Shares in Eco Animal Health (EAH:AIM) gained 8.5% to 368p on Monday after the livestock health products company said full-year revenues and profits to 31 March 2021 will be ‘significantly’ ahead of market expectations and the prior year.
CHINESE RESTOCKING
Today’s announcement is the second time since January that the company has upgraded its expectations for full-year revenues and profits and reflects the strength of the Chinese market despite localised outbreaks of African Swine Fever (ASF).
The 2019 outbreak of ASF decimated Chinese pig herds and it is the subsequent restocking of the herds which has resulted in strong trading pushing up demand for the company’s antibiotic drug Aivlosin.
Data from MARA/Rabobank estimates that hog herds are 350 million-to-380 million compared with 250 million in 2019 and 450 million pre-ASF in 2018.
The strength in the Chinese market continued despite the national February holiday season with demand resulting in an ‘unusually high continuation’ of production throughout the month.
Demand continued to be strong outside China and chief executive Marc Loomes commented: ‘We believe that our customers appreciate the superior performance of the group’s products and we should not overlook the solid growth being experienced in most of the other geographical markets that ECO addresses.’
MORE UPGRADES TO COME
Current consensus estimates have 2021 revenues 33% higher year-on-year at £96 million while EBITDA (earnings before interest, taxes, depreciation, and amortisation) estimates are seen doubling to £16.5 million.
‘Significantly ahead’ suggests at least a 10% beat to the current analyst consensus estimates, suggesting at least £106 million of full-year revenues and £18 million of EBITDA.
