MENU

Why IOOF Holdings Limited is a major shareholder of National Veterinary Care Ltd

IOOF Holdings Limited (ASX: IFL) is one of Australia’s largest wealth businesses. It offers financial advice, superannuation, investment management and trustee services.

It has to make good long-term investments to generate good earnings for its various funds for people’s wealth and retirement.

One of its latest investments is its three million shares of National Veterinary Care Ltd (ASX: NVL).

National Veterinary Care is one of the largest veterinary clinic businesses in Australia it has 64 clinics, with eleven of those acquisitions settled in this financial year alone.

It isn’t just a random assortment of veterinary clinics. Management are strategically acquiring clinics in geographical clusters to grow economies of scale.

It has a wellness program called ‘Best for Pet’ which aims to get people into an annual check-up service, but it helps that member spend increases by more than 90% after joining the program. The current membership retention rate is 79% and there has been a 23% growth of members since the start of FY18.

In its half-year result to 31 December 2017 it revealed revenue growth of 27.8%, statutory earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 12.8% and earnings per share (EPS) growth of 12.3%. Investors were expecting a bit more with the share price dropping from $3.15 at the start of the year to today’s $2.48.

The full year 2018 financials should show good growth, management are expecting revenue growth of more than 25%, the EBITDA margin will be between 16% to 17% and it will pay a full-year dividend.

It’s taking a number of initiatives to increase future revenue, margins and decrease costs. One example is that it’s training its vets to be higher skilled so that it makes less referrals outside of National Vet Care clinics.

The defensive and growing earnings of the vet business makes it appealing to me.

Foolish takeaway

If you take a long-term view on National Vet Care it should be able to keep growing at a market-beating rate. I think it’s one of the best small caps on the ASX, that’s why I’m looking to buy more shares over time if it continues to deliver on its growth plans.

I’d be very happy to buy shares at today’s price, but I’m keeping my eye on its competition as other vet groups are also growing.

If you want another top share then you should consider this exciting growth stock, that’s why it’s in my portfolio.

OUR #1 dividend pick to grow your wealth over the new financial year is revealed for FREE here!

Financial year 2018 is here and The Motley Fool’s dividend detective Andrew Page has revealed his must buy dividend share to grow your wealth in 2018.

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor Tristan Harrison owns shares of NATVETCARE FPO. The Motley Fool Australia owns shares of NATVETCARE FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!