VET CHAIN CHEWS OFF BIGGER PIECE OF PET MARKET
ORMEAU-BASED National Veterinary Care’s share price dropped almost 10 per cent yesterday, despite the company booking a 27 per cent increase in net profit.
NVL, which runs veterinary clinics and provides professional services, unveiled 1H18 revenue of $41.6 million, up 27.6 per cent on the prior corresponding period.
Its net profit, of $3.3 million, was 27.7 per cent higher than 1H17.
However, this was not enough to stop the share price plunging 9.72 per cent to close at $2.60.
Shaw and Partners senior analyst Darren Vincent said EBITDA, although solid, was slightly below expectations while the underlying margin, at 15.7 per cent, disappointed some people.
“However, you should be investing in NVL because you see the growth and long term opportunity,” he said.
“The result has reinforced our positiveness in the company.”
Mr Vincent also pointed to organic growth of 3.11 per cent at NVL’s general practices as an encouraging sign.
Managing director Tomas Steenackers said there has been strong growth in the number of independent clinics using its management and procurement services division.
Mr Steenackers said it now numbers 401 clinics – or 18 per cent of the industry, including three corporate or “mini-groups” of between 10 and 18 sites.
He said NVL, which acquired seven clinics in 1H18, was on track to buy another seven in the second half, well ahead of its target of between six and 10.
Mr Steenackers said the company would not hesitate to seize on good opportunities in the marketplace.
“We are not acquiring for the sake of acquiring,” he said.
“If there is a good opportunity we will grab it.”
Mr Steenackers said the company would open a new training centre, which runs workshops for veterinary professionals, in Melbourne in the next two months.
“The great thing about that is not everyone needs to come to Queensland (Ormeau facility) now, and take three days off work.”
He said the priorities for the next three months are to focus on its three growth pillars of organic growth of veterinary services, growth by acquisition, and growth of the management services and procurement division.
Mr Steenackers said it had no intention of expanding its retail offering.
“We focus on professional services, that is our niche,” he said. “Retail is good but it is getting more challenging especially with new developments such as Amazon.”
NVL issued guidance for FY18 of revenue growth 25 per cent above FY17 revenue of $66.8 million.