Pets can truly become our best friends, being our prized companions when spirits are high and our gentle saviours when we’re feeling low.
They can also be a financial lifesaver too.
In pandemic hit 2020, the Australian Bureau of Statistics says we spent 35% more time with our pets, though even before that, pets and associated services were on the rise.
A report from Animal Medicines Australia shows that in 2019, more than $13 billion was spent on pet services in Australia and with pets actually now outnumbering people in Australia, this figure is only expected to rise.
This means that keen investors are turning their eyes towards the ASX to see how they can capitalise on this market movement.
Pet-centric businesses have appeared on the ASX before, including Greencross who clocked in at over $1 billion in 2014 and National Veterinary Care that was acquired for around $250 million in 2020.
The current players
Apiam Animal Health (AHX)
AHX have currently been following a similar strategy to what led Greencross and National Veterinary Care to their riches, establishing smaller practices in strategic locations to build economies of scale and generate cash flow. They now have nearly 60 clinics and more than 160 veterinarians, beginning to target regional areas as well.
The acquisition of three leading veterinary centres in Queensland is expected to increase revenue by $10 million a year. The company also still has nearly $20 million of debt financing to continue financing acquisitions.
Their presence in the rural market also means they benefit from a rising agriculture sector as well as the pet boom.
AHX is still trading at an enterprise value-to-sales ratio of 1.38 and their expansion strategy will bring growth if executed successfully.
Mad Paws Holdings (MPA)
When starting out, MPA wanted to become an Airtasker for pet owners, but is now expanding beyond that having acquired Waggly Club, a subscription service for dog toys and treats, for $3.5 million. This adds $1.5 million in revenue to the business, which has a large and loyal customer base, with the recurring price model creating a stable foundation for growth.
The core business function remains the ‘airtasker model’ of Mad Paws, with an app that facilitates services such as dog walking, pet sitting and grooming.
MPA is also looking to poke its nose into new markets, with Dinner Bowl, a start-up focused on dog food delivery.
MPA looks to be attempting to become a total pet services solution, with players all over the market, making it an interesting stock pick as the pet boom continues.