1800-272-662
Shopping Cart 0
countryflagAU
Login

small-cap

Greencross Limited – Is it still likable after the recent drop in share prices?

Sep 21, 2015 | Team Kalkine
Greencross Limited – Is it still likable after the recent drop in share prices?

Results for full-year FY 2015

The highlights show a 75% increase in statutory revenue to $ 644.5 million and underlying revenue by 45% to $ 644.5 million. Group LFL sales growth is up 20 basis points to 6.2% and the outlet numbers grew by 35% to 332. The underlying gross margin is up by 50 basis points to 55.3% and the underlying EBITDA is up by 60% to $ 86.8 million while EBITDA margin grew by 130 basis points to 13.5%. NPAT rose by 118% to $ 19.1 million, underlying NPAT rose by 77% to $ 38.2 million and underlying EPS surged by 43% to 34.3 cents per share. The annual dividend is up by 36% to 17 cents per share. CEO Jeffrey David said that it had been another year of substantial growth and the size of the network grew by 35% extending the international pet care platform to more pet owners in Australasia.


Financial Summary (Source: Company Reports)
 
The results were underpinned by strong LFL sales growth and network expansion and the increase in revenues was driven by growth in same-store sales, new stores and the acquisition of vet clinics. There were increases in gross margins as well as gross margin percentages, and the retail gross margin increased by 160 basis points to 47.8% as a result of procurement benefits and the increased penetration of sales of private labels. Vet gross margin percentages improved by 90 basis points to 76.7% as a result of the increased contribution from high margin speciality and emergency services and the harmonisation of the terms of procurement. The increase in EBITDA reflected the economies of scale, the increase in gross margins and the benefits from the integrated Pet Care Model.
 

Store and Clinic Network (Source: Company Reports)

Group LFL sales growth was 6.2% compared to 6% in the previous year and the industry growth estimated by management was at 4%. Growth in the veterinary services business increased to 6.1% reflecting the growth in cross referrals both from retail stores to vet clinics and from vet clinics to the speciality and emergency business and the increase in membership of the Healthy Pets wellness program. The growth in retail Australian LFL sales was complemented by the strong LFL retail sales growth of 8% in New Zealand.


 

On Track to achieve Network Expansion Goals

The network contributed by delivering the benefits of scale and expanding customer reach. The retail store network was expanded by 65 stores to 200 stores (173 in Australia and 27 in New Zealand). In addition, 42 City Farmers stores were acquired and these have been integrated with the network on time and within budget. 21 vet clinics were added during the year taking the total to 132 clinics and the acquisitions completed in FY 2015 are expected to deliver more than $ 32 million on an annualised basis. The highlights of the expansion of the vet network include the establishment of co-located clinics, the commencement of a joint venture with Animal Referral Hospital, one of the leading speciality and emergency practices in Australia and the entry into the New Zealand markets with the acquisition of three clinics in Wellington, CEO Jeffrey David pointed out that the company currently has a market share of more than 8% in the rapidly growing $ 8.7 billion pet care market in Australasia and aims to achieve a market share of 20%. It estimates that 59% of Australian families have easy access to one of their facilities offering retail, grooming and vet services. A key element of the strategy is to increase customer reach by expanding the network and developing digital offerings to expand access to products and services.
 
The company continues to make progress in realising the benefits from its integrated pet care model. An analysis of the outcome from a year of customer data shows that a retail customer who expands engagement with the integrated pet care platform to include services such as grooming and vet services spans five times as much as a normal retail customer. Further, a vet customer who expands engagement to include grooming and retail services spends 2.2 times as much. CEO David says that the review of the shopping data confirms the benefits of the integrated model and establishing trusted advisor services with customers will enable the company to provide the best in affordable and holistic offerings.
 
The balance sheet continues to be strong and the company is well placed to fund its expansion plans with plenty of headroom under its banking covenants and balance sheet capacity to deliver on its growth plans. Net debt as on 30 June 2015 was roughly $ 234 million with $ 260 million of drawn debt under the bank facility of $ 350 million. The current leverage ratio of debt/EBITDA of 2.5 times shows the rapid expansion in FY 2015 including the acquisition and integration of City Farmers. The gearing measured as net debt/net debt + equity is 36%. The underlying cash flow conversion rate will improve as the fleet matures and, in a more normal year of expansion, the leverage ratio is expected to improve over FY 2016 as the expansion becomes self financing.


Average Customer Spend (Source: Company Reports)

Stock Performance

Recently, share prices dropped by over 13% on the news that the company CEO had stepped down without any notice and has been replaced by the current CFO Martin Nicholas and investors seemed to be worried that there was worse news to follow. The prices recovered a little but the valuation still seems to be extremely attractive. We believe that the strategy worked out for the company is going to fulfil its future growth potential. Moreover, we note that the company stands by the outlook provided in its recent annual report and that the year has had a strong start with like-for-like sales growth of 6.3% in the first two months of the year.


GXL Daily Chart (Source: Thomson Reuters)

We would recommend a Buy for the stock at the current price of $6.14.

Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people.Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation.Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product.The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd currently hold positions in:  BHP, BKY, KCN, PDN, and RIO. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.
Copyright
Copyright © 2015 Kalkine Pty Ltd ABN 34 154 808 312. No part of this website, or its content, may be reproduced in any form without the prior consent of Kalkine Pty Ltd.
Kalkine is a trading name of Kalkine Pty Ltd ABN 34 154 808 312, which holds Australian Financial Services Licence No. 425376.


Mid-Cap
Technical Analysis on One NYSE-Listed Uranium Stock- UEC
Mar 13, 2026 Team Kalkine
Small-Cap
One NASDAQ- Listed Semiconductor Stock at Resistance Level- HIMX
Mar 13, 2026 Team Kalkine
Blue-Chip
MQG Scales AUM and Private Credit Capabilities to Drive Growth
Mar 13, 2026 Team Kalkine
Small-Cap
Technical Analysis on Two ASX-Listed Stock – RAU, HRN
Mar 13, 2026 Team Kalkine
Mid-Cap
Technical Analysis on One NYSE- Listed Mining Stock- ERO
Mar 12, 2026 Team Kalkine

Past performance is not a reliable indicator of future performance.