GXH - Green Cross Health (formerly PHB - Pharmacybrands)

[BlackPeter]

Went ex dividend yesterday ... so far the SP drop (2 cents) is less than the dividend (3.5 cents). Good indication, but obviously early days.

This stock was for some months without analyst coverage - but it appears the Wall Street Journal "discovered" a new analyst covering Green Cross with a recommendation of "buy" with a target price of $2.20.

https://quotes.wsj.com/NZ/GXH/research-ratings

Bit more optimistic than me, but who am I to disagree?

[TideMan]

I'm not a holder and wouldn't be. That's because of my and others' experience at our local Unichem.
The shop assistants hover.
When I'm trying to decide which suppository (or similar) to choose, I don't want some know-nothing shop person giving me loud advice. What does she know about it? And I don't necessarily want everybody in the world to know what I'm buying.
So I use Countdown nowadays, where the prescriptions are free and you can browse without hassle. They also have a BP testing station right there.

The problem with Chemist Warehouse is that for a 3 month prescription, they'll only give you a month at a time, meaning you must go back again and again.

[BlackPeter]

You just have to love this trend (well, I do :t_up:) despite some of the nay saying on this thread:

10946

Already 9 cents up today (at 134 - graph shows only 130) and hardly any sellers left.

How do they say - market is always right :p;

[Onion]

Already 9 cents up today (at 134 - graph shows only 130) and hardly any sellers left.

It's one of those high volume shares.

Going gangbusters with over $35,000 traded just today!

[winner69]

Looks like you are onto a winner here Peter

Happy New Year BP

This post mid November when share price in the 110’s

You sure are onto a winner here eh

Well done ....even $1.50 on the cards I reckon. GXH not the basket case as many thought.

[BlackPeter]

Happy New Year BP

This post mid November when share price in the 110’s

You sure are onto a winner here eh

Well done ....even $1.50 on the cards I reckon. GXH not the basket case as many thought.

Happy new year to you as well ... and yes, based on the available info could I see them well in the 150 to 160 range. At current they operate still on a rather undemanding P/E below 12. If the SP moves however significantly above say 155, than we would need to see as well some growth to justify further increases.

Lets see what the FY brings - only 2 and a half months to go ...

[Dlownz]

Let's face it it was highly under valued and at 1.00 a share the div return was 7% congrats to those that brought then. While we could see it crack $1.50 only a good FY result will keep it there.

[Davexl]

Damn - sold my lot at 1.25 thinking that was it. Quite happy 'till I saw it jump an extra 9 cents a share! I had a large amount too and market didn't seem to want to budge yesterday. Well done to you others!

[mshierlaw]

Damn - sold my lot at 1.25 thinking that was it. Quite happy 'till I saw it jump an extra 9 cents a share! I had a large amount too and market didn't seem to want to budge yesterday. Well done to you others!

Well 1.25 did look sad a couple of days ago but ......... looks like the breakout will not hold up. No change today BIG RED candle yesterday.

10955

Likely to come back to your 1.25 sale shortly. I'm still sitting on the fence, don't fully understand the business conditions of the third leg, govt home services sector. Got some homework to do here B4 risking $$$$$$.

[Davexl]

Well 1.25 did look sad a couple of days ago but ......... looks like the breakout will not hold up. No change today BIG RED candle yesterday.

10955

Likely to come back to your 1.25 sale shortly. I'm still sitting on the fence, don't fully understand the business conditions of the third leg, govt home services sector. Got some homework to do here B4 risking $$$$$$.


Don't know much about that either sorry (check out attachments in the link below) - had them for the divvy, but the risk on the Chemists side is that they will be undercut somewhat by the Chemist Warehouse setting up shop (70 stores coming) - but the medical side is growing strongly to compensate against that risk. Staying out at this point, following Percy's advice (very wise) https://www.nzx.com/announcements/344883

[BlackPeter]

Well 1.25 did look sad a couple of days ago but ......... looks like the breakout will not hold up. No change today BIG RED candle yesterday.

10955

Likely to come back to your 1.25 sale shortly. I'm still sitting on the fence, don't fully understand the business conditions of the third leg, govt home services sector. Got some homework to do here B4 risking $$$$$$.

Short term technical indicators are only meaningful if there is enough volume supporting the trend. What you are seeing here is the trading noise of a low liquidity share ...

In my view - nothing to see here .. but a nice uptrend. Whether it holds will depend on the next results ...

[BlackPeter]

Tide turning for supermarket pharmacies? Looks like they start to close in the US.

https://www.marketscreener.com/CVS-HEALTH-CORPORATION-12230/news/The-Pharmacist-Is-Out-Supermarkets-Close-Pharmacy-Counters-29893604/

This would be a positive trend change for the established specialist pharmacies.

[winner69]

Tide turning for supermarket pharmacies? Looks like they start to close in the US.

https://www.marketscreener.com/CVS-HEALTH-CORPORATION-12230/news/The-Pharmacist-Is-Out-Supermarkets-Close-Pharmacy-Counters-29893604/

This would be a positive trend change for the established specialist pharmacies.

That’s interesting BP ..thanks

[BlackPeter]

Been on Saturday for some shopping in town and noticed that Life Pharmacy looked pretty busy. Not checking, whether they sold only hand sanitizer, face masks and antiviral medication, but it sort of appeared (given the spread of customers throughout the shop) people are still interested in other things as well.

Still - wondering, which impact the virus scare might have for a health care provider? Could be a great opportunity to get rid of all these Tamiflu stocks nobody needed during the previous scare.

Sadly though - the only long queues I have seen on Saturday have been in front of the Lotto counter :);

[Filthy]

the one green light in a sea of red. not surprising really. in for a solid year I think. going to get loads more customers.

[BlackPeter]

the one green light in a sea of red. not surprising really. in for a solid year I think. going to get loads more customers.

Agree. Nice to see them finishing above MA 50 as well above MA 200.

[value_investor]

Could be a nice little defensive play given the current climate, the pharmacy and medical side are about to crush things I think!

[Valuegrowth]

Now it is time for defensive sectors like healthcare, consumer staples and utilities. Given the current situation, health care and food come first before others. Health is no doubt a priority, and consumers will continue to use healthcare products and services in difficult economic times. Similarly, food and beverage companies are true defensive plays as most of their products are essentials. Utilities too are deemed defensive stocks as electricity, gas and water are also essentials. One stock to watch for sudden move.

[lissica]

Now it is time for defensive sectors like healthcare, consumer staples and utilities. Given the current situation, health care and food come first before others. Health is no doubt a priority, and consumers will continue to use healthcare products and services in difficult economic times. Similarly, food and beverage companies are true defensive plays as most of their products are essentials. Utilities too are deemed defensive stocks as electricity, gas and water are also essentials. One stock to watch for sudden move.

Could still be a lot of pain in pharmacy and medical centres.

Pharmacists are now starting to get that their crowded shops are not the best place for social isolation, and are asking for all scripts to be faxed so they can be picked up quickly without hanging around waiting.

The College of GPs want majority virtual consults as of tomorrow- 70% of consultations to be done on phone/video/email. This requires a lot more work for the same consult fee.

Medical centres have spent a lot of money on PPE, safety barriers, mobile clinics, staff time and resources already. No financial relief yet, but it is expected to be increased capitation funding targeted at high needs groups. I expect many medical centres will be out of pocket.

[Valuegrowth]

Thank you Lissica for your insight, it was very helpful.

[lissica]

So all that planning on the weekend was actually a dummy run for Pandemic level 3 and 4.

One GXH pharmacy close by had a barrier at the front with staff only allowing medication pickups. So not a lot of retailing going on.

Medical centre phone lines went crazy today- lots of telephone consults, but admin staff also run off their feet answering phones, calling patients to check where to send scripts (and prevent med centre pickups), answering queries, stopping people at the door etc. Expect that will die down over the next week as people adjust to virtual consults. Non-urgent in-person consults will be deferred, so there will be significant loss of income.

Medical centres and pharmacies will be the last businesses standing, but they will still feel pain.

I don't own GXH, but speaking as a part owner of a medical practice

[peat]

So all that planning on the weekend was actually a dummy run for Pandemic level 3 and 4.



Yeh its ridiculous to have a four stage plan, and virtually go straight to 4. Will there be a 5 or will it be 4+

[Food4Thought]

So all that planning on the weekend was actually a dummy run for Pandemic level 3 and 4.

One GXH pharmacy close by had a barrier at the front with staff only allowing medication pickups. So not a lot of retailing going on.

Medical centre phone lines went crazy today- lots of telephone consults, but admin staff also run off their feet answering phones, calling patients to check where to send scripts (and prevent med centre pickups), answering queries, stopping people at the door etc. Expect that will die down over the next week as people adjust to virtual consults. Non-urgent in-person consults will be deferred, so there will be significant loss of income.

Medical centres and pharmacies will be the last businesses standing, but they will still feel pain.

I don't own GXH, but speaking as a part owner of a medical practice

Thank you Lissica.

There was a big buy in the last few days. Found that interesting to see.

GXH could be rather well positioned for the ongoing situation.

Today's announcement
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12330222

Mentioned is about going to get a check up even if it is only a sniffle and the up and coming influx of winter symptoms etc will have a real impact on pharmacies and medical practises.

Counter trade for pharmacies will be down. Yet I wonder how this will all go. Especially if they do vitamins and remedies well on top of supplying medications etc.

Worth further analyses


Disc. Holding

[Food4Thought]

Results are out at the end if this month.

[BlackPeter]

Results are out at the end if this month.

That's what I thought as well, but they changed the plan:

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GXH/353847/323469.pdf

They didn't say whether the delay is due to the volume of beans they have to count :t_up: or whether it is because they can't find enough beans :scared: ... some sort of explanation would have been nice.

[Food4Thought]

That's what I thought as well, but they changed the plan:

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GXH/353847/323469.pdf

They didn't say whether the delay is due to the volume of beans they have to count :t_up: or whether it is because they can't find enough beans :scared: ... some sort of explanation would have been nice.

I believe, because they are a many store location and GP practise business, that, their data needs tidying up and ensuring they don't spend on overtime or hassle their bean counters.

Many people who didn't stop work have had plenty of hassles on top of their normal work to deal with.

A range of unforseen circumstances and increased volumes of product trading. My assumption is based on if other pharmacies visible trading increases are anything to go by.

This is one NZX listed company I pick as having a very good position in the current economic climate and benefiting from people getting on the health buzz etc etc.

There will be restructuring in most businesses in the near future. Reduction of costly premise leases, reduction in the budgets for middle management. Technology efficiencies. Centralizing.

The need for health care professionals and their services is one industry with increased pressure and under the microscope at the moment (I pat myself on the back for that pun)

I still wonder if they will at a point in time
merge with one of the big healthcare / retirement providers as I see there being synergies of scale there.

Speculation

[winner69]

That's what I thought as well, but they changed the plan:

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GXH/353847/323469.pdf

They didn't say whether the delay is due to the volume of beans they have to count :t_up: or whether it is because they can't find enough beans :scared: ... some sort of explanation would have been nice.

Many taking advantage of that waiver

Things got a bit messy with lockdown restrictions ...auditor visits etc.

But really a bit of an excuse to take things easy ....and a few more weeks to find some dirty stuff in thevaccounts that can blamed on Covid thereby hiding their past sins.

[BlackPeter]

Would expect they had a tough time over lockdown. There has been a fair bit of commentary on GP visits/revenue being well down. Would also expect pharmacy revenue to be down if lack of discretionary purchases outweighed Covid boost.

Sadly I am afraid I might have to concede that your scenario is rather likely.

On the other hand - If I look at the forward PE's of companies like AIR (actually - negative, which happens to be bad), AIA (32 and going up) or THL (going up), than it appears these days that markets tend to look through any "short term" misery and seem to equal stellar PE ratios with stellar share prices.

Given this maybe the long suffering holders of GXH can hope as well for a SP rise, even if our company is unlikely to ever reach the stratospheric PE rates of some of the other named companies which might not even survive the coming economical crisis.

[winner69]

Last years story but meaningless with what’s happening now.

Bit disappointed they didn’t conjure up a number like $2m impact of Covid instead of saying no Covid.

Main reference to future is we are resilient so sort of OK but no divie at moment

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GXH/355189/325141.pdf3

[Food4Thought]

Last years story but meaningless with what’s happening now.

Bit disappointed they didn’t conjure up a number like $2m impact of Covid instead of saying no Covid.

Main reference to future is we are resilient so sort of OK but no divie at moment

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GXH/355189/325141.pdf3

Happy with no dividend when it ensures a company can operate without over extending themselves.

Good considering the current climate.
Will be a reasonably busy 2nd half due to people staying indoors. People being free to roam and get back to the new normal and in he near future no doubt some covid created health importance awareness. Vitamins. Fitness. Aged care. Health is wealth.

[BlackPeter]

Last years story but meaningless with what’s happening now.

Bit disappointed they didn’t conjure up a number like $2m impact of Covid instead of saying no Covid.

Main reference to future is we are resilient so sort of OK but no divie at moment

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GXH/355189/325141.pdf3

Well, lets face it - every report is last years story - but still - quite solid result. They managed to get all divisions back into profitability, particularly pleased about the increased earnings at the doctors and at the community services division.

Despite some non cash write offs (the still rather new CEO creating a favorable baseline for future gains?) still EPS of 9.4 cents.

Overall - not really a growth story (though the recession might offer some buying opportunities), but hey - whats wrong with a solid health company with a (long-term average) PE of 10? Sure - SP unlikely to double in a hurry, but in my view as well unlikely to be cut in half.

They did hold the dividend payment back, but unless terrible things happen divi's will be reinstated in November.

Discl: hold;

[Food4Thought]

Well, lets face it - every report is last years story - but still - quite solid result. They managed to get all divisions back into profitability, particularly pleased about the increased earnings at the doctors and at the community services division.

Despite some non cash write offs (the still rather new CEO creating a favorable baseline for future gains?) still EPS of 9.4 cents.

Overall - not really a growth story (though the recession might offer some buying opportunities), but hey - whats wrong with a solid health company with a (long-term average) PE of 10? Sure - SP unlikely to double in a hurry, but in my view as well unlikely to be cut in half.

They did hold the dividend payment back, but unless terrible things happen divi's will be reinstated in November.

Discl: hold;

I do wonder about the companies holding dividends back. If they don't use the cash, there may be some special dividends or raised dividend opportunities. Pwrhaps using cash to increase efficient infrastructure and technology to reduce costs.

No doubt some cost cutting will be happening and I believe less profitable pharmacies will be getting trimmed from the waist (waste) line.

The healthcare & health professional side is where I see considerable potential.

Some synergies with companies from New Zealand and Australia providing products (Blackmores) could help keep the business moving forward.

I would like to see more online purchasing information and working at increasing home deliveries like what one competitor Chemist Warehouse are doing.

Don't let the home turf advantage slip away.

[Food4Thought]

Two weeks out from information release date and the share spikes into a higher average sales volume and price goes up 5%+

Must be a convenient coincidence

Disc. Hold

[peat]

Two weeks out from information release date and the share spikes into a higher average sales volume and price goes up 5%+

Must be a convenient coincidence

Disc. Hold
doesnt mean the person buying knows anything

[RTM]

doesnt mean the person buying knows anything

Converse is also true. And what I want to believe. Volume up a bit as well. Fingers crossed.
Disc: Hopeful holder

[nztx]

Sorry to cause a minor SP ripple for the few I grabbed today -- maybe GXH is more tightly held + SP sensitive than some thought after all ;)

Anyone done any sums on the rough % of shares out there that are likely to be on the loose, & not in hands of Longer Term Large stake holders ?

[BlackPeter]

Sorry to cause a minor SP ripple for the few I grabbed today -- maybe GXH is more tightly held + SP sensitive than some thought after all ;)

Anyone done any sums on the rough % of shares out there that are likely to be on the loose, & not in hands of Longer Term Large stake holders ?

Next annual report (9 days to go ;)) will give you the up to date data. According to last years annual report:

Top 2 shareholders hold more than 64% of the company.

Top 10 shareholders (each holding more than 1,000,000 shares, including above) hold above 75% of the company

Top 21 shareholders (each holding more than 500 k shares, including above) hold more than 81% of the company.

11768

If you want the number of "loose" shares, just deduct above numbers from 100% ;):

[percy]

Called into The Chemist Warehouse,South City this afternoon.Paid just $17.09 for 60 AiOra bone + joint tablets,which was even cheaper than their online price of $21.59.A lot of people in store.
They were flat out.Line up to pay,and four tills getting through the customers very quickly.What a business.?
If I were a GXH shareholder I would have cause to be very concerned.

[value_investor]

Called into The Chemist Warehouse,South City this afternoon.Paid just $17.09 for 60 AiOra bone + joint tablets,which was even cheaper than their online price of $21.59.A lot of people in store.
They were flat out.Line up to pay,and four tills getting through the customers very quickly.What a business.?
If I were a GXH shareholder I would have cause to be very concerned.

2 or 3 years ago I almost bought into GXH and ended up not going through just because I'm so uncomfortable investing in retail stocks and the rumors of Chemist Warehouse.

I feel pretty good about my decision now considering the response from GXH has been incredibly tame. I thought that they would've and could've doubled down on the online side of the business. Yes it does cannibalise sales of your existing stores, but if you don't do it then somebody else (CW) is going to anyways. It also opens up the business to new customers.

[ratkin]

Called into The Chemist Warehouse,South City this afternoon.Paid just $17.09 for 60 AiOra bone + joint tablets,which was even cheaper than their online price of $21.59.A lot of people in store.
They were flat out.Line up to pay,and four tills getting through the customers very quickly.What a business.?
If I were a GXH shareholder I would have cause to be very concerned.

Bit of a rubbish shop though, just rows and rows of vitamin pills. Once the novelty of checking it out wears off can see it becoming much quieter. I miss the New World that was in that spot. Used to enjoy having lunch in the centre before doing the weekly shop.
South City has been much quieter since losing its main attraction.

[keenkiwiflyer]

Annual report out. What do you think?

[BlackPeter]

Annual report out. What do you think?

Well, what do you think? Its not particularly hard to read, isn't it?

[BlackPeter]

Annual report out. What do you think?

OK - here are my 2 cents.

Looking at format and style ... the report is quite readable and easy to digest - maybe their CEO is keen to earn the annual reward for the most readable annual report? Anyway, I think this is a good thing ... some other companies could learn from that.

Maybe though they should stop talking in their reports about "non living reward members". So easy to misread this phrase - and then it would better fit into a totally different industry :p:

Looking at the content - well, it is what it is and I don't think I learned anything significant new from reading the report compared to the financials they published a month ago - which obviously makes the report already at publish date quite irrelevant. Given the huge delays to publish the data one wonders about the value to do it now. What exactly did they do during the Covid-downtime? Though maybe the auditors have not been able to physically inspect their books?

My view on the results has been already captured in post #281 in this thread. Maybe worthwhile adding: liabilities to assets pretty high at 64.2% (this is not flash :)) and - yes, NTA sitting at negative 10.4 cents per share (which however is better than last year at negative 11.6 cents). This amazing goodwill they have on their books better does not get eroded ;):

Sadly - nothing tangible on future plans or outlook, which feels particularly surprising given that we are already 1/3rd into the next financial year.

Still - I think a reasonable dividend stock (with PE around 10), but don't really expect any growth worthwhile mentioning ...

[nztx]

No Final 2020 Div paid in June - GXH must have been trading well past Covid with catch up etc

Bouncing around $1 - $1.05 of recent - normalised Div Yield in past (7.0 cps + Imp Credits pa)

Quite a tight Share Register as well with limited loose shares

Any guesses as to what December will likely bring in an Interim dividend ?

[flyinglizard]

This one is sitting at the corner. Every dog should have its run in the bullish market. Why GHX does not move at all?


Its historical reports and numbers seem not to bad at all, with reasonable dividend yield. The business model is changing to have medical center and community medical care services.

If the vaccine arrives as expected next year, assuming 80% of NZ population (4 million) will be injected. GHX has anything to do with this service? If yes, profit surges?

[Greekwatchdog]

I ponder all that myself. Worst performing stock in my portfolio. Half Year due this week so lets hope for some positive news. Guessing the competition in the Pharmacy division keeping people away.

[audiav]

If GHX has vaccination certified pharmacists (almost guaranteed they do) then likely they should see some volume. Some of the vaccines have rigid temperature requirements so getting fridge/freezer for these could involve some cost?

Amazon has announced entry to US pharmacy market recently which has hit the main player share prices over there. However NZ market cost wise completely different. Chemist Warehouse still expanding in NZ I think.

[flyinglizard]

I ponder all that myself. Worst performing stock in my portfolio. Half Year due this week so lets hope for some positive news. Guessing the competition in the Pharmacy division keeping people away.

It is not a dying business. The medical center and community care are growing at slow speed. Even NZR and ZEL have their move, this one does not move at all. Management team seems not keen to capital market?

[nztx]

I ponder all that myself. Worst performing stock in my portfolio. Half Year due this week so lets hope for some positive news. Guessing the competition in the Pharmacy division keeping people away.


A variety of reasons as far as I can see including -

- a reasonably tight share register
- not an easy stock to buy quantities of
- No dividend paid earlier in 2020
- probably doesn't star on many investor's radar despite a reasonable Div yield in normal times
- a lot of intangibles & low reported NTA accordingly

SP rage I have seen has reached north of $1.22 in pre-Covid times

Who knows - in recent conditions could deserve a rerating by investors
but that may also depend on what the upcoming Dec 2020 Div looks like
along with forward guidance picture from the board.

It probably may not be worse but better than earlier / middle 6 months of this year.

What effect has Aussie Pharmacy warehouse had on a section of GXH's pharmacy business ?

Post the Covid lockdowns, the local outlets have all appeared busy business as usual with an
element of further deferred Covid lockdown time business going through to catch up.

Anyone encountered a Doctors or Pharmacy not humming or busy in normal times ?


Discl: holder

[Getty]

Bang goes another bomb.
No divvie.

[flyinglizard]

The problem is the attitude of the management team towards capital market. Ignore the investors, then investors may ignore the company. The market is still ignoring GXH as negative news announced. What will happen if one day GXH tries to issue new shares to perform some large acquirision activities or improve its capital structure.

I noticed that the recent two medical center acquisitions were not announced individually, investors only have those information in the annual or half year reports.
No FY guideline provided
No forecast for COvid 19 between March and July, as other companies did

Clearly GXH does not need attention from capital market and it does not need future capital injection. They only need to slowly make its business strategy change by acquiring 1 medical center every year. They only need organic growth to accumulate operating cash flow, NOPAT or bank loan to complete small acquirision and eventually have 100 medical centers after 50 years.

[Greekwatchdog]

I just sold for a wee lost. Sadly nothings changed and the Pharmacy division is up against it. Good luck to holders.

[Habits]

NO INTERIM DIVIDEND!! Shareholders will be annoyed and disappointed at this. I know i would be but thankfully I sold a month ago to meet a short term payment. Including previous divvies I still made a small loss for the year. The reason I bought in the first place was for the dividend flow.

[BlackPeter]

Well - interesting results and they really work hard to conceal their successes, don't they?

Just looking through the financial:

Revenue - it actually did go up slightly (by 0.6% compared to same period last year) - despite Covid!;

NPAT - anybody noticed that NPAT is up by 24% compared to 1st half of last year ($11m vs $8.88m last year)? I recon they don't want to make too many noises due to the Covid subsidy they received (which they obviously paid to their employees as they had to);

This (Covid sub) explains probably as well the decision re divie, but who knows ... maybe they want to buy another couple of profitable GP practices instead? Would be fine with me.

Quite happy about their profit growth in the Doctors and Community health divisions - this is the future (and lots of ageing population based tailwind).

Sure - pharmacies is something they need to work on ... I recon they would make more money if they stop insisting on taking this stupid $5 prescription fee. This would pretty fast kill off their no frills competitors.

Overall - not unhappy holder - and yes, they could certainly work harder to sell their success instead of concealing it :):

[BlackPeter]

Jeez - if I look at the EPS for the half year (6.2 cents with Covid impact), how good will the full year look like?

Say 12 cents EPS (and I think the up-potential for that is clearly larger than the down potential) for a share which one can buy for slightly above $1. Sounds cheap to me ... I might even talk myself into buying some more :):

[Habits]

Jeez - if I look at the EPS for the half year (6.2 cents with Covid impact), how good will the full year look like?

Say 12 cents EPS (and I think the up-potential for that is clearly larger than the down potential) for a share which one can buy for slightly above $1. Sounds cheap to me ... I might even talk myself into buying some more :):

For real you want to buy more of this non performer?? I encouraged you to buy FBU at 4.20, they are moving up ever since. Give this one a miss and enjoy your zwarte piet celebration 5 December

[BlackPeter]

For real you want to buy more of this non performer?? I encouraged you to buy FBU at 4.20, they are moving up ever since. Give this one a miss and enjoy your zwarte piet celebration 5 December

Nothing wrong with buying an undervalued outperformer rather than an overhyped underperformer :):

Just ask yourself - how much lower is the GXH share price to drop assuming they keep or outperform their long term average 11 cent EPS (and it certainly looks that way this year)?

Compare that to FBU. Their long term EPS is 27 cents (i.e. 2.45 x GXH), but their share price is 5.7 times GXH. FBU is in terms of PE more than twice as expensive as GXH, and they are a proven underperformer in boom times.

Sure, it is often amazing what hype can do to a stock price, but I still prefer to buy low and sell dear.

Buying on hype is like surfing ... it can be fun until the wave catches up with you ... and I am not that good in that specific discipline.

Anyway - each to their own.

[nztx]

It's good bye Nurse here too -- better prospects elsewhere until they show signs of wanting to shell out Div's again .. ;)

[lissica]

This (Covid sub) explains probably as well the decision re divie, but who knows ... maybe they want to buy another couple of profitable GP practices instead? Would be fine with me.

Quite happy about their profit growth in the Doctors and Community health divisions - this is the future (and lots of ageing population based tailwind).


It would make sense to buy medical centres if they can get them. Good urban group practices sell for 3-4x EBIT, a lot less than a pharmacy business.

I wonder how many they own outright vs having a partnership stake. Does anyone know if this information is available?

[ratkin]

It would make sense to buy medical centres if they can get them. Good urban group practices sell for 3-4x EBIT, a lot less than a pharmacy business.

I wonder how many they own outright vs having a partnership stake. Does anyone know if this information is available?

All I know is that since they took over Christchurch south health centre it has gone to the pack. Never get to see the same Dr twice and seems to have high turnover of GPs. Have since changed practice

[turnip]

I wonder how many they own outright vs having a partnership stake. Does anyone know if this information is available?

2020 annual report p. 61-64 might be what you are after.

[BlackPeter]

All I know is that since they took over Christchurch south health centre it has gone to the pack. Never get to see the same Dr twice and seems to have high turnover of GPs. Have since changed practice

Funny that. I assume you did not realize that you can book an appointment with the doctor of your choice?

https://www.managemyhealth.co.nz/m/Appointment/Index/63007A0051006E004700490057004D004D00760049003D00

Obviously - if you just drop in without appointment, than they will allocate you to the next free doctor. Makes sense, doesn't it?

[ratkin]

Funny that. I assume you did not realize that you can book an appointment with the doctor of your choice?

https://www.managemyhealth.co.nz/m/Appointment/Index/63007A0051006E004700490057004D004D00760049003D00

Obviously - if you just drop in without appointment, than they will allocate you to the next free doctor. Makes sense, doesn't it?

My own Dr was rarely available, and was fobbed off with locums most of the time. It a familiar tale at that place, quite a lot of patients have gone elsewhere

[winner69]

Corporate consolidation of professional services never seems to work out well ...at last not to plan

[Getty]

If your well enough to pick and choose your tohunga, you dont need a tohunga.

[DDog]

Some movement this week

[BlackPeter]

Some movement this week

It is. Admittedly on low volumes.

I guess we will find out whether the old adage of an incoming tide lifting all boats applies, or whether the Christmas sales are looking good. Probably a bit of both ;):

But maybe it is just the PE of 10 and the expectation of divvies coming back next round which is attracting some some investors? Who knows?

[flyinglizard]

It is. Admittedly on low volumes.

I guess we will find out whether the old adage of an incoming tide lifting all boats applies, or whether the Christmas sales are looking good. Probably a bit of both ;):

But maybe it is just the PE of 10 and the expectation of divvies coming back next round which is attracting some some investors? Who knows?


Previous 1.05-1.06, 100k selling order was disgusting for nearly one year. A healthcare company stayed at the bottom around 2 years with PE 10. Unbelievable! prob another year waiting before a real takeoff.

ABA financial figure is looking so bad, but still a takeover and SP runs bullish.

[winner69]

Had another look at GXH

Shareprice going nowhere - ranging between 100 and 120

Looking at eps trend over the last few years probably punters fortunate share price still about 110.

Maybe one day there will be improvement ...in actually making money and the shareprice.

[BlackPeter]

Had another look at GXH

Shareprice going nowhere - ranging between 100 and 120

Looking at eps trend over the last few years probably punters fortunate share price still about 110.

Maybe one day there will be improvement ...in actually making money and the shareprice.

Not sure lack of making money is the problem. Typical annual EPS are somewhere between 9 and 14 cents for the last 10 years - long term average PE of this share is 10.5; Given as well that their doctors are profitable and growing and their community services started to make money again - things should actually all go into the right direction.

In a way this is as well a stock benefitting from the population getting older ...

Assuming that they pay this year again a dividend ... and maybe even a bit more than normal (hey - they need to do something with the money they didn't distribute last time due to Covid) ... I think there is still a bit headroom for the SP :):

Interesting to note that the SP used to be still not so long ago (well, 3 years now ...) above $2 - without any significant change in the fundamentals ... who knows, maybe it is a cyclical stock :t_up:

[winner69]

Not sure lack of making money is the problem. Typical annual EPS are somewhere between 9 and 14 cents for the last 10 years - long term average PE of this share is 10.5; Given as well that their doctors are profitable and growing and their community services started to make money again - things should actually all go into the right direction.

In a way this is as well a stock benefitting from the population getting older ...

Assuming that they pay this year again a dividend ... and maybe even a bit more than normal (hey - they need to do something with the money they didn't distribute last time due to Covid) ... I think there is still a bit headroom for the SP :):

Interesting to note that the SP used to be still not so long ago (well, 3 years now ...) above $2 - without any significant change in the fundamentals ... who knows, maybe it is a cyclical stock :t_up:

You never know share price might get back to that outrageous $2 plus ....stranger things have happened.

GXH have a disturbing trend like ABA in that the more acquisitions they make their return on invested capital diminishes.

They are probably (just) covering their cost of capital at the moment but if the past trend continues that could change.

[RTM]

Not sure lack of making money is the problem. Typical annual EPS are somewhere between 9 and 14 cents for the last 10 years - long term average PE of this share is 10.5; Given as well that their doctors are profitable and growing and their community services started to make money again - things should actually all go into the right direction.

In a way this is as well a stock benefitting from the population getting older ...

Assuming that they pay this year again a dividend ... and maybe even a bit more than normal (hey - they need to do something with the money they didn't distribute last time due to Covid) ... I think there is still a bit headroom for the SP :):

Interesting to note that the SP used to be still not so long ago (well, 3 years now ...) above $2 - without any significant change in the fundamentals ... who knows, maybe it is a cyclical stock :t_up:

I hope you are right.
I think the Chemst Warehouse has also knocked them around a bit. Not sure they can compete there.
Disc: Holder (sadly)

[Rawz]

I hope you are right.
I think the Chemst Warehouse has also knocked them around a bit. Not sure they can compete there.
Disc: Holder (sadly)

I went to chemist warehouse out at the airport today. First time I have been there. Wow their prices are incredibly low for the day to day items. And of course we went in for 1 thing and left with 6. A bit like going to Bunnings I guess. To cheap not to buy since you are there.

I wonder if the crazy prices are short term and running in conjunction with big advertising round with Dan Carter.

GXH will/has/is/should not compete and instead be the New World of pharmacy shopping and don't try be the PaknSave.

Disc. Never held.

[nztx]

I hope you are right.
I think the Chemst Warehouse has also knocked them around a bit. Not sure they can compete there.
Disc: Holder (sadly)


The stakeholders certainly have in turn been knocked about in 2020 in terms of Zero Div payouts
while The Dr's Surgeries have been busy with C-19 etc along with follow on to Pharmacy scripts
from my observations locally

This even after if not mistaken the company reporting Surpluses along the way

The market probably anticipates GXH returning to shelling out dividends again in current SP levels
reached - up from around the Buck level in recent weeks .. ;)

[BlackPeter]

You never know share price might get back to that outrageous $2 plus ....stranger things have happened.

GXH have a disturbing trend like ABA in that the more acquisitions they make their return on invested capital diminishes.

They are probably (just) covering their cost of capital at the moment but if the past trend continues that could change.

Don't jinx it - mentioning them and ABA in the same paragraph ....

Their ROCE was last year (if I can trust my spreadsheet) 12.6% - not outrageous, but not a pittance either.

Agree however that the accumulation strategy always carries the risk of moving from picking juicy low hanging fruit towards the ones which are really difficult (and dear) to harvest ...;

Anyway - I don't think that fair value is above $2 for the shares, but I don't think either that the current price is fair value. The truth is (as so often) in the middle :):

[Norwest]

I hope you are right.
I think the Chemst Warehouse has also knocked them around a bit. Not sure they can compete there.
Disc: Holder (sadly)

Chemist Warehouse may IPO this year, it would definitively be an IPO that I would be looking at in detail if if eventuates.

[nztx]

Chemist Warehouse may IPO this year, it would definitively be an IPO that I would be looking at in detail if if eventuates.


but the noisiest monkey in the tree is not necessarily the one to follow .. ;)

[winner69]

do I need to 'rubbish' GXH more often Black Peter

share price roaring ahead after the weekends efforts :t_up:

[BlackPeter]

do I need to 'rubbish' GXH more often Black Peter

share price roaring ahead after the weekends efforts :t_up:

Maybe you do ... how do they say - there is not such a thing as bad publicity ...

[winner69]

I noticed GXH’s NTA is negative 3 cents ....some investors don’t like that

Not always good ......esp if the $132m intangibles need to be written down.

[Vesper]

I'll be interested to see if they bring their div back. Would have thought it would have been a really good season last winter for flu jabs given COVID. Would have also thought their retail division would have benefitted from the rush to buy hand sanitiser, masks and general stocking up from COVID panic etc - but they actually have blamed COVID-19 despite the fact pharmacies were essential and kept open.
The half year update in November of revenue of $277m doesn't support that - it looks fairly steady relative to pre covid (not really a winner or loser of Covid) when I look at the full year results in 2020.

The amount they also put on intangibles to goodwill kind of makes me uneasy too - wasn't ABA similar on that? I can't see how it means too much when Chemist Warehouse is sucking up all them off the best kind of loyalty gainer - low prices for similar or even better result.

Disc: unhappy holder - I bought them as a newbie investor when they were on the way up at $2.20 back in 2015 when I did not properly DMOR and was pretty much investing on 'health company with strong tailwinds from aging population' - I know better now and might offload if they do make it back to $2;)

[BlackPeter]

I noticed GXH’s NTA is negative 3 cents ....some investors don’t like that

Not always good ......esp if the $132m intangibles need to be written down.


Mmh - not sure about the negative 3 cents, but hey, you are the accountant, aren't you? I am just an engineer :):

You are however correct that their NTA is minimal. FY20 balance sheet shows $134.7m net assets and $133.5m intangible assets. Should still be a positive NTA, but not by much.

They just don't own a lot of property (which could make them arguably as well more nimble). Sure - write offs are always a risk, but as long as they earn their keep (at the moment they do) would I think the risk is bearable.

How do they say - "pobody is nerfect" ...

[winner69]

BP - NTA is Net Tangible Assets

You need to allow for liabilities as well

Hence the negative NTA GXH has (I got the -3 cents from NZX)

[Jerry]

You and me, both, Vesper.

[BlackPeter]

BP - NTA is Net Tangible Assets

You need to allow for liabilities as well

Hence the negative NTA GXH has (I got the -3 cents from NZX)

OK - though your reasoning is not quite right (the liabilities are obviously already deducted from the Net assets which I used as a starting point, no need to deduct them again), but I found what I missed in Note 8 to the balance sheet:

12234

Obviously - I need to deduct not just the intangibles (which I did), but as well the deferred tax from the net assets to reach the NTA.

Black Magic ...

[winner69]

OK - though your reasoning is not quite right (the liabilities are obviously already deducted from the Net assets which I used as a starting point, no need to deduct them again), but I found what I missed in Note 8 to the balance sheet:

12234

Obviously - I need to deduct not just the intangibles (which I did), but as well the deferred tax from the net assets to reach the NTA.

Black Magic ...

Sorry - I apologise for missing the word 'some' out of my post (ie some liabilities)

Anyway we got there

[Beau]

I'll be interested to see if they bring their div back. Would have thought it would have been a really good season last winter for flu jabs given COVID. Would have also thought their retail division would have benefitted from the rush to buy hand sanitiser, masks and general stocking up from COVID panic etc - but they actually have blamed COVID-19 despite the fact pharmacies were essential and kept open.
The half year update in November of revenue of $277m doesn't support that - it looks fairly steady relative to pre covid (not really a winner or loser of Covid) when I look at the full year results in 2020.

The amount they also put on intangibles to goodwill kind of makes me uneasy too - wasn't ABA similar on that? I can't see how it means too much when Chemist Warehouse is sucking up all them off the best kind of loyalty gainer - low prices for similar or even better result.

Disc: unhappy holder - I bought them as a newbie investor when they were on the way up at $2.20 back in 2015 when I did not properly DMOR and was pretty much investing on 'health company with strong tailwinds from aging population' - I know better now and might offload if they do make it back to $2;)

Im in the same boat as you bought in at $2.12 for same reasons, doubled down at $1.02 a while back but doesn’t seem to want to advance past $1.14 hope maybe get back to my average for grandchildren one day.

[flyinglizard]

No matter how much you buy at this price, the disgusting selling order at $1.14 will block the SP heading towards north, just like it did at $1.04/1.05 before. Someone tries to control the SP. Another year, another year, have to wait.

[winner69]

GXH was heading towards a buck and I thought I better fix that by rubbishing GXH again to give it a boost

No need ...GXH one of the stars of the NZX today

[Beau]

Yes a star is born on its way back to my original purchase price $2.12 :D It may even break $1.14 one day. Today is the best it’s done for months here’s hoping.

[nztx]

probably more like jogging on the spot in a certain price range until Mr Market sees a vast improvement on the two
Div's passed on to date .. ;)

[winner69]

Whome reported GXH discussed at ST meeting the other day

Look for the share price to rise as the clan pile in.

[Beagle]

Me ol mate and former well respected poster Crackity likes these. I haven't had much time to look into them because I had to leave for a three day trip early the morning after but at first (admittedly very, very brief) glance it would appear they are on cheap metrics for good reason(s). The trend downwards in pharmacy profitability appears well entrenched. I think the fast expanding and highly competitive Chemist Warehouse poses formidable competition and with the ever increasing propensity of customers to buy online one's "local" Chemist's profitability is under real pressure and likely to remain so or come under even more serious pressure going forward. I like Crackity and know he's a shrewd investor so when I get more time I'll give him a call and discuss and try and get a better sense of what he foresees going forward.

[Arbroath]

Me ol mate and former well respected poster Crackity likes these. I haven't had much time to look into them because I had to leave for a three day trip early the morning after but at first (admittedly very, very brief) glance it would appear they are on cheap metrics for good reason(s). The trend downwards in pharmacy profitability appears well entrenched. I think the fast expanding and highly competitive Chemist Warehouse poses formidable competition and with the ever increasing propensity of customers to buy online one's "local" Chemist's profitability is under real pressure and likely to remain so or come under even more serious pressure going forward. I like Crackity and know he's a shrewd investor so when I get more time I'll give him a call and discuss and try and get a better sense of what he foresees going forward.


I agree Beagle that it’s likely cheap for a reason. Here in New Plymouth I’ve seen two chemists close recently one that had been operating for decades. There are also two new big discount operators opening, one already has (can’t remember its name) and Chemist Warehouse is coming soon. The landscape is fundamentally changing and the little franchise pharmacies are toast. There is also a pharmacy in the Valley Countdown that does free prescriptions.

[Beagle]

I agree Beagle that it’s likely cheap for a reason. Here in New Plymouth I’ve seen two chemists close recently one that had been operating for decades. There are also two new big discount operators opening, one already has (can’t remember its name) and Chemist Warehouse is coming soon. The landscape is fundamentally changing and the little franchise pharmacies are toast. There is also a pharmacy in the Valley Countdown that does free prescriptions.

Not showing on their website yet but I noticed a big new Bargain Chemist outlet when I was down in New Plymouth yesterday, just down for the Warehouse. https://www.bargainchemist.co.nz/pages/mailer#view=catalogue2&saleId=11802&page=1 Its hard to see any other outcome than the erosion of market share of the traditional corner shop Chemist and more and more closing down as it can't be cheap to keep a qualified pharmacist on duty especially with more and more places offering free prescriptions...

[BlackPeter]

Not showing on their website yet but I noticed a big new Bargain Chemist outlet when I was down in New Plymouth yesterday, just down for the Warehouse. https://www.bargainchemist.co.nz/pages/mailer#view=catalogue2&saleId=11802&page=1 Its hard to see any other outcome than the erosion of market share of the traditional corner shop Chemist and more and more closing down as it can't be cheap to keep a qualified pharmacist on duty especially with more and more places offering free prescriptions...

To be fair - while Pharmacies delivered last HY 62% of the earnings, it is not the whole story. GXH do have as well a "doctors" division (basically a number of GP practices) and a "community health" division (community nurses).

Earnings for pharmacies dropped last HY (which included as well some prominent Covid lockdowns), while revenue for the doctors and community health increased (admittedly from a low basis). Obviously - all three divisions do have (or should have) a healthy tailwind from an aging baby boomer generation.

Forward PE (depending on somebody's estimates) and backwards PE (I take typically 10 years and get flamed from winner for that) both between 9 and 10, which looks not too bad. Earnings CAGR (backward) close to 9, which is good, but sure - who knows how future earnings development will look like.

I am overall cautiously optimistic, but agree that one would need a good team to exploit the tailwind without taking too much trouble in the turbulences of new competition. The still newish CEO (Rachael Newfield) started to improve the numbers and brought the community care division out of the doldrums), which is good, however - shareholder communication overall is not particularly good, which is a bit sad. At this stage it is still a bit of hope that their work behind the scenes is better than their shareholder communication.

Looking at the SP - I think the market does price in a fair chunk of future turbulences which may or may not come. I do see them at this stage conservatively, but fairly priced. Hold a medium sized parcel and could not bring me to sell them for the current price (Hey - who would sell a healthcare stock with a PE below 10 in an established and growing market). I see the opportunities for price rises as higher than the potential of further share price drops.

[Beagle]

Fair enough BP.
I noted this from the most recent announcement from the company

Pharmacy Revenue down 5% and Operating Profit down 11% at $10.9m due to the impact of COVID-19 on retail sales
- Medical division continues to grow, with Revenue up 8% and Operating Profit at $5.7m
- Community Health Revenue up 10% and Operating Profit at $2.4m
- Government wage subsidy amounts of $8.0m included in Group Revenue and passed on to employees
Emphasis added. To me the lions share of the current profit comes from pharmacies and looks very vulnerable to ever intensifying competition from sources as noted in posts above.
I find it hard to get enthusiastic about this one.

[nztx]

Watching GXH -- 12 months of no dividends so far . IMO if that doesn't change, interest despite
a reasonably tightly held share register could decline & SP back to a buck could be on the cards

Announcements on Jun Div could be worthwhile watching .. ;)

[Beau]

Almost down to lows of COVID nation wide lockdown levels surely GXH would have had some headway since those times .

[winner69]

Almost down to lows of COVID nation wide lockdown levels surely GXH would have had some headway since those times .

GXH real dog ....will struggle for years ....and maybe one day might actually be worth something

And all those intangibles - $133m ....when equity is $145m — wow

That should be enough rubbishing to give the share price a boost

PERCY says ‘why bother’ a lot - seems appropriate for investing in GXH

[BlackPeter]

GXH real dog ....will struggle for years ....and maybe one day might actually be worth something

And all those intangibles - $133m ....when equity is $145m — wow

That should be enough rubbishing to give the share price a boost

PERCY says ‘why bother’ a lot - seems appropriate for investing in GXH

Actually - their earnings have been quite constant and reliable - averaging at around 11 cents per share. This gives them at $1.02 a PE of 9.3. Not too bad for a health stock ...

As well - they must sit by now on a nice cash reserve given they didn't pay last year dividends due to Covid (despite a nice profit).
Just wondering how big the divie will be this year?

On the other hand ... big majority shareholder might have interests not quite aligned with retail investors ... feels a bit like
CDI. Though - CDI actually served me quite nicely over the years (combination of dividend and SP rise is typically around 15% p.a.), even if it always looks to cheap. Maybe we can play the same game with GXH as well?

[winner69]

Actually - their earnings have been quite constant and reliable - averaging at around 11 cents per share. This gives them at $1.02 a PE of 9.3. Not too bad for a health stock ...

As well - they must sit by now on a nice cash reserve given they didn't pay last year dividends due to Covid (despite a nice profit).
Just wondering how big the divie will be this year?

On the other hand ... big majority shareholder might have interests not quite aligned with retail investors ... feels a bit like
CDI. Though - CDI actually served me quite nicely over the years (combination of dividend and SP rise is typically around 15% p.a.), even if it always looks to cheap. Maybe we can play the same game with GXH as well?

EPS might averaged around 11 cents ....but they have reliably been declining over recent years

My dataset has eps last 4 years as 14.2 /11.9 /11.3 /9.4 (2017 thru 2020)

I'd prefer to see the declining eps and ROE downward trend reversing to be comfortable with them

And H121 wasn't that brilliant although clouded by covod but they seemed to have actually gained something by taking the wage subsidy

Only rubbished them as that usually gives the share price a boost :):):t_up:

[BlackPeter]

EPS might averaged around 11 cents ....but they have reliably been declining over recent years

My dataset has eps last 4 years as 14.2 /11.9 /11.3 /9.4 (2017 thru 2020)

I'd prefer to see the declining eps and ROE downward trend reversing to be comfortable with them

And H121 wasn't that brilliant although clouded by covod but they seemed to have actually gained something by taking the wage subsidy

Only rubbished them as that usually gives the share price a boost :):):t_up:

As usual - you can make up any trend you want if you just pick the right dataset to support your argument.

I am working typical based on the last 10 years ... (2020 down to 2011):

$0.09 $0.11 $0.11 $0.14 $0.13 $0.11 $0.12 $0.11 $0.09 $0.05

based on this sequence the trend is even slightly pointing upwards :p;

But each to their own ...

[James108]

My view is chemist warehouse will continue to take share from them.

Stores are too small scale and not specialised (I.e compared to Mecca for eg stores are similar sized but specialised) you can buy everything they sell cheaper somewhere else.

The doctors side of the business will always struggle to make much money as the doctors that work in the practices are the only asset. They are extremely well educated, not replaceable and will take a big share of earnings growth as wages. The alternative is the doctors leave and set up their own practice.

Then again could be wrong as I haven’t followed them much since I sold out money years ago.

[Rawz]

As usual - you can make up any trend you want if you just pick the right dataset to support your argument.

I am working typical based on the last 10 years ... (2020 down to 2011):

$0.09 $0.11 $0.11 $0.14 $0.13 $0.11 $0.12 $0.11 $0.09 $0.05

based on this sequence the trend is even slightly pointing upwards :p;

But each to their own ...

I might have it wrong BP but you might have pulled this 10 year historical eps stuff out on MPG warning me and others off it when we were talking it up (we were wrong in the end as per most recent announcement). The only difference was the MPG eps over 10 years looked better than this GXH poor performance lol.

Shesh you got to be brave to be holding these shares as those last 10 years they did not have to deal with supermarkets, chemist warehouse, zoom pharmacy etc

GLTAH's, not for me

[flyinglizard]

I hope there is a takeover. The current management team cannot bring this company to success.

[winner69]

I might have it wrong BP but you might have pulled this 10 year historical eps stuff out on MPG warning me and others off it when we were talking it up (we were wrong in the end as per most recent announcement). The only difference was the MPG eps over 10 years looked better than this GXH poor performance lol.

Shesh you got to be brave to be holding these shares as those last 10 years they did not have to deal with supermarkets, chemist warehouse, zoom pharmacy etc

GLTAH's, not for me

Hey Rawz - GXH do consistently generate a fair amount of cash in spite of the competitive pressures

Like last 4 years Operating Cash Flows have totaled $126m of which they have invested $65m in buying things and paid $36m out to owners/shareholders. Not too shabby and as BP says dividends are likely to resume

However there is a bit Oceania to them - sell more but make less - not a good business model.

And then again they could do a WHS - plod along for years with 'disappointing' sales and then something clicks and they are off like a rocket

[Rawz]

Hey Rawz - GXH do consistently generate a fair amount of cash in spite of the competitive pressures

Like last 4 years Operating Cash Flows have totaled $126m of which they have invested $65m in buying things and paid $36m out to owners/shareholders. Not too shabby and as BP says dividends are likely to resume

However there is a bit Oceania to them - sell more but make less - not a good business model.

And then again they could do a WHS - plod along for years with 'disappointing' sales and then something clicks and they are off like a rocket

Consistently generate cash and little to no growth. This is sounding more and more like MPG. At least GXH shareholders have been collecting a dividend I guess.

I like a good value investment but the p/e would have to be at or below 7 for me

Tell me when they do a WHS thou and ill be in!

[Rawz]

BTW, did GXH get a bump from COVID? Pantry stocking? Margins improvement like every other (good) retailer?

[BlackPeter]

I might have it wrong BP but you might have pulled this 10 year historical eps stuff out on MPG warning me and others off it when we were talking it up (we were wrong in the end as per most recent announcement). The only difference was the MPG eps over 10 years looked better than this GXH poor performance lol.

Shesh you got to be brave to be holding these shares as those last 10 years they did not have to deal with supermarkets, chemist warehouse, zoom pharmacy etc

GLTAH's, not for me

Absolutely - trends do change and nobody - this is neither you nor me nor anybody else around here is able to predict future share prices.

I don't think either that I ever tried to do that, though it appears that some people have difficulties reading and call me out if a stock does well where I identified some risks or if a stock does bad where I identified opportunities. I think these people just don't understand that neither risks nor opportunities have to materialize (otherwise they would not be risks or opportunities, but certainties). However - even if they don't materialize they well might have existed.

So - just for the record - I do not know how stock prices will develop and neither do you. I try to contribute to the discussion by pointing to risks and opportunities of various stocks ... and I like to hear about other peoples viewpoints.

If you insist on reading into a risk or opportunity the absolute truth about a future outcome, than you should go to church or to the mosque. These are the only places I know of where they claim to know about the future with certainty. Obviously - we don't know either, whether they are right :) - i.e. please don't nail me down on that one.

[winner69]

You are only as good as your last game they say

[Beau]

Thanks for the rubbishing Winner seemed to work again this time feel free again next week.

[winner69]

Thanks for the rubbishing Winner seemed to work again this time feel free again next week.

Maybe it was the good things (cash flow etc) punters took on board :t_up:

[value_investor]

This one was always on my radar but I never pulled the trigger. My views:

- With the rise of online shopping, Chemist Warehouse coming into the market so aggressively and Covid, I thought this one would pivot digitally very hard but didn't. Their website is quite disappointing and they don't advertise as heavily for it as a HLG do who I get ads for on a regular. Also some of their stores leave a lot less to be desired with range and pricing. As a consumer, I'd much rather go to CW where I can get everything, rather than a lesser range. I also know they have some struggling stores that they continue to operate so they don't lose market share in a certain area, in a new age this really shouldn't be a thing.

- The medical side of the business is probably the most interesting in a post covid area. That and the ageing population theory in NZ playing out makes it the most stable part of the business. However the more I think about it, the more I think another operator could just come in and disrupt the business again like pharmacy. You are for the most part providing a quite homogenous service and seniors are very price sensitive. A new medical centre offering a slight discount would eat their lunch (Like CW already has).

- Community health is a struggle without the right amount of government funding but I see this as a societal thing. GXH have bemoaned in a lot of their reports a lack of funding in this area but in a post covid era, I don't see this getting better. I think if the government were to fund them to a higher level, it would not look great from a political lens that a healthcare company is making large profits in a country where healthcare is a right (we've seen this from both left and right governments in NZ).

My opinion is that the business is a slow/low growth type one. It might get back to paying 3.5c dividends consistently again but beyond that, I don't see it growing to a point I'd be confident to say I'm getting compounded annual returns greater than just putting my money in a market tracking ETF.

Disc: Not a holder.

[BlackPeter]

This one was always on my radar but I never pulled the trigger. My views:

- With the rise of online shopping, Chemist Warehouse coming into the market so aggressively and Covid, I thought this one would pivot digitally very hard but didn't. Their website is quite disappointing and they don't advertise as heavily for it as a HLG do who I get ads for on a regular. Also some of their stores leave a lot less to be desired with range and pricing. As a consumer, I'd much rather go to CW where I can get everything, rather than a lesser range. I also know they have some struggling stores that they continue to operate so they don't lose market share in a certain area, in a new age this really shouldn't be a thing.

...


Interesting ...

While I agree that Life Pharmacies (https://www.lifepharmacy.co.nz/) webpage is somewhat cluttered ... surprised anybody finds the Chemist warehouse (https://www.chemistwarehouse.co.nz/) online experience better. Checked as well some products - and at least for my (admittedly not representative) wee survey prices are quite similar.

I would think as well that the key decision criteria for using a pharmacy are location, accessibility and quality of service. Not sure how much of their service can sensibly be transferred online?

GXH owns roughly one third of the pharmacies in NZ. I am somewhat surprised that posters here seem to think that they will bear the brunt of the onslaught of the so called discounters - and this is not even taking into account that the discounters seem to specialize on selling cheap cr*p without providing any service or advise.

But even if the quality of their service would be comparable (which it clearly is not) - wouldn't it make sense to assume that it is more likely the small mum and dad pharmacies who might suffer? Unichem and Life Pharmacies do have some scale, are easier able to control their purchase prices and would find it easier to fight back on issues like opening times. They even might benefit if the Chemist Warehouse manages to kill off some of the small pharmacies (resembling so far 2/3rd of the NZ marketplace).





...

- The medical side of the business is probably the most interesting in a post covid area. That and the ageing population theory in NZ playing out makes it the most stable part of the business. However the more I think about it, the more I think another operator could just come in and disrupt the business again like pharmacy. You are for the most part providing a quite homogenous service and seniors are very price sensitive. A new medical centre offering a slight discount would eat their lunch (Like CW already has).

...


Seniors are hardly paying doctor fees anyway, aren't they? - hard to undercut small or no charges and still make money, isn't it?

As well - the challenge to open up new "discounter clinics" might be related to finding all these unemployed GP's currently just lining up for working with a discount provider. I was under the impression that we suffer a doctor shortage currently ... but maybe you have some relevant insider knowledge into the health system and know where to find them, do you? I am sure the Ministry of Health would greatly appreciate your insights ...

Obviously - the discounters could increase the GP salaries to lure away GP's from their current clinics ... but this might somewhat limit their potential to discount their services :p;

Obviously - none of us knows how the SP will develop, but at this stage I'd see their chances to do well much better than their risks to eventuate.

[Getty]

I dont know how many of their Pharmacies are co located with their Doctors chain, but that must be a factor in their favour.

Someone who has just been awarded their prescription, is less likely to stumble around town thinking where can I get this 20 cents cheaper?

[percy]

I am currently having sinus issues and will be having an operation to fix ,shortly.
So I am using paracetamol,ibuprofen and Neil Med Sinus rinse 120 premixed sachets.So lets check prices.
.................................................. ............................Life Pharmacy.................The Chemist warehouse....Savings $.........Savings %
Neil Med Sinus Rinse 120 premixed sachets......................$44.99............... ................$31.99...................$13.00... .............28.90%
Ethics Paracetamol tablets 100s........................................$6.99. ...............................$2.49.............. .......$4.50....................256%
Ethics Ibuprofen tabltes 100s...........................................$16 .99...............................$2.99........... ..........$14.00...................559%
So each time I purchase all three the cost is ....................$68.97........................ ........$37.47....................$31.50.......... .......45.68%

[Getty]

Mmm, direct translation?

Buy GXH quick!

They are creaming it!

[percy]

Not from me.,..........................lol.
Point is you visit The Chemist Warehouse, either online or visit a store,and see how much you can save,why would you buy the same products from Life Pharmacy again.?

[Getty]

That Dan Carter chap seems on target , with everything he does...

[Getty]

All we need now, is for DC to take over Papa Surf's surfboard from AFT, to get some product moving through their chain.

[BlackPeter]

Not from me.,..........................lol.
Point is you visit The Chemist Warehouse, either online or visit a store,and see how much you can save,why would you buy the same products from Life Pharmacy again.?

Good question and interesting comparison. I looked more into the stuff the wife typically buys (like cosmetic / skincare) and didn't find that significant price differences. It is just - our spend on painkillers is neglectable - typically less than one package per year.

Anyway - sorry to hear that you need the latter currently on a large scale. Hope things will improve for you soon :) - and I am sure that you know how to use them.

Unfortunately not everybody does - much painkiller abuse in NZ ... and people are dying for overdosing on them - I recon this is the people who bought them cheap at the discounter or supermarket - the pharmacist would have reminded them to stick within the safe limits;

However - just one other thought. I remember my grandmother using already 50 years ago the word "Apothekenpreise" (pharmacy prices) to describe the price level of shops with very expensive (too dear) products. Despite everybody knowing that pharmacies are expensive and have been over decades (and probably centuries) - they are still around. Funny that, isn't it?

Maybe saving some cents per tablet on painkillers is not the only consideration for the majority of consumers? At least this is not the way it worked in the past, but maybe now things are different?

[percy]

I am currently having sinus issues and will be having an operation to fix ,shortly.
So I am using paracetamol,ibuprofen and Neil Med Sinus rinse 120 premixed sachets.So lets check prices.
.................................................. ............................Life Pharmacy.................The Chemist warehouse....Savings $.........Savings %
Neil Med Sinus Rinse 120 premixed sachets......................$44.99............... ................$31.99...................$13.00... .............28.90%
Ethics Paracetamol tablets 100s........................................$6.99. ...............................$2.49.............. .......$4.50....................256%
Ethics Ibuprofen tabltes 100s...........................................$16 .99...............................$2.99........... ..........$14.00...................559%
So each time I purchase all three the cost is ....................$68.97........................ ........$37.47....................$31.50.......... .......45.68%

Update.I have just checked The Chemist Warehouse price of the Sinus Rinse.Is now $29.99.,so total spend is now $33.47 and total saved is $35.50 or 51.48%.

I first went into The Chemist Warehouse to buy some AiOra Bone + Joint tablets,and noticed the above products, that I had previously brought from the local chemist were far cheaper.Going by the numbers I see at The Chemist Warehouse I am not the only one who likes to save dollars.

[BlackPeter]

Not quite as smart as winner in producing these amazing EPS vs SP charts, but here is my go:

12442

Feels like PE (the third of the charts) is currently on the cheaper side, but who knows, maybe 2014 to 2018 (with a higher P/E) have only been a one off aberration ...

[winner69]

Just for you Peter

sed your EPS numbers. EPS for any March is shown as from prior Oct to next S ept (forward and backward looking eh). Shareprices are monthly close

Guessed March 2021 EPS as 11 cents

Over the duration of chart average PE has averaged 13.4 - take out the bubble period its average 11.1

GXH need to tell the market aa story around how they are as good as they were in 2014/2015/2016 - but as long as they say silence (lack of stories to the market etc)they'll probably trade below that PE of 11.1 - on my eps guess share price should be 120 plus

Interesting

[winner69]

I reckon it's the the 'power of the story ' that drives corporate value - or rather a decent chunk of it

GXH is obviously lacking a decent story and its share price currently reflects that

Below is a chart of GXH's PE ratio over the last 10 years - if nothing else the PE reflects market sentiment

I have noted the NZX50 PE (numbers from Jarden) at a few points in time - that measures overall market sentiment.

GXH had something going for them from 2011 through to 2015. The +ve sentiment towards them (ie a good story) matched that of the overall market and their share price moved accordingly (even though earnings weren't spectacular)

But since then whilst the PE of NZX50 has steadily increased (+ve sentiment) poor old GXH has seen its PE ratio falling away back to levels where it was 10 years ago whereas NZX50 has increased its PE from about 20 to over 30.

My read is that GXH doesn't tell a very good story at the moment- a paucity of announcements could say they don't even have a story to tell.

Until they start telling a good story (ie improve sentiment towards them) they will continue to languish with a PE of 10/11 (which some say is stupid)



Yes, the 'power of the story' drives value - even more so than traditional fundamentals

Get a good 'story' out there and market will sentiment will improve and we good see a share price of $2.50 or more (without making much more money)

What was the GXH story from 2012 to 2016 -- probably was a good story - next rainy day might go through their 'publicity' / presos to see what it was

But then some might say that that story was a pack of lies and nobody believes them any more

[flyinglizard]

Story teller ABA had many bad years, but the management did maximize shareholders profit. talking to takeovers takeovers for years and eventually sold the business for a not too bad price. SP always high.

GXH does have some similarity as ABA, however SP.....

[winner69]

Story teller ABA had many bad years, but the management did maximize shareholders profit. talking to takeovers takeovers for years and eventually sold the business for a not too bad price. SP always high.

GXH does have some similarity as ABA, however SP.....

Abano had a really good story ...but directors really stuffed up rejecting offers much higher than they eventually sold out for.

Recent stories all about keeping face in resurrecting something out of the mess.

[percy]

This announcement is from Blis and refers to their sales channel in Australia..
I would guess the same trend from pharmacy to online shopping is also happening here.,not only in supplements ,but most products stocked be pharmacies.

https://www.nzx.com/announcements/371121

[nztx]

With a matter of a few weeks away from FY Announcement - if 2020 was any indication
any bets on whether it will be a Div or a third Consecutive Div PASS BY from GXH ? ;)

Here is the Interim Announcement in Nov 2020:

https://www.nzx.com/announcements/363873


In particular, the following excerpt-

"Outlook and Dividend

Green Cross Health is focused on delivering earnings growth whilst refining its operating model to adapt to changing market conditions. The Company has worked to maintain a strong Balance Sheet (including not paying a full year dividend for FY20) in light of the challenging landscape that has been shaped by the COVID-19 pandemic.

In order to safeguard this position and to capitalise on acquisition opportunities that may eventuate as a result of the economic climate, the Board has resolved not to declare an interim dividend."

[BlackPeter]

Full year results are out:

https://announcements.nzx.com/detail/373011

Not bad. Revenue as per last year, but NPAT by nearly 25% increased!

Result Summary:
Operating Revenue in line with last year at $570m2
Operating Profit (EBIT) up 13% to $35.1m
Net Profit After Tax Attributable to Shareholders up 24% to 16.8m
Pharmacy Operating Revenue down 6% and Operating Profit at $24.1m
Medical continued to grow, with Operating Revenue up 7% and Operating Profit $9.3m
Community Health Operating Revenue up 10% and Operating Profit $3.7m.

No divie though "to preserve cash to assist the Company with accelerating its acquisition activities"

PE is 9.3 and EPS CAGR (both averaging over the last 10 years) was 8.9; Not too bad - a health company with quite healthy earnings and still consistently growing them. Move to doctors and community services in my view a good idea.

Some other observations:

NTA turned positive (from negative 10 cents to plus 6 cents), which is good. Yes, they still do have a lot of intangibles on the balance sheet, though given the earnings capacity they do seem to be appropriately priced in the balance sheet.

Liabilities to assets dropped into a more acceptable region (down from 64.2% to 59%), which is good as well.

Overall - good and consistent earner, promising strategy and balance sheet improving. Look undervalued to me.

Happy holder.

[winner69]

Pretty amazing full year result - EPS back to average levels - that is up on last year but not back to F18 number yet

No divie though ...but did mention keeping money for acquisitions

Result could see share price back over 120 :t_up:

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GXH/373011/347139.pdf

[BlackPeter]

deleted duplication thanks to the return of woeful server performance ... could somebody please fix that, it sucks.

[peat]

a low PE at 9.3 for sure... but growth will be challenging due to competition.

Operating Profit for the Pharmacy division declined 4% to $24.1m.Same store retail revenue was down 18% year on year due to compressed retail spending

[winner69]

a low PE at 9.3 for sure... but growth will be challenging due to competition.

Operating Profit for the Pharmacy division declined 4% to $24.1m.Same store retail revenue was down 18% year on year due to compressed retail spending




I know BP loves his 10 year stuff but 5 years history nough for me


Sales gowth last 5 years 5.0%pa
EBIT basically the same as 2016 - but down 0.1% pa
EPS down 1.3% pa (from 12.5 cents in 2016 to 11.7 cents this year ... did go to 14.2 cents in 2017)
Give them some dues in that they reasonably consistent in actually being profitable



GXH always interesting .... always looks like a good buy .... wouldn't mind holding .... but gunna companies put me off .... maybe one day.

[winner69]

Result could see share price back over 120 :t_up:

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GXH/373011/347139.pdf


GXH top of the NZX leaderboard today --- on its way to 120

Should have taken a punt :ohmy::D

Can't win them all

[flyinglizard]

This sucker really sucks. Another sucker has been takeover.

12552

[BlackPeter]

a low PE at 9.3 for sure... but growth will be challenging due to competition.

Operating Profit for the Pharmacy division declined 4% to $24.1m.Same store retail revenue was down 18% year on year due to compressed retail spending

Well, yes, but don't we hear this competition argument for ages? Earnings depending on the window size you are picking either very consistent (winners 5 year window) or nicely increasing (10 years :) ) - despite all this terrible competition some people like to use to monger fear.

Sure, pharmacies results are softer, though Covid might have been here as well a valid contributor / distractor.

I still don't see the discount pharmacies as huge competition for e.g. Unichem or Life ... if I look at our buying profile - actually, we do use the Chemist Warehouse, but whatever we order from them is stuff we used to buy previously at the supermarket. No damage to real pharmacies (which we use for prescriptions and any other health related service where you want to talk with some competent human without going to a doctor). I suspect this might be similar for other consumers.

Doctors and Community health, while still smaller divisions are clearly growing ... and I think offering services provided by dedicated humans vs. selling the cheapest mouth wash or over the counter medication via mail is where the future margins will be.

GXH does have a healthy tailwind - same age group supporting them which is pushing as well the growth of retirement villages. Good to see as well that the Community care division is making more money by focusing on the clients with higher care needs. I recon this is a win-win for society as well. Much cheaper to give some more money to GXH for caring for a person at home than having to shift that person into a retirement home and funding a care bed there.

[winner69]

Strong cash flow - improved ROE and ROIC

That's good

Share price deserves to be higher - say 130 to 140

But corporate value driven by the power of the story ....so obviously the Greencross story not that compelling (that's assuming they even bother telling a story)

Always think of Greengrass when I see Greencross - he was a likeable rogue

[value_investor]

Its been on my watchlist but I've never bought. My thoughts:

- I'm starting to wonder if they are trying to re-position the business to be more nimble and like HLG where it becomes a dividend machine in the future. I can see it with a low debt structure, paying consistent dividends. First it needs to shake off debt, make smart acquisitions and position itself to benefit post covid (unless they get bought). I also think it could be a good recovery stock when interest rates go up because they won't have those financing costs.

- The pharmacy results are much worse than they let on in the summary, and the result overall is a little bit rosier than at first glance. In the segment report, they do note that $10.8m was paid by the government in wage subsidy and $9m of that was paid to the pharmacy segment.

If you take total pharmacy revenue less than the pharmacy wage subsidy then its a 9% decrease on previous year. I also read that they were open throughout due to their status as an essential service so this can't really be used as reasoning in terms of covid-19. I can see this accelerating with the number of chemist warehouses I see pop up and the number of stores they plan on having.

- The statement of cashflows shows where the good work for me lies. To make $70m is operating cashflow and pay down a further $34.8m in debts in really pleasing to see. To more than halve debt in the past financial year will hold them in good stead to pay dividends. It would be a ripper of a dividend too considering they used to pay 7c a year which is just $10m to them (they currently have $37m in the bank). I do think they will pay the balance off in the next financial year.

Valuation: At about a 9 PE, its not a bad buy for future dividends once resumed if yield is your thing. I wouldn't be suprised if they waited it out for another year though and got the debt to 0 before they consider dividends.

Also not sure if they have but a $150m market cap and $37m in the bank is very enticing for a takeover given valuation and a stable base to start making changes (I often wonder if the IFTs of the world have ever thought about putting a bid in). For me, I have a rule due to past dealings to not buy retail stocks but I'm close to breaking that.


Disc: Not a holder but a interesting value play.

[nztx]

Quite a tight Share Register - infact tighter than some may realise

2 major holders who appear quite happy with slightly more than 64% in each of past 9+ years

An estimate of core holders looks like at a guess roughly 70% - 80% of issued Capital tied up in hands of larger holders
at times across past 8-9 years

Try buying large enough parcels & this is quite evident at times

Lack of recent dividends may have shaken a few out, but never the less probably still looks tightish

Who knows, some of the pharmacy takeovers & combinations may have resulted in GXH shares being issued as well .. ?

I would say a takeover aint going to happen unless major stakeholders see something better
they really like enough to move

Any better Castles likely to be on offer to relinquish holding the joint reins of the existing castle ? ;)

The major stakeholders probably rule the roost as well -- be that on whether a dividend gets spat out
or the other passengers onboard see the fruits of the years activities applied to acquisitions etc.

I guess one of those 'Love it or Leave' situations .. let's hope the big guys get their appetite back real
soon for fully imputed distributions on the generous side .. ;)

[flyinglizard]

Its been on my watchlist but I've never bought. My thoughts:

- I'm starting to wonder if they are trying to re-position the business to be more nimble and like HLG where it becomes a dividend machine in the future. I can see it with a low debt structure, paying consistent dividends. First it needs to shake off debt, make smart acquisitions and position itself to benefit post covid (unless they get bought). I also think it could be a good recovery stock when interest rates go up because they won't have those financing costs.

- The pharmacy results are much worse than they let on in the summary, and the result overall is a little bit rosier than at first glance. In the segment report, they do note that $10.8m was paid by the government in wage subsidy and $9m of that was paid to the pharmacy segment.

If you take total pharmacy revenue less than the pharmacy wage subsidy then its a 9% decrease on previous year. I also read that they were open throughout due to their status as an essential service so this can't really be used as reasoning in terms of covid-19. I can see this accelerating with the number of chemist warehouses I see pop up and the number of stores they plan on having.

- The statement of cashflows shows where the good work for me lies. To make $70m is operating cashflow and pay down a further $34.8m in debts in really pleasing to see. To more than halve debt in the past financial year will hold them in good stead to pay dividends. It would be a ripper of a dividend too considering they used to pay 7c a year which is just $10m to them (they currently have $37m in the bank). I do think they will pay the balance off in the next financial year.

Valuation: At about a 9 PE, its not a bad buy for future dividends once resumed if yield is your thing. I wouldn't be suprised if they waited it out for another year though and got the debt to 0 before they consider dividends.

Also not sure if they have but a $150m market cap and $37m in the bank is very enticing for a takeover given valuation and a stable base to start making changes (I often wonder if the IFTs of the world have ever thought about putting a bid in). For me, I have a rule due to past dealings to not buy retail stocks but I'm close to breaking that.


Disc: Not a holder but a interesting value play.

They are not going to pay any dividend soon.

"The Board has decided not to declare a final FY21 dividend in order to preserve cash to assist the Company with accelerating its acquisition activities."

This will mark the company as a growth company. I would prefer they to issue a bond to complete large acquisition under such low interest rate environment. However, the management will use dividend to acquire 2-4 medical center each year. Shareholders need a new ambitious CEO. Do not buy this sucker.

[winner69]

Nztx ...you sniffed out how these ‘non-controlling interests’ impact on things

[nztx]

Nztx ...you sniffed out how these ‘non-controlling interests’ impact on things


they'll probably be in here later & as time rolls on a few more may join them - winner :)

I think they may have a few similarly afflicted cousins in a similar position in the NZO neck of the woods ..

[RRR]

Good result IMO. 22 million debt, cash of 34 million - net cash of 12 million. 16 million profit with market cap of 150 million odd. PE ration of 9-10 - very cheap indeed

Medical practice business is growing very well. Pharmacy business is resilient despite the competition from chemist warehouse. I am a medic and the vast majority of the prescriptions I am emailing (eprescribing), based on the requests from patients, are to regular pharmacies such as unichem (I have hardly sent prescriptions to chemist warehouse).

Chemist warehouse is excellent for health supplements, OTC medications, beauty products/perfumes etc but, when it comes to the medical/pharmaceutical prescription drugs regular pharmacies are better value IMO - they usually have pharmacists who provide advice to their patients about their medications (when and how to take it, before/with/after food etc). If there are any issues their pharmacists contact the doctor who prescribed the drugs to clarify - hard to get this type of service from chemist warehouse who are very busy with their non-medical non-prescription health/beauty retail business..

Discl - hold

[lissica]

Good result IMO. 22 million debt, cash of 34 million - net cash of 12 million. 16 million profit with market cap of 150 million odd. PE ration of 9-10 - very cheap indeed

Medical practice business is growing very well. Pharmacy business is resilient despite the competition from chemist warehouse. I am a medic and the vast majority of the prescriptions I am emailing (eprescribing), based on the requests from patients, are to regular pharmacies such as unichem (I have hardly sent prescriptions to chemist warehouse).

Chemist warehouse is excellent for health supplements, OTC medications, beauty products/perfumes etc but, when it comes to the medical/pharmaceutical prescription drugs regular pharmacies are better value IMO - they usually have pharmacists who provide advice to their patients about their medications (when and how to take it, before/with/after food etc). If there are any issues their pharmacists contact the doctor who prescribed the drugs to clarify - hard to get this type of service from chemist warehouse who are very busy with their non-medical non-prescription health/beauty retail business..

Discl - hold

Similar experience here, most of my scripts go to Unichem or Life Pharmacies.

Medical practices seem to sell for about 3x EBIT, so should be earnings accretive if they can secure more.

I'm hesitant to buy in due to liquidity, but it's on the watchlist.

[winner69]

Share price close week at 110;

Not long to wait for 120 and then 130

Beagle reminded us this morning about good old Ben’s saying In the long run the market is a weighing machine, not a voting machine

The weighing machine is starting to weigh a fairer value

[Habits]

Share price close week at 110;

Not long to wait for 120 and then 130

Beagle reminded us this morning about good old Ben’s saying In the long run the market is a weighing machine, not a voting machine

The weighing machine is starting to weigh a fairer value

They are retaining profits and not paying rewards to patient (unintended pun) shds... so at least there is finally price appreciation. I am not getting hopes up and thinking it is a share worth holding. Gave up and sold after holding during 2020 anticipating, as an essential business there would be good returns

[BlackPeter]

WOW:

12581

Actually - peaked just at $1.18 but can't be bothered to update the chart ...

Somebody wanting in and realizing that this is a low liquidity stock?

[BlackPeter]

Actually - just noticed that ShareClarity reviewed and updated their DCF valuation for GXH after the FY result. DCF used to be at $1.14 and has now changed to $1.47;

Didn't realize they have that many followers ...

[winner69]

Strong cash flows ...improving returns on capital.... improving outlook .....a DCF of $1.47 is still pretty conservative

Hope you making zillions Peter

[flyinglizard]

The real test is tomorrow, if it will break through with decent trading volume, then I have no doubt with the targeted price.

12582

[flyinglizard]

emmm, 1-2 weeks testing again with low trading volume. Very Interesting. If it will pass the new testing, From TA perspectives, it may have something big coming out soon.

[BlackPeter]

... was this the golden cross I just saw in the window passing by ... ?

[winner69]

... was this the golden cross I just saw in the window passing by ... ?

You seeing things which are not there again? ....50 been above 200 for a while is what i see

Even if there was one some say so what because the Golden Cross is often a significantly lagging indicator.and that the real money to be made has already been made

whatever the chart says GXH heading to 150

[BlackPeter]

You seeing things which are not there again? ....50 been above 200 for a while is what i see

Even if there was one some say so what because the Golden Cross is often a significantly lagging indicator.and that the real money to be made has already been made

whatever the chart says GXH heading to 150

Sigh .... one can't be specific enough. I am talking about the EMA 50 crossing the EMA 200, using a one day interval.

If that's what you did as well, than you would have seen the crossing happening yesterday. Here is the picture:

12592

Just for clarity - I added the red potato ... just to make it easier to see which cross I am referring to. The thin green line is the EMA 50 and the thin red line is the EMA 200.

[winner69]

Hey BP -the beauty of maths

I was using SMA whiel you were using EMA - simple v exponential

if yahoo does sums right this is what it looks like ....the GC a while back ....the yellowish mark

Weird - we almost got a Death Cross yesterday

[BlackPeter]

Fair enough. If I use your timeframe, I see an EMA based golden cross as well close to yours, however followed by another cross of death when the SP drops under the EMA 200 again ... which enabled the new golden cross to appear yesterday :t_up:

Anyway - now we are both in the green, great things might happen :) - who knows?

[Cottagestyles]

... was this the golden cross I just saw in the window passing by ... ?

Heh, noticed this cross as well and grabbed some for no other reason than TA FOMO 😁 Add another camper happily in the green at the moment.

[RTM]

whatever the chart says GXH heading to 150

Pretty sure mine will not be in my portfolio anymore should they get anywhere near that level. I would need some really encouraging news from them, and can't see them providing that.
Pretty disappointed with this stock, I significantly underestimated the effect of The Chemist Warehouse.
They doesn't seem to have responded well to the increased competition.

[winner69]

Share price just about got to 120 today

Later in the week maybe

[flyinglizard]

failed again, but be patient, patient patient!

[nztx]

The GXH board probably have a smile & a pat on the head reserved for all those who bought into
the changed stance on "Withholding the Dividends" for yet further durations on another
replacement reason thrown into the hat after Covid-19 excuses were starting to look thin .. ;)


You may even wind up gracefully contributing to preservation of the pot of readies for a bit
of Aussie competition .. if no suitable acquisitions come GXH's way as well .. ;)

How long is a piece of string and are they responding to market changes well ? ;)

[flyinglizard]

Need replace CEO and the whole board members ASAP.

[flyinglizard]

The annual report shows some positive signs.

- Net debt to positive finally after easing dividend, around $12.9m. First time in recent years.
- The decrease in pharmacy revenue from FY21 to FY20 is 19.6m, the gain in both medical and community revenue during the period is ($5.7m+$15.80m) = $21.5m.
- The decrease in pharmacy profit from FY21 to FY20 is $1.1m, the gain in both medical and community revenue during the period is ($2.7m+$2.5m) = $5.2m.
- Net Assets approximate $150m

If the trend continues, the loss in pharmacy division has been offset by the growth from medical and community divisions. It already happened this financial year.

We take a look at the whole medical sector,

PE PB DIVIDEND YIELD REVENUE MARKET CAP
AFT 62.06 117 0% $113.1M $489.8M
EBOS 28.55 - n/a 2.79% $8.8B (2020) $5.33B
GXH 9.74 - n/a 0% $570.4M $163.2M
FPH 34.9 13.5 1.657% $1.97B $18.6B

A company in medical service sector with annual revenue of $570.4m, but its market cap is only 163.2m.

What's wrong? It is definitely a five bagger, in my view.

[BlackPeter]

Annual report is out: https://announcements.nzx.com/detail/374504

Obviously - the big news came already a month or so ago with the annual financials. Still - one of the reports worthwhile reading ... and, it even is readable! Compliments to the CFO ...

Apart of from the things already discussed at full year announcement:

Net asset value per share is (rounded) $1.05 (which is good for a share trading for $1.14) however - they do have a lot of intangibles on the books (given their earnings I think quite justifiable) ... and NTA per share looking now slightly healthier (up to negative 2 cents from negative 10 cents).

Liabilities to assets down from 64% to 59% (which is good and feels like manageable);

The direction looks clearly right.

RoE is 14% - not too bad.

Ah yes - and just for winner: 10 year revenue CAGR is 38.5, while 10 year earnings CAGR is only (a still healthy) 8.9; I know - they have been a different company 10 years ago, but still ... they probably should watch these low margin activities like community services ... high revenue, low earnings - but I think they know that.

[BlackPeter]

Nice ending to the week - somebody recognizing value?

12704

I do like the picture :):

[flyinglizard]

12713

Cannot be faking it again and again! ENOUGH IS ENOUGH!

[flyinglizard]

12714

Cannot be faking it again and again! ENOUGH IS ENOUGH!

[flyinglizard]

disappointed doctor shareholders or upset institutions keep selling at $1.18, no dividend, slow business model transition, no attention from retail investors. The ship is sinking, wait for 2-3 more months?

[winner69]

Wesfarmers surprise bid for API in Oz (Priceline) today

Interesting the likes of Wesfarmers are attracted to ‘pharma’

Could have a look at NZ. You never know they or some other outfit might be attracted to Greencross.

[percy]

LPL TRUSTEE LIMITED 45,935,821 32.09
CAPE HEALTHCARE LIMITED 45,840,983 32.02
Between these two shareholders they control 64.11% of GXH.
I think they still have " a pause" agreement.
We know Andrew Bagnall controls LPL Trustee,so that leaves Cape......?

[winner69]

That Wesfarmers offer for API is at 10 times EBIT

Same multiple for GXH values them ay $2.40/$2.50

GXH really 'cheap' eh

[percy]

That Wesfarmers offer for API is at 10 times EBIT

Same multiple for GXH values them ay $2.40/$2.50

GXH really 'cheap' eh

I do not know API well enough to comment.
note.Cape Healthcare is 51% owned by Elite Investment Holdings LTd,Hong Kong.And I would guess Elite are controlled by Zuellig.
[Getting a clearer picture?]

[winner69]

I do not know API well enough to comment.

Not exactly the same …both have pharmacies. GXH have their doctors etc which API don’t have but they have beauty clinics.

Sames sector….maybe corporate activity sometime ….you never know.

[percy]

Not exactly the same …both have pharmacies. GXH have their doctors etc which API don’t have but they have beauty clinics.

Sames sector….maybe corporate activity sometime ….you never know.

Yes you never know,but I remain doubtful.It comes down to what Bagnall and who ever is behind Elite decide they want to do.
Daughter works in the beauty clinic sector.Not without competition.Not the great money spinner a lot of people think.Franchisor may do well, but will not last in business if the frachisee is not profitable.I did post some months ago [somewhere] about an Aussie Laser treatment frachise where the franchisor had been very naughty,Link down below.
The successful pharmacies are those that have a strong online channel.That is not GXH's strong point..

https://www.google.co.nz/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwj8odDC_NzxAhUExzgGHQRtAOIQFnoECCcQAw&url=https%3A%2F%2Fwww.smh.com.au%2Fbusiness%2Fcomp anies%2Ftrapped-and-we-can-t-get-out-botox-laser-hair-removal-clinics-face-franchisee-uprising-20210325-p57dy4.html&usg=AOvVaw0-3Jm77WydRYeWxEhl7PXE

[RRR]

Eprescriptions are now the norm since covid, I hardly do paper prescriptions nowadays - Ministry of health took the initiative and created the online infrastructure (not the private pharmacies/chains!!). >90% of my prescriptions go to unichem or life pharmacies. $5 charge per prescription is a burden for some patients - if the govt scraps this fee GXH will benefit

https://www.health.govt.nz/our-work/digital-health/other-digital-health-initiatives/emedicines/new-zealand-eprescription-service
Scroll all the way down for interesting stats

Discl - accumulating

[BlackPeter]

Eprescriptions are now the norm since covid, I hardly do paper prescriptions nowadays - Ministry of health took the initiative and created the online infrastructure (not the private pharmacies/chains!!). >90% of my prescriptions go to unichem or life pharmacies. $5 charge per prescription is a burden for some patients - if the govt scraps this fee GXH will benefit

https://www.health.govt.nz/our-work/digital-health/other-digital-health-initiatives/emedicines/new-zealand-eprescription-service
Scroll all the way down for interesting stats

Discl - accumulating

I agree with above statement. Not sure however, how big the "IF" is? Is there any indication that the government plans to scrap this fee, I didn't see that in the article?

[percy]

I would guess in the meantime ,or more likely the long term those pharmacies not charging the Govt $5 [per item] fee will grow.
The Chemist Warehouse and Bargain Chemist do not charge this fee.
I noted when I had my sinus issues, my $5 per prescription fee was actually $20 per [total] prescription, although repeats were not charged.
I would expect a good number of people would be paying a lot more than the $20 I was paying,so I would expect they will be looking to move to pharmacies not charging the fee.

[RRR]

Most patients don't actually mind paying $5 per drug (a prescription may have several drugs)! I was surprised by this - as mentioned most of my prescriptions goes to regular pharmacies such as unichem. Not sure whether the Govt will scrap this fee...

Only a minority of patients request their prescriptions to be sent chemist warehouse etc. Many regular pharmacies have started to waive the prescription fee..

[percy]

Most patients don't actually mind paying $5 per drug (a prescription may have several drugs)! I was surprised by this - as mentioned most of my prescriptions goes to regular pharmacies such as unichem. Not sure whether the Govt will scrap this fee...

Only a minority of patients request their prescriptions to be sent chemist warehouse etc. Many regular pharmacies have started to waive the prescription fee..

Well I would think if GXH wanted to stay "in the game" they too will waive the prescription fee.
Therefore GXH investors will need to consider what affect this will have on GXH's earnings.I would guess huge.

[RRR]

Well I would think if GXH wanted to stay "in the game" they too will waive the prescription fee.
Therefore GXH investors will need to consider what affect this will have on GXH's earnings.I would guess huge.

Some of their pharmacies are waiving the fee, I guess those ones closer to the likes of chemist warehouse. Pharmacy business is competitive for sure but they are not going out of business soon. It is obvious for us who write prescriptions on a daily basis!!
GXH other businesses are growing very well - medical practice (The Doctors brand) and community health. GXH is not all about pharmacies

[percy]

Some of their pharmacies are waiving the fee, I guess those ones closer to the likes of chemist warehouse. Pharmacy business is competitive for sure but they are not going out of business soon. It is obvious for us who write prescriptions on a daily basis!!
GXH other businesses are growing very well - medical practice (The Doctors brand) and community health. GXH is not all about pharmacies

Pharmacies still account for over half of GXH's revenue,and both their revenue and margins will continue to come under pressure,as will their overheads,including rents,staffing and insurances.

[flyinglizard]

Bad sign again! I am trying to use VCP analysis for GXH. However, it never successfully reaches to $1.30- $1.40 price range again after Jan 2020. That means if it has ability to reach $1.40 -$1.50 later on, it have very high possibility failed to break out and climb upwards. Unless.....

Fundamentally, it looks great, but technically, it sucks........

12746

[winner69]

Yippee - share price breaks through 120

Should carry on with it now .....130 then 140 then 150 ...

[winner69]

I see many covid vaccination centres are branded Unichem - assung they doing the jabs

Hope they making zillions for doing this community service

[flyinglizard]

I see many covid vaccination centres are branded Unichem

Hope they making zillions for doing this community service

Some NZ post offices closed and moved into Pharmacy store in CHCH.

[winner69]

GXH board bemoan lack of analyst coverage.

Who can blame analysts when GXH are woeful at ‘communicating’ to the market

Businessweek had this snippet

The company’s approach to communications was summed up when a shareholder asked how the company had traded over the first three months of the new financial year. The response was that Green Cross, unlike other companies, doesn’t disclose these specific figures to investors

Anyway share price holding above 120 ….probably be 150 if the Board were a bit more enthusiastic in telling their story

[value_investor]

GXH board bemoan lack of analyst coverage.

Who can blame analysts when GXH are woeful at ‘communicating’ to the market

Businessweek had this snippet

The company’s approach to communications was summed up when a shareholder asked how the company had traded over the first three months of the new financial year. The response was that Green Cross, unlike other companies, doesn’t disclose these specific figures to investors

Anyway share price holding above 120 ….probably be 150 if the Board were a bit more enthusiastic in telling their story

Agreed. No guidance reported. A website that looks out of date. No investor days, no marketing material.

[winner69]

Agreed. No guidance reported. A website that looks out of date. No investor days, no marketing material.

Just confirms they don't give a stuff about 'retail' shareholders - probably seen as a bloody nuisance

A bit of do as we say from Bagnall/Merton doesn't help and Ellis if far from charismatic.

Maybe the company will be a lot more will be forthcoming when those two dudes want out and they need capital markets to front up with zillions

[winner69]

Me ol mate and former well respected poster Crackity likes these. I haven't had much time to look into them because I had to leave for a three day trip early the morning after but at first (admittedly very, very brief) glance it would appear they are on cheap metrics for good reason(s). The trend downwards in pharmacy profitability appears well entrenched. I think the fast expanding and highly competitive Chemist Warehouse poses formidable competition and with the ever increasing propensity of customers to buy online one's "local" Chemist's profitability is under real pressure and likely to remain so or come under even more serious pressure going forward. I like Crackity and know he's a shrewd investor so when I get more time I'll give him a call and discuss and try and get a better sense of what he foresees going forward.

the ST get together in March discussed GXH

Up about 20% since --- hope attendees joined the ride with crackity

[winner69]

Bugger - share pricce gone below 120

No worries the share price has increased at a CAGR of 7% pa over the last 10 years - better than the 15% pa decline over the the last 5 years

Hopefully 140 by end of August

[flyinglizard]

Bugger - share pricce gone below 120

No worries the share price has increased at a CAGR of 7% pa over the last 10 years - better than the 15% pa decline over the the last 5 years

Hopefully 140 by end of August

The SP drop is caused by the comment "company board bemoan lack of analyst coverage". Who will hold something that does not attract analysts and potential buyers, plus no dividend for a few years.

They really need someone who knows how to do the marketing and branding for them. They do not know what is market, what language cheers up the investors and institutions. Do not blame market and analysts, that is their own fault.

[winner69]

What the hell is going on with gxh share price

Heading below 110 …might even get to 100

Looked so promising in the mid 220s a few weeks ago

[BlackPeter]

What the hell is going on with gxh share price

Heading below 110 …might even get to 100

Looked so promising in the mid 220s a few weeks ago

Probably my fault. I sold out at 118 some weeks ago ...

Anyway - I still think the company could have an amazing potential as health stock, but probably too many ex MET directors on board.

Bad apple principle might apply. Remember what happend to MET? Shareholders shafted.

[flyinglizard]

Sold out at $1.16 before lockdown. after nearly two year holding, only has 12% gain without dividend, very disappointed and never come back again. It is going back to $1.03-$1.05 price range now.

[RTM]

https://announcements.nzx.com/detail/379015

The only numbers mentioned are.....
"It has taken a 25 per cent shareholding in health technology company PillDrop."
and
"PillDrop launched in 2020 ...."

Hmmmm....time will tell I guess.

[Habits]

https://announcements.nzx.com/detail/379015

The only numbers mentioned are.....
"It has taken a 25 per cent shareholding in health technology company PillDrop."
and
"PillDrop launched in 2020 ...."

Hmmmm....time will tell I guess.

Competition for WHS's Zoom? Yes time will tell

[RRR]

Interesting - Greencross in partnership with PEP in talks to acquire Tamaki Health. There are other interested parties also..

https://www.nzx.com/announcements/380023

[RTM]

Interesting - Greencross in partnership with PEP in talks to acquire Tamaki Health. There are other interested parties also..

https://www.nzx.com/announcements/380023

https://www.tamakihealth.co.nz/about-us/history
Mercury Capital was chosen for its significant expertise to support Nirvana Health Group’s work and vision. The investment is being used to enhance the business of high-quality patient care and grow clinic acquisitions.

This is certainly not one of my better bets, watching nervously. Does management have enough nous to pull this off profitably ? Not sure or confident at all.
Disc: 2% of portfolio….today.

[RRR]

https://www.afr.com/street-talk/pep-finds-kiwi-healthcare-player-for-tamaki-health-bid-20210928-p58vhl

[RRR]

Share price 1.30!
More buyers than sellers. Buyers are bidding decent sized parcels..
GXH is one of the few bargains listed in NZX - just my biased view

Discl - hold a decent parcel, accumulating since last year

[nztx]

Share price 1.30!
More buyers than sellers. Buyers are bidding decent sized parcels..
GXH is one of the few bargains listed in NZX - just my biased view

Discl - hold a decent parcel, accumulating since last year


A tight share register - we know what that means when demand pressure goes on the jar :)

[RTM]

https://www.nzx.com/announcements/383627

One of my less than stella bets. Nice to have some positive news.
Dividend: 3c per share.

[value_investor]

Interesting result, the dividend is very welcomed for the shareholders and the segments itself are performing well. I just think there are others in the pharmacy side that can do better. Chemist Warehouse have popped up with so many stores, Costco is opening in NZ and this one is very susceptible to competition on the pharmacy side.

The medical and community divisons are at the mercy of demographics and I can't see how it will give you outsized returns against other stocks, the growth is quite limited in terms of where it can go. I think what they can do however is become a safe dividend player, with modest growth prospective in the future with a low debt base.

Disc: Not a holder.

[percy]

Pricing and margin management is being reviewed
carefully, with exclusive distribution arrangements and strategic brand relationships being sought.

I take that to mean they are losing the battle against the discounters.

[RRR]

Result not bad at all. You guys are hard to please..LOL
9.7 million half year PAT, market cap of 176 m - PE of <10
Medical practice business is growing very well. Pharmacy business is turning around well - worst is over..
Compare to PEB (I know oranges vs apples comparison, but both in the medical field) - revenues 5 million, loss making, market cap 1 Billion - crazy..I work in the medical field - I will never buy PEB, but very comfortable owning GXH

[percy]

Result not bad at all. You guys are hard to please..LOL
9.7 million half year PAT, market cap of 176 m - PE of <10
Medical practice business is growing very well. Pharmacy business is turning around well - worst is over..
Compare to PEB (I know oranges vs apples comparison, but both in the medical field) - revenues 5 million, loss making, market cap 1 Billion - crazy..I work in the medical field - I will never buy PEB, but very comfortable owning GXH

Yes I agree not a bad result,however I have my doubts about the pharmacy business's future.

[winner69]

Going gangbusters at Greencross

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GXH/386338/363500.pdf

[winner69]

FY22 profit to be about $23m/$24m

Market cap $164 …jeez GXH is cheap these days

[percy]

The company notes that this uplift may not continue in full into the next financial year due to the uncertain and changeable outlook for COVID-19 vaccination and swabbing activity”.

[Sideshow Bob]

Probably sold a bit of panadol and a few more masks yesterday.......:sleep:

[nztx]

Who needs Competition when the Competition are as good as this :


https://www.stuff.co.nz/business/127632360/chemist-warehouse-overcharges-customer-4000


Chemist Warehouse overcharges customer $4000

;)

[RRR]

GXH share did very well compared to broader market - in fact share price didn't fall at all. They must be doing really well thanks to omicron outbreak - swabbing, RAT tests, vaccinations, local doctor clinics etc
Buyer/seller depth has also increased significantly. Cheapest healthcare stock:t_up:

Discl - added a few more yesterday

[Sideshow Bob]

Trading update March 2022 - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/388902)

Green Cross Health (NZX:GXH) continues to experience higher than anticipated revenue and profitability relative to the prior period. For the 11 months to 28 February 2022, the company has experienced an increase in revenue of approximately 16%.

Group CEO Rachael Newfield said “COVID-19 related activity across the company’s three divisions of Medical, Pharmacy and Community Health as well as the impact of recent acquisitions in the Medical division, continue to be the key contributors to the elevated performance levels. The company notes that this level of performance is not expected to continue into the next financial year.”

Net Profit After Tax Attributable to Shareholders for the 12 months to 31 March 2022 is projected to exceed the prior period result by $9.0m - $10.5m1 (25 January 2022 guidance $4.5m – $6.5m increase on prior period).

Green Cross Health is scheduled to release its audited full year result for the year to 31 March 2022 on 27 May 2022.

1 $10.5m - $12.0m excluding extraordinary amounts.
ENDS

[RRR]

Excellent update - as expected due to surging omicron

[RTM]

Excellent update - as expected due to surging omicron

But this is worth considering as well:
“The company notes that this level of performance is not expected to continue into the next financial year.”
One of my worst holdings…
Not breaking even even now.

[RRR]

But this is worth considering as well:
“The company notes that this level of performance is not expected to continue into the next financial year.”
One of my worst holdings…
Not breaking even even now.


GXH is priced for no growth anyway - Omicron-related increased revenue is just a bonus! That's how I see it..
Accumulating from 1.06..

[nztx]

A tight share register - this is what happens with buying interest & limited shares coming on the market IMO

Forget whether growth priced in or not in this case :)

[RRR]

A tight share register - this is what happens with buying interest & limited shares coming on the market IMO

Forget whether growth priced in or not in this case :)

Tightly held share registry/low liquidity etc shouldn't concern a retail investor - such issues are a problem for mutual funds/institutions. That's why funds don't own much of GXH. Briscoes and STU are also similar. I like companies with low institutional ownership:)

[RTM]

https://www.nzx.com/announcements/389191

Surely it’s time EBOS acquired GXH ?

[RTM]

Some one(s) knows something(s) ? Much increased turnover today already.

I think from memory it was just $12K yesterday.

13690

[percy]

Some one(s) knows something(s) ? Much increased turnover today already.

I think from memory it was just $12K yesterday.

13690

Big jump on good volume.Chart looks good.Highest share price in the past two years.

[RRR]

$1.50 :t_up::)
I should have got a few more - it was dirt cheap.
Owning GXH was shameful;)

Discl - accumulating since 2021, hold a significant parcel for long term

[RTM]

$1.50 :t_up::)
I should have got a few more - it was dirt cheap.
Owning GXH was shameful;)

Discl - accumulating since 2021, hold a significant parcel for long term

Happy with the $1.50 as well....
However...one really wonders why ?

[RRR]

Happy with the $1.50 as well....
However...one really wonders why ?

Invested in GXH for dividends only - 6-7 cents per year! Any capital appreciation is a bonus
I know their business well - I know where my prescriptions are going:)
13693

[nztx]

went up in a hurry -- a fairly tight register & buyers climbing in

What do brokers have to say about GXH, aside from tight & difficult to secure reasonable parcels ? ;)

[BlackPeter]

went up in a hurry -- a fairly tight register & buyers climbing in

What do brokers have to say about GXH, aside from tight & difficult to secure reasonable parcels ? ;)

Don't think they are these days on any brokers radar screen ... just one of these stocks with huge majority holder and little liquidity.

[percy]

Some one(s) knows something(s) ? Much increased turnover today already.

I think from memory it was just $12K yesterday.

13690

Perhaps the new director has been buying.?
https://www.nzx.com/announcements/390118

[nztx]

May pay to be a bit wary -- if buyer interest subsides the slide could be back down
to $1.00-$1.10 range .. but who knows .. been there done that before too :)

Maybe a Final Div in June might confirm intention for restored Divs and allay
downwards possibilities ?

Look no further than ENS for Lowish Issued Shares / Tightish Registers
and the demand interest evaporating scenarios :)

[Beau]

Sold out yesterday and glad to be finally out after being down for several years doubling down when at $1.02 ended up down slightly but as I said glad to be rid of. Good luck to holders.

[winner69]

Amazing result from GXH

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GXH/392813/371655.pdf

[Grimy]

Looks like some were expecting it from the price rise over the last couple of days........

[BlackPeter]

Amazing result from GXH

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GXH/392813/371655.pdf

Yes, pretty solid result:



• Operating Revenue up 18% to $670.3m
• Operating Profit (EBIT) up 54% to $54.1m1
• Net Profit After Tax Attributable to Shareholders up 47% to $24.6m1
• Pharmacy Operating Revenue up 16% and Operating Profit up $11.7m to $35.9m
• Medical Operating Revenue up 35% and Operating Profit up $6.6m to $16.0m
• Community Health Operating Revenue up 12% and Operating Profit up $1.9m to $5.6m
• $21m Net Cash position – 3.5 cps dividend declared

Crunching some numbers:
RoE up to 19.4% (quite good) and liabilities to assets down to a quite manageable 57.4%
long term (10yr) PE is 11.2 and earnings CAGR throughout this 10 year window was 6.7; Pretty flash.

Looks like the "devastating" competition of the discounters is for them not so bad after all. Numbers look healthy, industry clearly has a tailwind. Maybe there are reasons to bother with this company after all?

They even managed to move their NTA into positive territory (well, just .... the purchase of all these brands is still weighing heavily on the books).

[bull....]

the growth area is medical division which they should pour capital into to expand more rapidly.

[winner69]

Love them or hate them you have to admire GXH's financial performance over recent years.

Solid ROE and F22 it was 19.4% but whats impressive is their return on invested capital (ROIC) which includes borrowings of 18.4%

That's way above their cost of capital so Greencross are adding real economic value - excess returns are pretty high

If one assumed a WACC of 10% those the excess return over the cost of capital this year was about $16m

Some finance / investment professionals get an intrinsic value of a company be using MVA = NPV of future EVA (MVA being Market Value Added - difference between Market Cap and Book Value / NPV of future EVA being the present value of future excess returns)

At the moment GXH's MVA is a mere $7m - using a modest growth rate this 'should' be be about $170m which gives an Intrinsic Value of $2.40 a share

Whatever GXH share price 'deserves' to be over $2 but market sentiment towards them is such that this may never happen

Does put them out there to be acquired .... even though they are acquiring quite a few things themselves

[winner69]

Whome reported GXH discussed at ST meeting the other day

Look for the share price to rise as the clan pile in.

This was about a year ago

Apparently quite a long discussion on Greencross and generally positive

Seems, based on company performance, they weren't talking rubbish

And share price up about 30% since as well

[RTM]

Other than paying a bit to much for one round...I am a happyish holder. As long as they keep looking after their basics....they should do OK. The same demographics helping the Retirement companies should also assist GXH.

Will continue to hold provided dividend holds up.
2.4% of NZ / OZ portfolio.

[winner69]

..........................

They even managed to move their NTA into positive territory (well, just .... the purchase of all these brands is still weighing heavily on the books).

Another case where NTA is a rubbish indicator - purchases not really 'weighing heavily on the books' are they - you know that and suppose just a tongue in cheek comment

Without those intangibles Greencross don't have a business eh

[nztx]

Love them or hate them you have to admire GXH's financial performance over recent years.

Solid ROE and F22 it was 19.4% but whats impressive is their return on invested capital (ROIC) which includes borrowings of 18.4%

That's way above their cost of capital so Greencross are adding real economic value - excess returns are pretty high

If one assumed a WACC of 10% those the excess return over the cost of capital this year was about $16m

Some finance / investment professionals get an intrinsic value of a company be using MVA = NPV of future EVA (MVA being Market Value Added - difference between Market Cap and Book Value / NPV of future EVA being the present value of future excess returns)

At the moment GXH's MVA is a mere $7m - using a modest growth rate this 'should' be be about $170m which gives an Intrinsic Value of $2.40 a share

Whatever GXH share price 'deserves' to be over $2 but market sentiment towards them is such that this may never happen

Does put them out there to be acquired .... even though they are acquiring quite a few things themselves


A couple of major stakeholders on share register .. no take out will occur unless they agree IMO

possibly the same reason for SP being where it is too, along with the dividend holiday :)

[RTM]

A couple of major stakeholders on share register .. no take out will occur unless they agree IMO

possibly the same reason for SP being where it is too, along with the dividend holiday :)

Dividend...just curious why you think major shareholders would want a dividend holiday ? Genuine question..I don't understand.
I do agree they reduce the liquidity of the stock...turnover today just $28K so far !

[nztx]

Dividend...just curious why you think major shareholders would want a dividend holiday ? Genuine question..I don't understand.
I do agree they reduce the liquidity of the stock...turnover today just $28K so far !

more a reference to the 3 periods where no dividend and where the SP tracked .. first & second lines intended
as & should be read as unrelated in previous posting.

No doubt this is a fairly tightly held stock - if trying to buy any sizeable bundle, but the converse adverse affects
can be seen if buyer interest isn't present equally in trying to sell any larger quantity ..

[RTM]

more a reference to the 3 periods where no dividend and where the SP tracked .. first & second lines intended
as & should be read as unrelated in previous posting.

No doubt this is a fairly tightly held stock - if trying to buy any sizeable bundle, but the converse adverse affects
can be seen if buyer interest isn't present if equally trying to sell any larger quantity ..

Duh...gotcha...thx.

[RRR]

Excellent result - all 3 divisions are doing well.
Pharmacy is growing again!
Medical practice business has a long runway..
:t_up:

[nztx]

All fears of Pharmacy Warehouse impacting things must be dispelled now too :)

[RRR]

Covid surely had a positive impact in FY2022. Revenue 670 million. NPAT 24 million vs market cap 190 million

FY2023 profit will be lower - just my prediction/assumption. Probably 19 million NPAT
They will be acquiring medical practices and pharmacies. Gearing is only 12%.


Compare with PEB - total revenue 11 million. Loss in multimillions (never made a profit). Market cap 690 million!

GXH is a value buy. Liquidity is low for sure - the only negative in my view.

[nztx]

Covid surely had a positive impact in FY2022. Revenue 670 million. NPAT 24 million vs market cap 190 million

FY2023 profit will be lower - just my prediction/assumption. Probably 19 million NPAT
They will be acquiring medical practices and pharmacies. Gearing is only 12%.


Compare with PEB - total revenue 11 million. Loss in multimillions (never made a profit). Market cap 690 million!

GXH is a value buy. Liquidity is low for sure - the only negative in my view.


Your value will go where the major stakeholders dictate .. not much choice about that - other than stay in or jump overboard :)

[RRR]

Not sure what you mean. Major stakeholders with skin in the game is good - I like such companies with majority promoter holding.
Other eg Briscoes, HLG, AFT, Turners..

They are allocating capital efficiently - their return ratios have been improving over the years.
There is some dividend and the rest is invested for growth (buying medical centres, pharmacies etc)

Discl - accumulating

[nztx]

Not sure what you mean. Major stakeholders with skin in the game is good - I like such companies with majority promoter holding.
Other eg Briscoes, HLG, AFT, Turners..

They are allocating capital efficiently - their return ratios have been improving over the years.
There is some dividend and the rest is invested for growth (buying medical centres, pharmacies etc)

Discl - accumulating


Share Register in 2018 & 2019 when I looked appeared as tight as - and supported
by brokers comments similarly for trade in larger parcels of GXH

Roughly 64% held by two top holders (roughly equal)

and 80% held by top 20 holders

The available pool of shares on the loose (outside top 20) at the same time was quite small -
around just 2.7 - 2.9 mil

Wouldn't expect this has changed too much since

Your fortunes going forward with GXH appear to be in the hands of the top holders with their Board seats

Demand for shares will push SP up ; if it dries up or performance wanes, so likely will SP as seen in the past
when it was sailing around the buck level for some time

[RRR]

Share Register in 2018 & 2019 when I looked appeared as tight as - and supported
by brokers comments similarly for trade in larger parcels of GXH

Roughly 64% held by two top holders (roughly equal)

and 80% held by top 20 holders

The available pool of shares on the loose (outside top 20) at the same time was quite small -
around just 2.7 - 2.9 mil

Wouldn't expect this has changed too much since

Your fortunes going forward with GXH appear to be in the hands of the top holders with their Board seats

Demand for shares will push SP up ; if it dries up or performance wanes, so likely will SP as seen in the past
when it was sailing around the buck level for some time

My focus is on the business - I know their business very well.
Share price drop in the last few years was because of concerns about their pharmacy business and threats from chemist warehouse..Apparently chemist warehouse was going to kill their pharmacy business:eek2: Pharmacy revenues are now up trending again.
So far I have accumulated just under 100K shares - I have put a buy order to make it 100k:)