Following the successful strategy employed in  Queensland with their dedicated equine hub and support clinics, Apiam Animal Health (ASX: AHX) has set fresh foundations for growth in New South Wales with the acquisition of Agnes Banks Equine Clinic which will form the cornerstone of their operations in the State. 

Already Australia’s largest provider of regional animal health services, NSW presented an opportunity for Apiam to expand their national footprint, especially in the equine industry where NSW is the most lucrative for racing and breeding participants. 

Established in 1989, Agnes Banks Equine Clinic is located 5km from Hawkesbury and 70km from Sydney where the business employs 14 equine vets, of which 3 are registered specialists in Equine Surgery and Medicine. 

“The acquisition of Agnes Banks Equine Clinic aligns with our equine strategy to operate high performance cornerstone clinics in key regions for the Australian equine industry,” said Apiam Managing Director, Dr Chris Richards. 

“These cornerstone clinics feature state-of-the-art facilities and equipment operated by experienced vets, including some with registered specialist qualifications. Moving forward, these large cornerstone facilities are expected to provide a base for further expansion into the equine veterinary sector on a regional basis.” 

The addition of ABEC is expected to be earnings accretive with the clinic having generated $4.7m revenue and $0.75m EBITDA in FY21. Furthermore, ABEC has a strong track record having delivered 15.8% revenue growth over the past two years. 

The acquisition continues a busy period for Apiam which has acquired $19.34m in new revenue over the past five months which will be added to the $126.2m reported for FY21 that didn’t include any of the earnings accretion acquired since 30 June 2021. 

Subsequently, brokers have identified AHX as a stock undervalued by the market, with Shaw & Partners recently issuing a $1.29 price target. Burrell shared a similar view with their $1.27 valuation. 

While Apiam has a presence in NSW in the form of smaller mixed animal clinics, ABEC will form the equine hub for future expansion plans, following a strategy that has delivered success in Victoria and Queensland. This will enable Apiam to offer its feeder clinics with access to specialist equine skills and knowledge to capitalise on revenue opportunities and industry leading resources in their local markets. 

Highlighting the opportunity of the Agnes Banks and Hawkebury region, Godolphin (the world’s largest racing and breeding operation), chose Agnes Banks to set up their NSW racing stables based on the ease of access to Sydney and pristine conditions only available in regional NSW. 

Total consideration for the ABEC acquisition will be $4.8m comprising $4.1m cash and $0.7m in AHX shares with 50% escrowed for 12 months and 50% for 24 months. Key personnel have entered extended employment agreements with Apiam and remain committed to continuing to lead the future growth of the clinic which takes Apiam’s national portfolio to 64 veterinary businesses that employ more than 800 staff. 

New South Wales has emerged as the most lucrative and popular racing State in recent years with major boosts to the industry’s prize money being the primary driver behind participation across racing, breeding and wagering turnover. 

Racing NSW’s latest $19.5m injection took total returns to $310m for FY21 to be Australia’s most lucrative State where increased participation bodes well for Apiam’s future expansion plans in New South Wales.