Tuesday, 28 February 2023

Pampered pets continue to boost ASX pet stocks, reporting solid half yearly results

by Berkeley Lovelace

  • Humanisation of pets trend continues to benefit ASX pet stocks
  • Apiam Animal Health reports ~25% increase in revenue as pet owners seek higher standards of care
  • Mad Paws on track for operating EBITDA break even target by mid-2023 as profitable revenue growth accelerates

It’s seems the Aussie pet boom is lasting beyond the early stages of Covid-19 pandemic with the humanisation of pets trend remaining strong and ASX pet stocks the big beneficiaries.

Households may be tightening their budgets as inflation continues to bite and rate hikes add to the cost of servicing a mortgage each month.

But the February reporting season has shown our pets are not going without and would be oblivious to any monetary stress of their owners.

Let’s look at how three main pets stock listed on the ASX have performed this reporting season.

Apiam Animal Health (ASX:AHX)

Australia’s largest provider of regional vet services last week released its H1 FY23 results reporting revenue of $93.7 million, up 24.7% and gross profit of $61.4 million, up 32.9% on H1 FY22.

Other key results included:
• Underlying EBITA growth of 26.7% to $6.9 million
• Underlying NPAT growth of 14.9% to $3.7 million
• Strong cash flow performance with operating cash flow increasing 24.2%.

AHX also said it had recorded strong YTD trading (to January 2023) delivering earnings leverage, with underlying EBITA margins increasing to 7.8% in FY23 January YTD, up from 6.9% in FY22 January YTD.

The company said pet care remains a non-discretionary service with average transaction values increasing by more than 17% YTD as pet owners seek higher standards of care in line with human treatment options.

Furthermore, AHX said demographic changes in regional and peri-urban areas have driven rapid growth in pet numbers, particularly dogs, with 69% of Australian households now owning a pet, up from 61% pre-pandemic.

Services by AHX vets to pets in regional Australia now contribute to over 50% of the company’s revenues, with the balance being services to the livestock industries.

AHX managing director Dr Chris Richards told Stockhead regional vet care is booming with the company continuing its acquisition strategy to capture regional growth centres and in animal segments with fast-growth profiles.

In H1 FY23 AHX completed four mixed animal acquisitions that are expected to add $23.8 million in pro-forma annualised revenue to the company.

“The vet market to date doesn’t show any signs of slowing down and these numbers are proof of the upward trend of the humanisation of pets,” he said.

“The regional market as a whole is going quite well, with agriculture commodities continuing to remain strong across several markets.

“Overall, the regions are booming with population growth and these demographic changes are part of the driving force behind growth in pet numbers and reliance on veterinary services.”


Mad Paws Holdings (ASX:MPA)

The online digital platform provides a pet marketplace of services including sitting, walking, day care and grooming to pet owners.

MPA has a diversified revenue model including e-commerce platform Pet Chemist for dispensing prescription pharmaceuticals and over-the-counter health care products for pet owners.

It also has a growing subscription revenue model via multiple verticals including Waggly toys & treats, Mad Paws Insurance, Dinner Bowl for fresh food and Sash for beds and other accessories.

The company reported a strong H1 FY23 including:

  • Group revenues up 261% on pcp and up 74% on a pro-forma basis
  • Marketplace revenues up 150% on pcp
  • e-commerce and subscription revenues up 335% on pcp and up 55% on a pro-forma basis
  • On track for operating EBITDA break even target by mid-2023
  • Group Operating EBITDA margins improve from -127% to -21% in H1 FY23
  • Marketplace Operating EBITDA of $700k up from $600k pcp, with an EBITDA margin of 22%
  • ecommerce and subscription operating EBITDA margins improved to -18% from -74% in the pcp

Co-founder and CEO Justus Hammer said the company’s trend of strong profitable revenue growth in 2022 has accelerated, achieving record months for both the Marketplace and Pet Chemist business.

“We are also excited to be acquiring new customers at a faster rate than ever before, which is a result of our improved customer retention strategies, driving a more loyal and long-term customer base across all verticals,” he said.

“Mad Paws is a fast growing, capital light business, being driven by the strong tailwinds of the Australian pet sector.

“We believe we have only just begun to penetrate this multi-billion dollar opportunity in Australia alone as we continue to build awareness and shift pet owners from traditional suppliers of these products and services.”

Hammer said the company’s future success will be built around its key pillars including:

  1.  Profitable revenue growth
  2. Prudent cost management
  3. Disciplined capital management

“The key short-term goal is to create a single platform for customers to book or buy Mad Paws products and services reducing friction for our customers and allowing us to cross sell existing customers to increase our share of wallet,” he said.

“For our marketplace vertical, Mad Paws will focus on increasing sitter supply to match owner demand, efficient customer acquisition, continued improvements in our search algorithms and maximising operating EBITDA.

“For our subscription and e-commerce businesses, Mad Paws will seek to accelerate growth by improving efficiencies in gross margins and new customer acquisition, as well as further leveraging the cross-sell opportunities across our 328,000 customers.”

Hammer said the company is working on product range expansion, where we have seen significant success with nearly 500 additional SKUs added to the Pet Chemist business in the last six months.

“Mad Paws remains highly focussed on efficient revenue growth, prudent cost management and disciplined management of capital to drive the best outcome for shareholders,” he said.

“Based on current trading, Mad Paws believes it is still on track to deliver the goal of break-even EBITDA by mid-way through calendar year 2023.”



Australia’s largest marketer, wholesaler and distributor of healthcare, medical and pharmaceutical products has posted a record H1 FY23 result with key highlights including revenue growth of 17%, underlying EBITDA growth of 39.3% and underlying NPAT growth of 29.6%.

EBO’s healthcare segment underlying EBITDA rose 37.6% to $255 million on pcp, while its animal care EBITDA was up 31.5% to $51 million.

The EBO animal care segment generated revenue of $291.2 million,  an increase of 6.3% and 31.5% respectively on pcp.

EBO ventured into animal care under its subsidiaries Masterpet and Lyppard.

Lyppard is an Australian veterinary wholesaler providing products for companion and production animals and elite athletes of the equine world.

Masterpet has brands such as Black Hawk, VitaPet, AristoPet, Trouble & Trix, and Yours Drooly.

EBO also owns Animates, a specialty pet retail supplies brand with stores throughout New Zealand, trading as a joint venture with the Australian brand Petbarn.

The company established an $82 million pet care manufacturing facility at Parkes, NSW, which started operations in  H2 FY22.

EBO said growth was driven by strong performances from its leading pet care brands and businesses,  the benefits of its new pet food manufacturing facility and growth in Animates.

The company said its brands and businesses have benefited from the continued strong pet market conditions.

EBO CEO John Cullity said its new pet food manufacturing facility is successfully operating with commercial production rates meeting demand.

He sad the facility is enhancing its local supply chain capabilities and providing a competitive advantage for the Black Hawk range.

“The animal care segment continued its strong performance with each of our key brands and divisions – Black Hawk, Vitapet and Lyppard – as well as our Animates joint venture, recording robust growth,” he said.

To learn more about other ASX pet stocks click here:


The AHX, MPA & EBO share price today:


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