Benchmark cleared to export eggs from Chile

Benchmark Holdings (BMK) drove up half-year revenues by 19 per cent at constant currencies, while adjusted cash profits were 42 per cent to the good on the same basis once fair value movements from biological assets were excluded. The underlying margin increased by three percentage points to 22 per cent, due in part to the effect of operational leverage, but management also kept a lid on operating costs despite wider inflationary pressures.

Reported profits remained in negative territory as the aquaculture biotechnology company registered exceptional costs amounting to £2.7mn, which largely related to its listing in Norway. Management confirmed that it would maintain its dual listing on Euronext Growth Oslo and on London’s Aim “for the foreseeable future”, although the potential benefits of a primary listing on the Oslo Børs are to be examined.

The company’s genetics business in its core salmon market saw 30 per cent revenue growth on the back of a commensurate increase in the number of eggs sold into the market. Sales accelerated in the Norwegian and Icelandic markets, while Benchmark also benefited from new business wins in Chile, while the award of “disease free compartment status” from the Chilean regulator will facilitate egg sales from the South American country.

Near-term prospects are set fair, with “good visibility of salmon egg sales from Norway and Iceland”, although third-quarter sales of its Ectosan Vet and CleanTreat sea lice treatments will trail off in line with seasonal trends. Shrimp markets have softened but demand is forecast to rebound “as inventory levels normalise along the global supply chain”.

Consensus figures don’t point to positive earnings until 2025, so we reserve judgment in the short term even though the company trades at a 31 per cent discount to the target price. Hold.

Last IC View: Hold, 37p, 30 Nov 2022