GICS Sector : Healthcare
Genus plc operates as an animal genetics company in North America, Latin America, the United Kingdom, rest of Europe, the Middle East, Russia, Africa, and Asia.The company operates through three segments: Genus PIC, Genus ABS, and Genus Research and Development.It sells sows, boars, and semen to breed pigs with various characteristics for pork production under the PIC brand.
Genus reported robust financial results for the six months ended December 31, 2024, with adjusted operating profit rising 19% to £45.2m and adjusted profit before tax increasing 21% to £35.4m. The interim dividend remained stable at 10.3p per share, reflecting the company's commitment to shareholder returns. Improved cash flow was a standout feature, with positive free cash flow generated in the first half, supported by enhanced working capital management and reduced inventory levels. Operating margins expanded by 200 basis points to 13.4%, driven by strong performances in key segments such as PIC, which saw a 13% operating profit increase excluding China, and ABS, where sexed volumes grew 13%. CEO Jorgen Kokke emphasized the company's strategic progress, stating, "Our focus on porcine growth and bovine value acceleration is yielding tangible results."
Publication Date: Mar -08
Genus made significant strides in its strategic priorities, particularly in porcine genetics and bovine improvement. PIC added 7 new royalty customers in China, signaling progress in a challenging market, while PRP commercialization remains on track for FDA approval by 2025. The Value Acceleration Program (VAP) for bovine genetics has delivered £11m in benefits, with an additional £6.5m expected from Phase 2, targeting a £21m annualized benefit by FY2025. These initiatives underscore Genus's commitment to innovation and operational efficiency. The company also highlighted improved cash flow and a net debt to EBITDA ratio of 2x, with over £100m in headroom, underscoring financial stability. CFO Alison Henriksen noted, "Our cash flow generation and reduced lease liabilities demonstrate our focus on financial discipline."
Genus's shares are trading at a P/E ratio of 159.49x TTM and a price-to-sales ratio of 1.88x, reflecting the market's confidence in its growth trajectory. The enterprise value to EBITDA ratio stands at 27.38x, indicating a premium valuation. While these multiples appear elevated, they are supported by the company's strong margins and strategic progress. The stock offers a dividend yield of 1.67%, providing some income appeal, though the primary driver remains its growth potential. Analysts expect revenue growth of 4.4% next year, aligning with management's outlook for stable H2 performance in Europe and North America, despite ongoing challenges in Brazil and China.
In conclusion, Genus's strong financial performance, strategic progress, and improved cash flow position it well for future growth. While valuation multiples are elevated, the company's ability to deliver on its strategic initiatives and navigate macroeconomic challenges will be key to sustaining investor confidence.
What Developments Are Shaping the New Narrative for Genus?
Nov -24
3 UK Stocks That May Be Trading At Discounts Of Up To 43.6%
Nov -21
Institutional owners may ignore Genus plc's (LON:GNS) recent UK£64m market cap decline as longer-term profits stay in the green
Nov -08
We Think Genus' (LON:GNS) Healthy Earnings Might Be Conservative
Oct -18
Genus plc's (LON:GNS) Financial Prospects Don't Look Very Positive: Could It Mean A Stock Price Drop In The Future?
Oct -14
UK's September 2025 Stock Picks Possibly Trading Below Fair Value
Sep -24
Genus (LON:GNS) Has Announced A Dividend Of £0.217
Sep -13
Taylor Wimpey (LSE:TW.): A Fresh Look at Valuation After a Year of Share Price Pressure
Sep -09
Genus PIC's 3.5% growth is driven by increasing demand for porcine and bovine genetics, expansion into emerging markets, and strategic partnerships. Additionally, advancements in reproductive technologies, such as sexed semen and gene editing, are enhancing productivity and efficiency in the livestock industry, further fueling growth.
Genus ABS's 3.8% growth is driven by increasing demand for advanced animal genetics, expansion into emerging markets, and strategic partnerships. The company's focus on innovation, particularly in genomic selection and gene editing, has improved herd productivity and fertility, attracting more customers. Additionally, growing concerns about animal welfare and sustainable farming practices have boosted demand for Genus's solutions.
Genus Research and Development's 4.2% growth in Porcine Products is driven by increasing demand for genetic advanced pig breeding, rising adoption of precision livestock farming, and growing need for disease-resistant genetics. Additionally, expansion in emerging markets, strategic partnerships, and investments in R&D contribute to the segment's growth.
Genus Research and Development's 4.5% growth in Bovine Products is driven by increasing demand for high-quality genetics, advancements in reproductive technology, and growing adoption of precision farming practices. Additionally, expanding global dairy markets, particularly in Asia, and the company's strategic partnerships and acquisitions contribute to its growth momentum.
Genus Research and Development's 5.0% growth is driven by increasing demand for gene editing in livestock, advancements in CRISPR technology, and strategic partnerships. Growing need for sustainable and efficient food production, coupled with rising adoption of precision breeding, further fuels growth. Additionally, expanding product portfolio and geographic presence contribute to the segment's growth momentum.
Genus plc provides advanced genetics and reproduction services to the pig industry, including breeding, genetics, and reproduction technologies.
Genus plc offers a range of genetics and reproduction services to the cattle industry, including breeding, genetics, and reproduction technologies.
Genus plc provides genetics and reproduction services to the dairy industry, including breeding, genetics, and reproduction technologies.
PIC is a leading provider of genetics and reproduction services to the pig industry, offering advanced breeding, genetics, and reproduction technologies.
ABS Global is a leading provider of genetics and reproduction services to the cattle industry, offering advanced breeding, genetics, and reproduction technologies.
Genus plc offers sexing technology for cattle and pig breeding, allowing for more efficient and effective breeding programs.
Genus plc operates in a niche market with limited substitutes, but there are some alternatives available to customers.
Genus plc has a diverse customer base, which reduces the bargaining power of individual customers.
Genus plc has a moderate level of dependence on its suppliers, but it has implemented strategies to mitigate supply chain risks.
The biotechnology industry has high barriers to entry, making it difficult for new entrants to compete with Genus plc.
The animal genetics industry is highly competitive, with several established players competing for market share.
| Value | |
|---|---|
| Debt Weight | 28.96% |
| Debt Cost | 5.47% |
| Equity Weight | 71.04% |
| Equity Cost | 5.47% |
| WACC | 5.47% |
| Leverage | 40.76% |
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