Ok, lets get this straight. NVL is a roll in of Vets who wanted to IPO to get an on market valuation. Part cash, part script. Many of the post IPO acquisitions where in fact settlements of the intial roll in. Apart from that they have bought a greyhound practice, a bunch of allied services business and to their credit what looks like a good acquisition in New Zealand.
Let me offer my blunt opinion. NVL will struggle to scale and the results frankly are very ordinary. They are being beaten by National Vet Associates USA ( locally called Vet Partners ) this is backed by Aries Capital LLC. Vet Partners appears to be bigger that NVL and is simply paying more based on the wacc drive from US private equity. There are probably two or three off markets vet business's bigger than NVL. Greencross appear to have discovered that the opportunity cost of opening a vet hospital if managed well is less than six times EBITDA. Hence they seem to have a strategy of buying well when the opportunity is available or opening co-located hospitals that give what appears to be a very strong NPV and an acquisition value of less that six times full costed. NVL needs to go back to the market when it runs out of debt headroom. It cant compete against Vet Partners. I should add there are two other PE backed groups consolidating in the market. There is a limited supply of practices worth buying. NVL will not get to a business of scale.
My take. Sell NVL
GXL Price at posting:
$6.42 Sentiment: Buy Disclosure: Held
