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Asian growth slows for Abcam

RESULTS: Medical-proteins supplier Abcam (ABC) admits Asian growth did not meet expectations during the first half.
March 4, 2014

Shares in medical-proteins supplier Abcam (ABC) crashed 12 per cent in early trading after it revealed sluggish Japanese growth during the six months to December. Despite a hefty government stimulus implemented in Japan last April, the distribution of research funds has been slow. Underlying sales rose 9 per cent in the region, lower than the expected double-digit growth.

IC TIP: Sell at 424p

This has caught Abcam off-guard. Sequestration in the United States and spending cuts from the US National Institute of Health had posed a bigger threat going into the first half. But underlying revenues still grew 7 per cent in the Americas, which is important given that the region accounted for 43 per cent of the group’s catalogue sales.

Europe, the Middle East and Africa also managed good underlying growth of 10 per cent despite changes to distribution partnerships as a result of the Epitomics acquisition. But emerging markets in the Asia Pacific region disappointed analysts with growth of just 15 per cent. Abcam will try to reinvigorate its presence there in the second half. A new office in Shanghai and a consolidated distribution network will help the group ‘get it right’ in China, says chief executive Jonathan Milner.

Brokerage Numis expects full-year pre-tax profits of £46.3m, giving EPS of 17.5p (down from £46.6m and 17.6p in 2013).

ABCAM (ABC)

ORD PRICE:424pMARKET VALUE:£ 847m
TOUCH:423-425p12-MONTH HIGH:534pLOW: 391p
DIVIDEND YIELD:1.7%PE RATIO:25
NET ASSET VALUE:85p*NET CASH:£35m

Half-year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201257.319.97.71.94
201362.021.28.32.13
% change+8+7+8+10

Ex-div: 19 Mar

Payment: 18 Apr

*Includes intangible assets of £108m or 54p per share