PHB - Pharmacybrands Ltd

[gonzo56]

LPL has been doing nothing but going down, down, down.
Now changed their name to PHB (I'm not sure if the takeover is fully complete) the volume has increased.

What do you guys reckon about jumping on the band wagon? I know it's risky so I would'nt get more than $1,500, but I think it has potential.
Also, owning 4 brands has got to be good right?

[Paper Tiger]

i would not touch this share primarily because it appears to be very lightly traded and with a large difference between buy and sells (currently 28 / 35). Difficult to get in at a reasonable price, could be very costly to get out.

Even ignoring that I fail to see why owning 4 brands provides a compelling buy :confused:.

regards
Paper Tiger

[percy]

Also, owning 4 brands has got to be good right?[/QUOTE]

I think Coca Cola has only bothered with one brand.

[gonzo56]

Haha, I get your point about the brands, I just figured PHB exemplified a monopoly situation..
OK, thanks for your feedback PT.
I'll just add it to my NZX.com portfolio to track for a while.

[gonzo56]

Oh, and buy the way, The Coca Cola Company has "a portfolio of more than 3,000 beverages"
http://www.thecoca-colacompany.com/brands/brandlist.html (www.thecoca-colacompany.com/brands/brandlist.html)

[percy]

Oh, and buy the way, The Coca Cola Company has "a portfolio of more than 3,000 beverages"
http://www.thecoca-colacompany.com/brands/brandlist.html (www.thecoca-colacompany.com/brands/brandlist.html)

PHB only need to add 2996 brands !!!!Could be interesting!!!

[gonzo56]

Haha, "hold on to your hats!"

[percy]

Haha, "hold on to your hats!"

I tried looking up shareholders and could not find it.If this company has Andrew Bagnell as major shareholder you may be in for a fast ride as he is very astute.

[gonzo56]

"Following the completion of the proposed merger, the new Board will consist of Andrew Bagnall, John Bolland, Andrew Davidson, Peter Merton, Bill Meaney, Ian Sharpe and Mark Vuksich."
www.voxy.co.nz/business/life-pharmacy-takeover-offer-pharmacybrands-shares-goes-unconditional/5/23428

[percy]

"Following the completion of the proposed merger, the new Board will consist of Andrew Bagnall, John Bolland, Andrew Davidson, Peter Merton, Bill Meaney, Ian Sharpe and Mark Vuksich."
www.voxy.co.nz/business/life-pharmacy-takeover-offer-pharmacybrands-shares-goes-unconditional/5/23428

gonzo56.Peter Merton I know of through my shareholding in Ebos.Another very astute businessman.I have been to Life Pharmancy website and I think Merton and Bagnell end up with large shareholdings.I think you would do well following these two.I think there are 99.96mil shares on issue.with a share price of 35cents market cap is 34.99mil.I can not not find turnover or profit figures to work out PE ratio or any other figures.,so the $1500 you are looking to spend is still buying you a "Pig in Poke" Pretty interesting one though with two very astute bussiness men with a lot of flesh in the game. Go for it!!!!!

[percy]

You may find the market cap of other retailers of interest.we must remember retail is very difficult at present.
Briscoes $275.8 mil,
Hallensteins $488 mil,
Kathmandu $488 mil,
Michael Hill $271.6 mil,
Postie Plus $14.4 mil,
Pumpkin Patch $363.7 mil
Smiths City $16.95 mil,
Kirkcaldies $26.41

[winner69]

Percy .... this is relevant from their half year to Sept announcement last November -

The Directors note that, had the acquisition occurred on 1 April 2009 the estimated consolidated revenue of the combined organisation would have been $10,500,000, and a consolidated profit of $1,352,000 prior to abnormal costs by both companies associated with the merger of $3,456,000.

257 outlets in NZ is quite a few. They have part ownership of 29, Assume most the companies revneues come from franchise fees

[gonzo56]

Only part ownership of 29!
...
PE: 8.6. I can see the market cap stretching it legs.
mmm and EBOS has done well.. Exciting stuff, but I think i'll let the pig in the poke breath for a while before I go for it. (I dont know if I can be so brash)
Thanks Percy btw, I appreciate it.

[percy]

gonzo56
This is what I like about sharetrader,people like you bringing a share to our notice.Then we have to do some research.With good posters like winner69 we all find out a lot.Peter Merton
Built PRNZ .I think he had 49% with Zuellig group 51%.Merton is on Ebos board and he and Zuellig are large ebos shareholders.The ebos people speak very highly of him.I will like you will be watching with interest.

[winner69]

Bagnall's main shareholding interest I believe is as a trustee but being on the board is a postive.

[percy]

Bagnall's main shareholding interest I believe is as a trustee but being on the board is a postive.

Sorry I am getting a bit confused.Some where I think I read Bagnall and Merton,s holding was in a joint venture.I would expect he would be a trustee for say A Bagnall family trust.
I am sure he has skin in the game.I have found researching hard as company announcements and website have got me a bit mixed up.I look forward to annual report to help me out.
You are seeing it more clearly than me,sorry.

[winner69]

You might be right here Percy .... digging a bit deeper I think Bagnall has real money invested in the merged entity through his previous interests in Life ... it all does seem pretty complicated eh

[winner69]

I think you need to take that reported PE of 8.63 with a grain of salt as prob based on LGL reported financials which have no semblence to the merged entity

A PE of 8.63 implies NPAT of more than $4 million which seems a bit far fetched at this stage .... even with the synergies of $2m which might come through

Will be interesting to see how all this pans out

[percy]

I just doubled the six months profit to give 12 month profit of $2.7mil and with 99.96mil shares EPS .027 with share price of 35cents PE of 12.9 which I expect is too high.We will have to see earnings growth rate to make a better judgement on share price.That said, I cannot help but feel Merton and Bagnall are well worth watching.$34.99 mil would buy you Smiths City and Postie Plus with $3.64mil left over.I do not think we should go "rashers" on the "pig in poke" just yet!!!

[Snoopy]

LPL has been doing nothing but going down, down, down.
Now changed their name to PHB (I'm not sure if the takeover is fully complete) the volume has increased.

What do you guys reckon about jumping on the band wagon? I know it's risky so I would'nt get more than $1,500, but I think it has potential.
Also, owning 4 brands has got to be good right?

I was in Blenheim last week and called into 'The Warehouse'. There was a distinct section set aside as a pharmacy. The product selection look really comprehensive and the pricing sharp. It looked like you could even get your perscriptions dispensed there (?) I hadn't seen another Warehouse done up like this before. A threat to PHB?

SNOOPY

[percy]

I was in Blenheim last week and called into 'The Warehouse'. There was a distinct section set aside as a pharmacy. The product selection look really comprehensive and the pricing sharp. It looked like you could even get your perscriptions dispensed there (?) I hadn't seen another Warehouse done up like this before. A threat to PHB?

SNOOPY
Very much so.This is the reason chemist shops getting together.With Govt watching perscipition charges Chemists old world is over.Need muscle to buy,to advertise.negoiate with landlords etc.Much like Paper Plus,Mitre 10,Foodstuffs etc.

[Silverlight]

Top 10 holders

CAPE HEALTHCARE LIMITED 26,904,646 26.91%
LPL TRUSTEE LIMITED 26,904,355 26.91%
MASSEY PHARMACY LIMITED 3,030,000 3.03%
MATTHEW JAMES FLEET & MRI CHRISTCHURCH TRUSTEES LIMITED 2,421,048 2.42%
GORDON KEITH RITSON 1,972,643 1.97%
MURRAY LAWRENCE DUNN & FORTUNE MANNING TRUSTEE COMPANY LIMITED 1,967,145 1.97%
GANET INVESTMENTS LIMITED 1,588,093 1.59%
BRETT ANDREW FORDYCE & FRANCIS DRAGICEVICH & CHRISTINE LOUISE HUTTON 1,182,263 1.18%
ARTHUR HECTOR MCAULAY 1,037,770 1.04%
DAVID SCOTT MILNE & JENNIFER MARY MILNE & LLOYD WARREN LAMBERG 1,029,072 1.03%

[Silverlight]

Cape Healthcare is 49% owned by Peter Merton, and 51% owned by a Hong Kong company.

LPL trustee is 100% owned by John Bagnall

[percy]

Cape Healthcare is 49% owned by Peter Merton, and 51% owned by a Hong Kong company.

LPL trustee is 100% owned by John Bagnall

Would expect the Hong Kong company is Zuellig group owned.
John Bagnall is John ANDREW Bagnall.

[Silverlight]

ELITE INVESTMENT HOLDINGS LIMITED is the hong Kong company, they also own 1.6m shares in Ebos.

Is the beneficial owner of LPL Trustee Bagnall or is it someone else?

[percy]

ELITE INVESTMENT HOLDINGS LIMITED is the hong Kong company, they also own 1.6m shares in Ebos.

Is the beneficial owner of LPL Trustee Bagnall or is it someone else?
I went to the companies office.LPL Trustee limited.100 shares owned by John Andrew Bagnall.

Elite.? I am sure they will end up at Zuellig group as Merton has always worked in tandem with them.Either worked for them or with them.
What I did find of interest that between them they control over 53% of the shares so a lot of skin in the game.There was a tie up 20 years ago between Ebos and Mereton.I donot know what it was.Also Zuellig was listed or had an interest in a listed company here in NZ;again I cannot remember the details.
THat 53% between them I meant Bagnall and Merton.

[percy]

I googled zuellig group.second entry.
ebos director peter merton and the zuellig group own cape healthcare.

[percy]

The profit of $3.5 mil was a lot higher than I thought it would be so brought a small parcel today.Was trying to keep my powder dry but just could not help myself.Peter Merton I feel is worth following.

[gonzo56]

Wohoo!
Finally.

[percy]

Wohoo!
Finally.

Well done gonzo56.

[Lizard]

I think you need to take that reported PE of 8.63 with a grain of salt as prob based on LGL reported financials which have no semblence to the merged entity

A PE of 8.63 implies NPAT of more than $4 million which seems a bit far fetched at this stage .... even with the synergies of $2m which might come through

Will be interesting to see how all this pans out

I only just got around to looking through the FY result and agm speech. At $3.5m NPAT, they were probably a little over $4m NPAT normalised for acquisition timing. Synergies might have been better than suggested, since the agm speech says second half for both companies showed an improvement of $1.36m over prior. Although tax wasn't quite normal and there is a bit of interest income from the extra cash sitting there.

I thought it looked interesting, though there is a fair bit of goodwill in the assets buried in the equity accounted value of group investments. Means ROIC is only okay-ish. Seems to me this is a difficult business to expand organically with expansion probably driven by acquisition and somewhat capped by the size of NZ (still a bit of room to go though), so acquisition price becomes critical. Overall looked to be fairly well run and I'd still see as reasonable value at current price (37cps).

[percy]

I only just got around to looking through the FY result and agm speech. At $3.5m NPAT, they were probably a little over $4m NPAT normalised for acquisition timing. Synergies might have been better than suggested, since the agm speech says second half for both companies showed an improvement of $1.36m over prior. Although tax wasn't quite normal and there is a bit of interest income from the extra cash sitting there.

I thought it looked interesting, though there is a fair bit of goodwill in the assets buried in the equity accounted value of group investments. Means ROIC is only okay-ish. Seems to me this is a difficult business to expand organically with expansion probably driven by acquisition and somewhat capped by the size of NZ (still a bit of room to go though), so acquisition price becomes critical. Overall looked to be fairly well run and I'd still see as reasonable value at current price (37cps).
Thank you for your analysis Lizard.As allways well research,what I would expect from sharetrader's top analyst.

[Silverlight]

Just had a re-look through the Annual Report

Rehashing the analysis already done to 31 March.

NTA is 21.31 cents
Revenue was 16.2 cents
Profit was 3.58 cents

With the price now at 32 cents this offers increased value in a different area of the Healthcare space, with PHB making up 28% of the pharmacy sector.

Low liquidity would require patience to build a decent position though.

[Lizard]

A good first half from PHB out today at $2.6m NPAT. Lots of cash on hand to underpin further expansion.

Price has picked up on this illiquid stock (last sale 41cps), but valuation is outpacing as execution progresses.

I'm currently thinking it's a reasonably safe "accumulate" at these prices (or at least as "safe" as illiquid small-cap stocks are ever able to be!).

[Lizard]

I picked up 1500 of these the other day, just to get access to the spp at 45cps as a starter parcel. Hoping that the spp will bring a bit more liquidity into the market and the Radius acquisition will get them to a scale where they can get noticed.

Looks like I'm not the only one, as a few being grabbed here at 65cps... given there were only 664 shareholders on the register and they are offering only up to $4500 for a maximum raising of $3.5m, it seems unlikely there would be much scaling. The lack of liquidity also puts a few barriers on grabbing some before the 18 July ex-date, so I guess it is pretty easy to justify picking up a few at "silly" prices. Though if this keeps up, it will probably bring out a few sellers with 10000 shares to spare that they can replace via spp.

[zigzag]

According to the 'Independent Adviser's Report' there are a total of 670 shareholders. Take out the two main holders and you have 668. If they all take up the maximum allowed under the SPP then the amount raised will be just over 3 million, well short of the 3.5 million they are talking about. If some subscribe for less than the maximum, then they will raise even less, and the two main holders will own proportionally more of the company. Personally, I am not overly concerrned by this as I like it that the major shareholders and people driving this co. have the confidence to increase their exposure. I just hope they have their maths right, or, am I missing something?

[janner]

Your purchase of 1500 shares !!..

You have woken my interest into many of your well thought out posts.

[Joshuatree]

Surprisingly ,Received my SPP today . Forgot about the 26 shares i still have; my broker overlooked selling in a past "Life"( think they were a divvy s/p). Worth a crack this time round.

[Lizard]

Why are bidders jumping over themselves to try and pick up some PHB on such a down day? And surprised no one is selling to them, since that 64cps bid is a good premium on the recent 45cps spp!

[Lizard]

Result on track for PHB at $4.1m NPAT for HY12 after booking $1.3m of one-off costs in association with acquisitions.

Think they are probably usually stronger second-half too (Christmas/summer sales), so shaping up for a strong year... debt has been reduced back to unconcerning levels following the Radius Pharmacy acquisition and they are managing some small organic growth, driven out of dispensary revenues.

Further growth in second half will come from the acquisition revenues (only acquired from this year), with synergy benefits likely to be obtainable over the next 12-18 months. I'd say $9-$10m NPAT for FY12, but could edge up to as much as $15m over the next 2 years. Offer price of 80cps (market cap $96m) is no longer a steal, but it probably still has some growth in it over the next year or two - and perhaps a dividend at some stage?

[elZorro]

Result on track for PHB at $4.1m NPAT for HY12 after booking $1.3m of one-off costs in association with acquisitions.

Think they are probably usually stronger second-half too (Christmas/summer sales), so shaping up for a strong year... debt has been reduced back to unconcerning levels following the Radius Pharmacy acquisition and they are managing some small organic growth, driven out of dispensary revenues.

Further growth in second half will come from the acquisition revenues (only acquired from this year), with synergy benefits likely to be obtainable over the next 12-18 months. I'd say $9-$10m NPAT for FY12, but could edge up to as much as $15m over the next 2 years. Offer price of 80cps (market cap $96m) is no longer a steal, but it probably still has some growth in it over the next year or two - and perhaps a dividend at some stage?

Hi Lizard, one question: why do none of my shares look like this one? And why not a great deal more interest in the share on ST? I like the look of these store brands, when you're ill money is no great object, and Zuellig being partly behind it is also interesting. They should make a great deal more profit in the next half, at the moment it amounts to only 27k NP p.a. average per store. It's a great trend, not shared by too many companies.

Credit: karen1

[Lizard]

Hi Lizard, one question: why do none of my shares look like this one?

Simple answer; hold more shares... one of them is bound to! :)

Yeah, I still like this one, although I'd like it more at 65-70c. Not sure what the chartists see, but I'd have thought a quarter of consolidation wouldn't go amiss? FY result not till May, so, on balance, I'd say there is no hurry.