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Diets boosting Benchmark

The aquaculture group is moving towards profitability
January 25, 2017

A few years ago, the global farming of fish overtook that of beef. Thus aqua farming specialist Benchmark (BMK) is operating in a sweet spot. This so-called 'Blue Revolution' and the increase in aquaculture is bringing with it many of the same problems associated with traditional farming, meaning the demand for fish health products is rising.

IC TIP: Buy at 93p

Benchmark is aligning itself to benefit. The acquisition of fish nutrition company INVE in December 2015 added a superior global commercial platform, which has allowed Benchmark to launch several of its products in new markets. The pipeline has also been enhanced and now includes 94 products with an addressable market of £783m (from the £742m estimated at the half year). Benchmark is also in the throes of redeveloping its commercial site in Braintree, which will increase operational capacity.

Extra revenue from INVE enhanced the 20 per cent organic growth reported at the company, with problems in Chile outweighed by strong trading elsewhere. But an increase in research and development spending, coupled with integration costs, weighed on the bottom line. The group's $70m (£56m) debt facility, taken this year to help finance the acquisition, added £2.2m of finance costs.

Broker Numis expects adjusted pre-tax profit of £5m for the year to September 2017, giving EPS of 0.8p (from £4.2m and 1.7p in FY2016).

 

BENCHMARK (BMK)

ORD PRICE:93pMARKET VALUE:£485m
TOUCH:91-95p12-MONTH HIGH:94pLOW: 50p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:70p*NET CASH:£0.4m

Year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201218.53.6nana
201327.54.94.7nil
201435.4-1.4-1.0nil
201544.2-11.4-6.0nil
2016109-22.4-4.4nil
% change+147---

*Includes intangible assets of £353m, or 68p a share