A fall in pre-tax profit is not what we have come to expect from Abcam (ABC), the global supplier of proteins and antibodies for diagnostic and research purposes. But the group has begun a new phase of growth, with a focus on consumer-led expansion. This has resulted in an increased investment in people, technologies, and businesses. Administration and management expenses of £26.7m, from £20.7m in the same period last year, weighed on the bottom line.
Turnover was beefed up by a meteoric 52 per cent rise in Chinese sales on a constant-currency basis, which chief executive Alan Hirzel says "even took us by surprise". The group has targeted the country as a key growth market, given its growing importance in scientific research. Antibody sales also performed ahead of expectations, with revenue from the group's rabbit antibody products and other products up 32 per cent.
Continued expansion and integration remains the group's priority for the next few years, built on a business model with good cash generation. Abcam certainly has cash on the balance sheet to buy its way to a bigger product portfolio. The long-term outlook for earnings is positive, although the investment is expected to hold back short-term earnings growth.
Broker Peel Hunt is anticipating 2016 full-year adjusted pre-tax profit of £51.2m and EPS of 19.8p for the year to June 2016, up from £49.5m and 19.7p in FY2015.
| ABCAM (ABC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 682p | MARKET VALUE: | £1.38bn | |
| TOUCH: | 678-684p | 12-MONTH HIGH: | 690p | LOW: 463p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 37 | |
| NET ASSET VALUE: | 113p* | NET CASH: | £57m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 66.7 | 22.1 | 8.84 | 2.29 |
| 2015 | 78.8 | 20.9 | 8.43 | 2.35 |
| % change | +18 | -5 | -5 | +3 |
Ex-div: 17 Mar Payment: 15 Apr *Includes intangible assets of £168m, or 83p a share | ||||
