved in a water soluble formulation for the treatment of layers in Europe in 2016. We re-iterate our positive stance and continue to expect Aivlosin® to generate strong growth in multiple geographies.
Kosmos Energy (KOS.L)—Secondary listing (Standard), currently on NYSE. Oil and gas exploration and production company focused on frontier and emerging areas along the Atlantic Margins. During the first half of 2017, gross sales volumes from Ghana averaged approximately 132,000 barrels of oil per day (net: 26,900 bopd). No offer. NYSE:KOS. Mkt Cap £2.54bn. | Pembridge Resources (PERE.L) - the natural resource exploration and development company has today moved from AIM to the Standard List of the Main Market.
ECO Animal Health has received approval of water soluble Aivlosin® in chickens laying eggs for human consumption in Turkey, its fourth marketing authorisation of Aivlosin® this year. Turkey is one of the ten largest egg producing countries in the world. Marketing authorisations are under review in various geographies and the group is in the process of submitting additional regulatory filings. We continue to expect Aivlosin® to generate strong growth in multiple geographies, with additional marketing authorisations providing further growth potential.
OnTheMarket—Intention to float on AIM to raise c. £50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m. Wilmcote Holdings plc—Sch1 from the Company established with the objective of creating value for its investors through the acquisition and subsequent development of target businesses in the downstream and specialty chemicals sector. Offer raising £15m at 120p with market cap of £25m. Expected 17 August 2017 Hipgnosis Songs Fund investment Company offering pure-play exposure to Songs and associated musical intellectual property rights. Offer raising £200m at 100p. The Company has decided to extend the closing date for the Placing, Offer for Subscription and Intermediaries Offer to 1 August 2017. The Company may bring forward this closing date at any time. Admission 15 September 2017
The approval of water soluble Aivlosin® for swine respiratory disease is very encouraging and in line with expectations. The approval strengthens the group’s offering in the US where Aivlosin® was first approved in 2012 in a water soluble formulation for the treatment of enteric disease of swine and later approved (for the same disease in swine) in 2016 in a premix formulation. North America represented 19% of Aivlosin® sales in FY 2017 and is a key territory for driving growth. ECO Animal Health reported in its 2017 full year results (announced June 2017) that 2018 had started well with growth and good demand in North America. We believe the new approval will enhance this further and we re-iterate our positive stance.
Clipper Logistics (CLG LN) Hold as we wait for upgrades to materialise | ECO Animal Health Group (EAH LN) Full year results ahead of expectations | Northgate (NTG LN) Mixed outlook, but shares now undervalued | Retail Negative consumer indicators but scope for inflation to flatten | Summit Therapeutics (SUMM LN) Ridinilazole: potential to address an unmet need
The approval of water soluble Aivlosin® in chickens laying eggs for human consumption in Malaysia is very encouraging and is the second for this indication in Southeast Asia. The approval also follows the European approval in June 2016. ECO Animal Health continues to submit additional regulatory filings in other key egg producing markets. We continue to expect Aivlosin® to generate strong growth in multiple geographies, with additional formulations, indications, geographies and species providing further growth potential.
Touchstone Exploration— Oil exploration and production company active in the Republic of Trinidad and Tobago. Interests of approximately 90,000 gross acres. Production c. 1,300 boepd. Raising £1.45m. Expected mkt cap £7.5m. Due 26 June. | I3 Energy –Schedule 1. Independent oil and gas company with assets and operations in the UK. Offer TBC, 7 June admission. | Verditek— Schedule 1 update. On Admission, the Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission in Early June | Tiso Blackstar Group—Schedule 1 update. Media, entertainment and marketing solutions group/ £160m mkt cap. Admission only. Expected late June. | DP Eurasia—Intention to float from the exclusive master franchisee of the Domino's Pizza brand in Turkey, Russia, Azerbaijan and Georgia . £20m primary raise plus a partial vendor sale. | Film Finances—Sky News reports that ‘movie financing company with credits including the Hollywood hits La La Land and Nocturnal Animals is plotting a blockbuster premiere on the London stock market that will value it at several hundred million pounds.’ Expected ‘during the summer’. | AIB—Intention to float from AIB, Ireland's leading retail and commercial bank . The Minister for Finance intends to sell approximately 25% of the Ordinary Shares of AIB. Prospectus and announcement of the price range due in mid-June 2017. | Curzon Energy—Report on Proactive Investors of intended LSE float this year with acquisition of coal bed methane assets in Oregon. Looking to raise £3m plus. | NLB Group—financial and banking institution based in Slovenia, with a network of 356 branches. Seeking Ljubliana Stock Exchange listing with GDRs on the LSE. Expected mid June. | Flying Brands (FBDU.L)—Prospectus approved by FCA. RTO of Stone Checker Software, supplier of technology solutions in the field of kidney stone analysis and prevention. Has raised £550k at 3p. Subject to GM on 15 Jun. | AEW UK Long Lease REIT—Intention to Float. Up to £150m raise. Admission early June. UK specialist and alternative property | Kuwait Energy— $150m raise plus vendor offer. Admission due June. 2p reserves 810.0 mmboe
ECO Animal Health has had a very strong FY 2017 with this morning’s trading update indicating PBT likely to be significantly ahead of market expectations. We moved to a forecast sensitivity of 4 at the time of interim results, highlighting the potential for the group to beat estimates. This morning’s update proves this to be the case and we upgrade our 2017, 2018 and 2019 EBITDA estimates by 26%, 13% and 4% respectively. In our view, Aivlosin® has significant growth potential with a pipeline of possible future approvals and line extensions.
ECO Animal Health Group (EAH LN) 2017 significantly ahead of expectations | Midatech Pharma (MTPH LN) New take on valuation and direct sales strategy | RhythmOne (RTHM LN) Good results/momentum – delivering on execution | Victrex (VCT LN) Positive H1 underpins FY profit and special dividend expectations
Animal Health is a vast market with multiple long-term growth characteristics and opportunities. In this report we have outlined valuations, M&A activity and the key growth drivers in two animal health subsectors: companion animal health and livestock health. Although the commercial positioning of the eight companies covered in this report (Animalcare, Anpario, Benchmark Holdings, CVS Group, Dechra, ECO Animal Health, Genus and Pets at Home) differ significantly, all have exposure to positive market trends.
Arian Silver Corp (AGQ.L) | Eco Animal Health (EAH.L) | Panmure Gordon & Co (PMR.L) | E K F Diagnostics Holdings (EKF.L) | Keras Resources (KRS.L) | Restore PLC (RST.L) | boohoo.com (BOO.L) | Premier Technical Services Group (PTSG.L) | Space and People (SAL.L) | Nektan (NKTN.L)
Earthport (EPO LN) Expansion of Bank of America Merrill Lynch partnership | ECO Animal Health Group (EAH LN) Interim results highlight period of strong growth
Big Sofa Technologies— Schedule 1 from the b2b technology company providing video analytics at an enterprise level. Seeking to complete RTO of unlisted HubCo investments. Raising £6.1m. Target date 19 December. ECSC—Schedule 1 from provider of cyber security services. Raising £5m. Vendor sale £0.8m. Target date 14 Dec. Expected market cap £15m. RM Secured Direct Lending - The secured direct lending fund intends to float on the Main Market on 15 December raising up to £100m Creo Medical Group - UK based medical device company focused on surgical endoscopy, a recent development in minimally invasive surgery. Admission due 7 December. £20m to be raised on Admission with anticipated market cap of £61.2m
Eco Animal Health (EAH.L) | Tern (TERN.L) | A r i a n a R e s o u r c e s (AAU.L) | Taptica International (TAP.L) | Hotel Chocolat (HOTC.L) | P l u t u s P o w e r G e n (PPG.L) | Feedback (FDBK.L) | GW Pharmaceuticals (GWP.L) | Advanced Oncotherapy (AVO.L) | O n e V i e w G r o u p (ONEV.L)
Eco Animal Health (EAH.L) | PhotonStar LED Group (PSL.L) | Bango (BGO.L) | DX Group (DX.L.L) | Circle Oil (COP.L) | Science Group (SAG.L) | Kennedy Ventures (KENV.L) | SyQic (SYQ.L) | Sabien Technology (SNT.L) | Intercede Group (IGP.L)
ECO Animal Health’s lead product, Aivlosin®, continues to generate strong growth in multiple geographies. The recent additional product approvals in the US and Europe along with prospective new market opportunities provide an attractive outlook. We estimate a c.15% 3 year CAGR for Aivlosin® sales, with new marketing authorisations providing upside potential. We initiate coverage with a 498p Target Price and a Buy recommendation.
