Apiam shares are up more than 30pc in 2021, as corporate investors back its aggressive growth strategy
Health & Biotech
Health & Biotech
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Investors are now backing Apiam to pursue a targeted growth-by-acquisition strategy as it scales up across regional Australia.
For animal healthcare company Apiam (ASX:AHX), 2021 has gotten off to a cracking start as the company builds out its regional expansion strategy.
And accompanying that growth outlook, investors have started to take notice.
Since starting January below 60c, AHX shares reached a high of 81c in March and have consolidated above 75c, marking a gain of more than 30 per cent so far this year.
In light of that growth, Stockhead caught up with MD Chris Richards for an update on the company’s outlook and the feedback he’s getting from investors.
For starters, walking the walk (as opposed to just talking the talk) is always important.
“We’ve now put three consecutive half-year results together where we’ve delivered on what we said we were going to do in terms of growth and strategy,” Richards said.
That momentum was confirmed in the December half-year, which saw revenues climb to $61.2m while net cash flows from operating activities ripped higher to $6.4m, a gain of 137 per cent from the prior year period.
Richards said that accompanying that growth, interest from institutional funds means corporate investors now account for a higher proportion of the registry.
“I think what’s caught the market’s interest there is that we’ve completed the capex program to get all our systems in place,” Richards said.
“For example, we could quite easily double our existing revenue in those veterinary and dairy farm healthcare segments, utilising the existing systems that we’ve invested in over the past few years.”
Ultimately, it puts the company in a position to leverage its areas of strength, such as the subscription-based Best Mates companion animal service and ProDairy — its proprietary platform promoting cow health.
And as it scales up to meet demand in Australia’s fast-growing regional corridors, Richards said investors are also on board with the company’s growth-by-acquisition strategy.
“We’ve got a very strong acquisition pipeline, and because we’ve got all the systems in place, investors are expecting us to move aggressively on those opportunities,” he said.
Richards also flagged the commercial synergies being achieved with joint venture partner PETstock, which also holds a 10 per cent stake in Apiam.
As part of the joint venture (of which Apiam owns 80 per cent), the two companies are executing on a distribution strategy where new Apiam vet clinics are built inside or in close proximity to PETstock stores.
“For us, we benefit from a distribution standpoint because there’s already an established customer base coming into that location,” Richards said.
“And for them, it allows them to provide full vet services, in addition to their product sales and other service platforms (such as puppy training and grooming).”
While the synergies are obvious, Richards said the two companies had spent the last three years getting the model optimised in terms of clinic size and service capacity.
“Now we understand what that clinic needs to look like, what services it can provide and what size it needs to be,” Richards said.
And having nailed down its JV plan, both Apiam and PETstock are already seeing the benefits with one new clinic that opened in Torquay last month, followed by a new clinic at Shepparton.
“With PETstock holding that 10 per cent stake, it solidifies that relationship and gives them confidence to co-invest with us in new clinics,” Richards said.
“And now we’ve got the model right we can really accelerate on that strategy.”
This article was developed in collaboration with Apiam, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.