Animal genetics specialist Genus (GNS) is hoping African Swine Fever proves to be both a blessing and a curse. As the epidemic continues to sweep across China, sales of breeding stock pigs in the country halved in 2019, depressing operating profit by £5m. But with larger-scale technical farms emerging from the aftermath and supply shortages driving price increases, the group spies an opportunity as farmers restock from 2020.
Growth in Latin America and Europe meant adjusted operating profit from the pigs business still grew by 4 per cent at constant currencies (including joint ventures) to £101m. Meanwhile, with increased uptake of Genus’ beef and sexed dairy genetics products (which produce a higher chance of female cows), operating profit in the bovine division increased by 15 per cent at constant currencies to £30m. This was driven by 40 per cent growth in North America, where margin pressures are increasing the popularity of ‘beef-on-dairy genetics’ – the production of ‘hybrid’ cows that produce more valuable meat after their useful dairy life.
House broker Peel Hunt forecasts adjusted pre-tax profit of £69m and EPS of 77.9p in 2020, rising to £77m and 86.3p in 2021.
| GENUS (GNS) | ||||
| ORD PRICE: | 2,750p | MARKET VALUE: | £1.79bn | |
| TOUCH: | 2,740-2,746p | 12-MONTH HIGH: | 2,950p | LOW: 2,090p |
| DIVIDEND YIELD: | 1.0% | PE RATIO: | 222 | |
| NET ASSET VALUE: | 774p* | NET DEBT: | 16% | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 399 | 57.8 | 65.7 | 19.5 |
| 2016 | 388 | 60.9 | 81.1 | 21.4 |
| 2017 | 459 | 40.7 | 53.8 | 23.6 |
| 2018 | 470 | 7.8 | 69.7 | 26.0 |
| 2019 | 489 | 9.9 | 12.4 | 27.7 |
| % change | +4 | +27 | -82 | +7 |
| Ex-div: | 07 Nov | |||
| Payment: | 29 Nov | |||
| *Includes intangible assets of £186m or 286p a share | ||||
