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MIDAS SHARE TIPS: How's this for herd immunity? Animal feed maker with an anti-viral additive


Coronavirus has turned business as usual on its head. With the country in lockdown, millions of people on furlough and no clear end in sight, numerous companies are cancelling their dividends to conserve cash. 

Anpario, a small, AIM-listed business based in Worksop, Nottinghamshire, is bucking the trend. 

The company makes healthy additives for animal feed so animals live longer and are more productive, while only consuming natural ingredients. 

Growing business: Anpario is working flat out to produce its animal food additives which include healthy herbs

Growing business: Anpario is working flat out to produce its animal food additives which include healthy herbs

Customers include farmers around the world who use Anpario’s products for poultry, pigs and cattle. They are also used for fish, such as farmed salmon. 

As Anpario’s products are part of the food chain, most employees benefit from key worker status and they have been working flat out recently, including weekends and overtime. 

Virtually all the group’s ingredients are produced in Worksop and the site is running at full capacity, as farmers strive to ensure they have sufficient supplies to feed their livestock. 

Last month, chief executive Richard Edwards released robust financial results for 2019 and expressed confidence about the future. Revenues and profits moved ahead and the company proposed an 11 per cent dividend increase to 8p. 

The board can change its mind before the annual meeting in June but so far, Edwards and his team are committed to making the payment and see no reason why they should be unable to do so. Anpario shares rose following the results but, at £3.25, they are still way below the £5.10 peak in 2018. 

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Edwards and his team have faced some challenges since then, but the business provides a genuine service and the shares should rebound. Coronavirus has had no material adverse impact on the business so far and governments around the world are putting measures in place so that food supplies are not affected by the Covid-19 pandemic. 

That means Anpario should be able to secure the raw materials it needs and transport them to customers. Long-term prospects are sound too. Anpario’s food additives are based on organic acids and herbs, including oregano, which has natural anti-viral properties. 

The products boost gut health and immunity so that animals are less prone to diseases such as E.coli, salmonella and African swine fever. That helps them to become stronger, more productive and almost certainly happier too. Chickens lay eggs for longer and eggs are larger, less prone to breakage and more consistently sized. 

Birds bred for eating are healthier and tend to produce more meat. Dairy cattle produce more milk, piglets suffer less premature death from disease and grow faster, while farmed fish are protected from harmful bacteria. 

These benefits are all achieved through natural means, rather than using antibiotics or other additives, such as formaldehyde and zinc oxide. Antibiotics have been widely banned but loopholes remain. 

Formaldehyde is still used in the US and Latin America, while zinc oxide is administered in Europe to limit tummy upsets in piglets. All these compounds have been linked to greater infection among humans and many farmers in every part of the world are turning to natural alternatives such as those produced by Anpario.

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The company is relatively small – with just 115 employees – but its products are sold across the globe, including Asia, the US, the Middle East, Europe and the UK. Several regions experienced problems last year. 

American farmers were affected by the trade spat between US President Trump and Chinese president Xi Jinping. China itself battled to cope with swine fever and in Europe, Anpario deliberately withdrew from low-margin products. 

Yet the business still grew in 2019, as sales surged in Latin America and parts of Asia and the Middle East. The company has a strong balance sheet too, with no debt and £13 million of cash in the bank. 

Looking ahead, Edwards is gaining new customers, launching new products and developing Anpario Direct, which sells natural additives directly to farmers and is particularly useful to smaller customers. The company even sells products on Taobao, China’s answer to Amazon.

Midas verdict: Even before coronavirus took hold, there was widespread concern about products in animal feed that could prove harmful to human health. 

That distrust is almost certain to increase, driving interest in natural alternatives. Anpario should benefit and the shares should rise. 

At £3.25, they are a buy – and the dividend offers a further incentive to investors. 

 Traded on: AIM Ticker: ANP Contact: anpario.com or 01909 537380

Winging it: Anpario is also sponsoring a couple of fledgling pigeons which will be racing with the benefit of Orego-Stim once they are fully grown

Winging it: Anpario is also sponsoring a couple of fledgling pigeons which will be racing with the benefit of Orego-Stim once they are fully grown

…DIET EVEN GETS PIGEONS TO FLY FASTER 

Pigeon racing is big business. A Chinese fancier snapped up Belgian champion Armando for a record £1.1 million last year and top birds routinely change hands for tens of thousands of pounds. 

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Owners are keen to protect their flock and a bestselling product from Anpario, Orego-Stim, helps them. 

Made using oregano oil, it boosts pigeons’ strength so they can fly faster and recover from races quicker. 

Demand is especially strong in the UK and Australia, and there is plenty of interest in China too. 

Anpario is also sponsoring a couple of fledgling pigeons which will be racing with the benefit of Orego-Stim once they are fully grown. 

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