Australians are well known to love a punt on the horses but a rising number of Australians are getting involved in racehorse ownership which resulted in a 28% increase in yearling sale prices at this month’s Magic Millions sale on the Gold Coast.
With 776 yearlings changing hands, Australian opened their wallets with aplomb for a chance to own the next champion of the turf with a median sale price of $230,000 per yearling for the sale. Staggeringly, this was a 28% increase on last year’s median sale price at the Gold Coast sale.
Driving this investment in bloodstock is the continued increase in prize money on offer to race horses in Australia.
In FY21, Australians racing horses in New South Wales won $310 million while those who chose to in Victoria were returned $237 million. In Queensland, owner returns totalled $271 million however this included prize money from greyhound racing and harness racing as well under the State’s centralised administration.
Over the past 10 years, the prize money on offer in Australian Thoroughbred racing has increased 82% with a total of $879.6 million returned to owners in 2021 across the country.
Rising investment in Australia’s racing industry continues to be the lifeblood of many regional towns across the Eastern seaboard. According to Racing Australia’s 2021 Fact Book, the industry had 11,898 registered employees last year, but that figure increases significantly when you add periphery services such as vets, transport operators, and feed suppliers.
Given the continued increases in prize money on offer from Thoroughbred racing, the demand to race horses flows down through the breeding industry as evidenced by the 28% increase in the Magic Millions median sale price for yearlings.
Having identified this growing demand, Australia’s largest operator of regional vet clinics Apiam Animal Health (ASX: AHX) has been actively expanding its footprint to service the racing, breeding and performance horse industries.
The operator has long had a large presence in the production and companion animal sectors but last year made one of their single largest acquisitions when acquiring Scenic Rim Vets in Queensland for $16m in June 2021, right at the start of the breeding season. Subsequently, many of the yearlings that will be going through future Magic Millions sales will have been examined and in some cases treated by Scenic Rim vets which is just one of Apiam’s dedicated equine hubs.
With its 13 veterinarians and further support staff, Scenic Rim is one of the largest equine service providers in Queensland, located in the heart of the State’s breeding industry.
Following the success witnessed from Scenic Rim while operated under Apiam’s hub-and-spoke model, the Company went on to acquire Agnes Banks Equine Clinic in November 2021, a clinic that employs 14 equine vets, of which 3 are registered specialists in Equine Surgery and Medicine.
Similar to their model in Queensland, acquiring Agnes Banks enables Apiam to centralise its equine operations where its feeder clinics around New South Wales can refer business to Agnes Banks while also providing the network with access to those registered equine specialists.
Despite Apiam having been opening their wallets to grow their vertically integrated network of clinics over the past 12 months, Managing Director, Dr Chris Richards believes there are still greater opportunities on the horizon.
“Having already seen encouraging results from the integration of Scenic Rim and Agnes Banks into the Apiam network, we are open to similar equine hubs in other racing-centric regions around Australia,” said Dr Richards.
“We’d had good interest from a few clinics interested in joining the Apiam network where the centralised model greatly assists clinics to capitalise on the growth opportunities, and vets in improving work-life balance. We’ve got a nice pipeline of potential acquisitions to explore in the future.”
The work-life balance mentioned by Dr Richards is in reference to the people-focused initiatives that Apiam is spearheading in the veterinary industry which has proven popular amongst veterinarians.
Emerging as an employer of choice in the animal health industry, their strong focus on people has seen Apiam expand substantially over the past 9 months, taking their national headcount to over 850 staff across 70 locations. With all of these new clinics having joined their network, Apiam has acquired $24.54m in revenue which can be added to the $126.2m generated in FY21 by the Company on a pro forma basis.
While the 28% increase in yearling sale prices was a significant boost, reflecting the increased investment Australians are spending on horses, more could still come across the yearling sale season with further prize money increases expected to be announced by Racing NSW in the coming months.
Such an announcement would follow the $16m boost announced by Racing Victoria in June 2021. As a turf war between the two States is playing out while they fight to lure owners to race in their respective States, service providers like Apiam are well positioned with a large presence across Queensland, New South Wales and Victoria’s racing industry.
Apiam Animal Health welcomes investors to register for updates on their latest developments and industry research by joining their mailing list here.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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