A more detailed version of Bell Potter's article: Analysts at...

A more detailed version of Bell Potter's article:

Analysts at Bell Potter have initiated coverage on Apiam Animal Health, a diversified and vertically integrated animal health business, with a buy recommendation and a 12 month price target of $1.57.
Apiam listed on the ASX in December 2015 and it was immediately in favour with its shares increasing from circa $1.20 to hit its highest level of $1.45 in a matter of weeks.
Since then it has trended slightly downward and more recently has traded in the vicinity of $1.35. However, apart from the interim result there has been no material news flow aside from confirmation that the 12 veterinary practices flagged for acquisition in the prospectus had been completed.
The interim result held no surprises and only covered a short trading period from November 1, 2015 to December 31, 2015. Consequently, assessing industry conditions and Apiam’s scope for growth is a better gauge of the company’s merits.
As highlighted by Bell Potter in its snapshot of Apiam’s profile, one of the key factors is its exposure to an expanding production animal base in dairy, beef and pigs. This differentiates it from the likes of Greencross which has faced its challenges and indeed some share price volatility.
However, one of the similarities between the two companies is that they are in a position to benefit from fragmented industry conditions that provide substantial opportunities for consolidation.
In particular, Bell Potter highlighted the growth opportunities that present themselves in Apiam’s vetchem business, an industry which the broker estimates is worth in the vicinity of $1 billion annually and has been growing at a compound rate of more than 7% per annum over the last 30 years. This area of the group’s operations is expected to account for 73% of revenues in fiscal 2016.
The Vetchem business incorporates the procurement and wholesaling of animal pharmaceuticals, nutritional supplements and equipment.
In arriving at a valuation for Apiam, Bell Potter noted that the average fiscal 2016 enterprise value to EBITDA multiple for the Australian agricultural sector was 11.5 and 8.4 for input producers and suppliers. Taking these metrics and other peer comparisons into account, as well as assessing acquisition opportunities over the next three years, the broker values the group at $1.57 per share, in line with its 12 month price target.
This implies upside of 15% to Friday’s closing price of $1.37.is 8.4. Taking into account these multiples and factoring in the group’s acquisition