Benchmark has reported a fourth sequential quarter of revenue and AEBITDA profit growth in the January-March (Q2) period, highlighting the continued favourable trends in its three business areas. The group has, so far, been largely unaffected by the post February economic shock and maintains that it continues to have a strong outlook in its important salmon egg and nutrition businesses for the remainder of the year.
Key points to note include:
Q2 results: revenues were up by 29% at £39.3m, reflecting strong growth in the three divisions of Nutrition (+16%), Genetics (+20%) and Health (+390%). These were broadly consistent with or ahead of our expectations.
Safe haven status: Benchmark’s alignment to the aquaculture segment should mean it is largely insulated from economic disruption caused by the Russian invasion of Ukraine and associated sanctions.
Balance sheet: Benchmark has a strong balance sheet with cash of £46.2m and net debt of £81.4m on 31st March, which is a positive element in the investment case. We expect the company will look to refinance its NOK855m bond in the second half of 2022.
We have also revised our DCF-valuation to reflect forecasts and now assume a higher cost of capital more appropriate to the current inflation/interest rate environment. Our model yields a fair valuation of £478m or 68p/share, versus the current 51p level.
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