MIDAS SHARE TIPS UPDATE: Healthy animal feed manufacturer Anpario is flying high
Not so long ago, the Chinese were responsible for half of the global consumption of antibiotics – 160,000 tons per year. More than 50 percent of it was given to animals, in feed and as medicine.
In 2014, however, the Beijing government implemented reforms and last July it banned the use of antibiotics in animal production.
The decision has almost certainly helped Chinese consumers, who eat more chicken and pork than any other country in the world. But it was also welcome news for Anpario, which specializes in natural additives for animal nutrition.
Winner: Top pigeon Lady Oregon is assisted by Anpario
Based in Worksop, Nottinghamshire, Anpario has seen rapid sales growth in China as farmers look for ways to keep their livestock healthy without using antibiotics.
The company has also made good progress in other parts of the world, including America, where the demand for antibiotic-free poultry is growing rapidly. The US consumes about 20 million tons of chicken a year, just behind China, and more than half of these birds are now bred without the use of antibiotics, an amount that is bound to increase.
Until recently, formaldehyde was widely used in Europe to improve animal health. But concerns about the chemical’s carcinogenic properties have now severely limited its use, forcing farmers to look for alternatives such as Anpario’s products.
The company makes food additives based on natural ingredients such as organic acids and oregano. The best-selling product, Orego-Stim, improves gut health in animals to help them absorb more nutrients and become stronger.
To prove a point, Anpario sponsored a flying pigeon, Lady Oregon. She received Orego-Stim daily and won the Sydney Gold Ring endurance race last month, flying 350 miles across Australia and arriving an hour earlier than the next bird.
The company has bought six of its own pigeons to compete in the One Loft Race of the Royal Pigeon Racing Association this summer. With top pigeons selling for hundreds of thousands of pounds, good diets are imperative and pigeon fanciers are among Anpario’s most avid customers.
Chief executive Richard Edwards will release a 2020 trading update this week and the news should be encouraging. Brokers have been tracking static sales and profits, but Edwards has recently been positively surprised and supporters hope he will continue in that vein.
In 2021, sales are expected to grow 5 percent to £ 31 million, with profits up 9 percent to £ 4.9 million. In the coming years, Anpario hopes to triple sales to £ 100 million and grow profits even faster, through a combination of organic growth and select acquisitions.
The company is also proud of its dividend record, with the 2020 payout expected to increase 6 percent to 8.5 pence, and increase to 9 pence in 2021.
Traded on: TARGET Ticker: ANP Contact: anpario.com or 01909 537380
Midas verdict: Midas recommended Anpario in April last year when the shares were at £ 3.25. They have since increased to £ 5.50. Investors would be forgiven for selling some of the stock and making some profit, but the long-term outlook for Anpario is favorable. Antibiotics are disappearing from the food chain worldwide, farmers are looking for natural alternatives and Anpario offers some of the most innovative products on the market.