FY25 interims point to a stronger second half

For the six months to 30 September 2024 ECO Animal Health reported revenue of £33.2m, -13%YoY and (adj.) EBITDA of £0.45m (H1 23: £0.7m). The gross margin remained firm at 40.3% compared to 40.8% a year earlier. In the October Trading Update (Equity Development report ‘Trading update: headwinds in China’) the Group reported that the combination of a lower incidence of disease and reduced Aivlosin^® demand in China and SE Asia markets meant that FY25 (adj.) EBITDA would be c.£7.2m. Into H2 the Group has seen “demand accelerate” to the extent that 82% of market consensus revenue is now covered by year-to-date revenue combined with orders and run rate across operations worldwide. Consequently, the (adj.) EBITDA outlook is reiterated.

Following the Trading Update, and in light of Interim results, our Fair Value range is revised to 97p – 102p based on an updated comparative review of EAH peers. We note that this valuation includes only the initial (R&D etc.) costs but not the full potential contribution from next-generation products under development.