DPH’K (Dechra Pharma) issues a trading update for y/e 30-Jun-2012. Revenue ahead 9.3% equivalent period last year, 7.5% excluding acquisition of Eurovat (Eurovet Animal Health).
European and US pharmaceuticals performed strongly. Services revenue grew by approx. 6.5% over comparables. Economic conditions remain “challenging”, but Pharma segements continue to grow. Product pipeline remains strong. International expansions continues. Margins have stabilised in Services. Board is confident full year results will be in line with expectations.
PE 13.82, ROE 23.55%, Z 3.88, Interest cov 18.1. MKT £434m. Earnings: 2012F +16.7%, 2013F +12.5%. Beta 0.20. Revenue per share growth over last 4/5 years to 30-Jun-2011 was 5.0%.
Directors own £12.2m in shares, and invested £629k in the rights issue in Apr 2012. Reassuring.
In summary, good growth in EPS is expected, assisted by acquisition in Eurovet, and current valuation is reasonable. The historic growth in revenue per share disappoints me, so I view it as a hold, rather than a buy.