GXL Greencross Limited/ Veterinarians

[NZSilver]

Profit downgrade - blaming storms/wa/internal distribution problems - let's see if they are one offs. (however eps growth still 40%), acquired 3 clinics in Wellington for ebita 4x. I think they will be very aggressive with acquisitions over the next few years to get growth as it looks like the may not get much from existing portfolio. Approx 250 mil left in debt facility to fund growth. Currently on pe of 19-20.

[winner69]

Profit downgrade - blaming storms/wa/internal distribution problems - let's see if they are one offs. (however eps growth still 40%), acquired 3 clinics in Wellington for ebita 4x. I think they will be very aggressive with acquisitions over the next few years to get growth as it looks like the may not get much from existing portfolio. Approx 250 mil left in debt facility to fund growth. Currently on pe of 19-20.

Those 3 vet clinics in Wellington

Good news for shareholders .....most of the staff had to take pay cuts since being acquired ... and work harder

[winner69]

The 700 seems hard to break through doesnt it

I still waiting for low 6 something or even sub $6

And a couple of those staff who had pay cuts and told to work harder have left. Good riddance an good news for shareholders if that's the way they operate

[BlackPeter]

The 700 seems hard to break through doesnt it

I still waiting for low 6 something or even sub $6

And a couple of those staff who had pay cuts and told to work harder have left. Good riddance an good news for shareholders if that's the way they operate

Well - certainly an somewhat spectacular (and not so usual) picture: Just look at the volume density over the last 12 months or so. Many more shares traded during this period than anytime else over the last 5 years. This is not a market just breaking away, this is a real fight between bulls and bears:

GXLvolume.JPG

Not sure who will win this battle. I guess on the bulls side is a huge CAGR (admittedly most of it bought instead of grown) and a very interesting (non-cyclical) growth industry with a huge long-term potential. More and more elderlies and childless couples who have their pets as child substitutes and treat and pay for their care accordingly. They want to buy the best for their four legged family members - and are prepared to pay for that.

There was a time when pets with cancer could call themselves happy to be put down. These days some of them get cancer surgery and ongoing medication.

Remember last Christmas the long queues in front of one of the Animates shops. I wondered what was happening and went there, and saw that people queued up with their dogs to get a photo of their four legged darling with Santa. I am sure, that the good dogs have been allowed afterwards to pick as well a nice present in the shop.

On the bears side is a huge amount of "goodwill" on the balance sheet (actually - the balance sheet looks quite frightening, if we remove this one item), some recent management changes (did the ones in the know leave the ship?) and potentially a somewhat too aggressive growth strategy (which might have clouded managements decision making). I guess the jury is still out whether they paid too much for petbarn - and whether they established all these new vet clinics in wise locations.

Discl: still holding (potentially unwise) - and watching the epic battle with interest ....

[winner69]

BP, the OBV still trending down and not showing much divergence from price direction ....bears winning?

But that Williams thing suggest clogs to oversold territory

Takes your chance on the racetrack eh

I waiting for low 6 something .....might get there

[winner69]

BP, the OBV still trending down and not showing much divergence from price direction ....bears winning?

But that Williams thing suggest clogs to oversold territory

Takes your chance on the racetrack eh

I waiting for low 6 something .....might get there

Below 6 bucks .....getting interesting?hhh

[BlackPeter]

Below 6 bucks .....getting interesting?hhh

Interesting - certainly. Buying opportunity - maybe. Risky - dead sure. I did since my last post some more analysis and bought out of GXL (with the price still in the mid 610's).

My reasons: A not very sound Altman-Z score (2.3) and second thoughts about their ability to integrate a huge (and probably too expensive purchased) retail chain with an originally quite healthy vet business. I don't write them totally off (though I had to take some losses ), but I think that at this stage that it first will get worse, before it might get better. IMHO is a further profit downgrade more likely than a positive surprise at reporting time. As well - their high valuation is only justified if you look at their huge (but historic) CAGR. Question is - where would future growth in the high double digits coming from? Other organisations started as well to round up vet clinics (driving the price up for everybody) and animal food you can buy as well in the next supermarket (keeping the margin's down for everybody - particularly in Australia, where they still have some real competition between supermarkets).

Discl: Enjoy the epic battle much more since I bought out ... but might be back if & when the PE better reflects a much reduced growth rate.

[babymonster]

yeah... i have to cut some lost on this one.. averaging down but still at high 6s... sold half at 6.05... hopefully after today, it can recover... good luck

[NZSilver]

Yes these roll up companies are taking a hammering - well out of market darling status + macro conditions aren't helping. I hold SGH, CAJ, GXL who are all growing profit, revenue and eps by acquisition. I thought these guys would have been pretty "recession" proof as underlying business day to day shouldn't change much.

[blocker3]

Yes these roll up companies are taking a hammering - well out of market darling status + macro conditions aren't helping. I hold SGH, CAJ, GXL who are all growing profit, revenue and eps by acquisition. I thought these guys would have been pretty "recession" proof as underlying business day to day shouldn't change much.

Yes they have had a hammering NZ SIlver. I also own these 3 shares and believe that they have been all oversold.GEM is another one I own and has taken the same flight path.

Good news yesterday however at last with a good base now to work from.Up 15 % yesterday and now also up 4% today.
http://www.asx.com.au/asxpdf/2015081...2q2q5z621z.pdf. Cheers