Investing in best small cap ASX stocks starts with identifying a good business model. Other key factors like financial health and growth prospects follow soon after. Inclusion of small cap shares ASX in portfolio can help in realigning your financial goals.
Embark Early Education Limited (ASX: EVO)
Embark Early Education Limited demonstrated strong growth and operational resilience in the first half of 2024, driven by strategic acquisitions and a commitment to enhancing shareholder value through dividends. With positive occupancy trends and plans for further expansion, the company remains a competitive player in the Australian childcare market.
In the half-year ended 30 June 2024, Embark reported a net profit after tax from continuing operations of $2.488 million, an increase from $2.386 million in the prior comparative period. Increased revenues, effective control of support office costs, and the prudent use of centre-based labour within government-mandated guidelines drove this growth.
During this period, Embark made significant strides in expanding its operations, successfully acquiring five centres located in Queensland and Victoria. These acquisitions have added an additional 431 places per day to the group, further bolstering its capacity. Revenue growth for the half-year reached 17.7%, totaling $34.43 million, while underlying Australian centre EBITDA grew by 19.2%, reaching $8.06 million. The company’s strategy of adjusting fees in response to inflationary pressures has positively impacted overall financial performance.
Embark maintained a robust balance sheet with no borrowing as of 30 June 2024. The company reported cash reserves of $12.5 million and term deposits of $3.5 million. Additionally, Embark returned value to shareholders by paying a fully franked dividend of $0.03 during the half-year, with $0.015 distributed on 26 March 2024 and another $0.015 on 3 June 2024. Overall, the half-year results reflect a solid operational foundation and a strategic focus on growth through acquisitions and efficient management practices.
Considered to be among top small cap stocks ASX, Embark Early Education Ltd is poised for continued growth in 2H2024, driven by strong occupancy rates, currently at 83.5%, and the introduction of Queensland's "Free Kindy" initiative, enhancing affordability for families.
Embark Early Education Limited is in a strong position in the Australian childcare market, demonstrating solid financial stability and the potential for future growth.
Apiam Animal Health Limited (ASX: AHX)
Apiam Animal Health’s FY24 results reflects strong financial performance and operational efficiency. The company reported notable revenue and gross profit growth, with gross margins expanding to 67.0%, underpinned by a strategic focus on high-value products and consulting services. Underlying EBITA margins increased to 7.7%, driven by successful cost synergies, underscoring effective management of business support and clinical services.
For the fiscal year ending 30 June 2024, Apiam Animal Health Limited reported significant financial progress. Revenue increased by 6.2% to $204.8 million, up from $192.8 million in FY23. The gross profit increased by 9.6% to $137.3 million, and gross margins improved to 67.0% from 65.0% in FY23. This growth is mainly due to company's strong focus on higher-value products and consulting services, which has uplifted the profitability.
The Clinical Vet Services segment contributed a 7.4% revenue growth and accounted for 78% of the company’s total revenues.
The company reported a substantial 116.5% increase in NPAT, reaching $4.9 million compared to $2.3 million in FY23.
Apiam declared a final dividend of 1.0 cent per share. Strong cash flows helped in debt management and organic growth, thus reducing net debt to $66.8 million as of 30 June 2024, down from $71.1 million at the end of 2023.
The Company has recently undertaken a strategic migration to a vet-supported clinic management model. The redundancy and restructuring program as per this model helped in optimizing operations by reducing non-veterinary positions. The changes to the leadership and senior veterinary teams were done to ensure that the clinics are better equipped to meet local market demands effectively.
Looking forward, the company is well placed in a list of asx small caps to buy as it is expanding its clinical portfolio with new Greenfield clinics and has restructured four existing locations, which is expected to create additional growth opportunities. Systematic investments in advanced product technologies for commercial pig and beef feedlot sectors will further drive future revenue growth.
Source: Company’s Report
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