GXH - Green Cross Health (formerly PHB - Pharmacybrands)

[gonzo56]

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

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

[Snow Leopard]

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

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

regards
Paper Tiger

[percy]

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

I think Coca Cola has only bothered with one brand.

[gonzo56]

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

[gonzo56]

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

[percy]

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

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

[gonzo56]

Haha, "hold on to your hats!"

[percy]

Haha, "hold on to your hats!"

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

[gonzo56]

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

[percy]

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

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

[percy]

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

[winner69]

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

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

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

[gonzo56]

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

[percy]

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

[winner69]

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

[percy]

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

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

[winner69]

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

[winner69]

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

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

Will be interesting to see how all this pans out

[percy]

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

[Snoopy]

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

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

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

SNOOPY

[percy]

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

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

[Silverlight]

Top 10 holders

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

[Silverlight]

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

LPL trustee is 100% owned by John Bagnall

[percy]

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

LPL trustee is 100% owned by John Bagnall

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

[Silverlight]

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

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

[percy]

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

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

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

[percy]

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

[percy]

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

[gonzo56]

Wohoo!
Finally.

[percy]

Wohoo!
Finally.

Well done gonzo56.

[Lizard]

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

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

Will be interesting to see how all this pans out

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

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

[percy]

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

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

[Silverlight]

Just had a re-look through the Annual Report

Rehashing the analysis already done to 31 March.

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

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

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

[Lizard]

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

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

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

[Lizard]

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

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

[zigzag]

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

[janner]

Your purchase of 1500 shares !!..

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

[Joshuatree]

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

[Lizard]

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

[Lizard]

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

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

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

[elZorro]

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

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

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

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

Credit: karen1

[Lizard]

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

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

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

[Lizard]

Very happy with that full year result of NPAT $9.9m - right on the spot, but also very cash generative in second half (about $8.6m I think) and paid down another $10m of debt.

Dividend of 3.5cps will also edge it towards greater visibility.

Further improvement to come in NPAT this year - I value at $1.20 ish, so think the current 86cps still reasonable value.

[Snow Leopard]

Good one.

I think a little celebration is in order.

A bottle of Anchor Strong in hand whilst doing the 'Happy Tiger Bop' :ohmy:

best wishes
Paper Tiger

[percy]

Very happy with that full year result of NPAT $9.9m - right on the spot, but also very cash generative in second half (about $8.6m I think) and paid down another $10m of debt.

Dividend of 3.5cps will also edge it towards greater visibility.

Further improvement to come in NPAT this year - I value at $1.20 ish, so think the current 86cps still reasonable value.

Well done Lizard.An excellent result.

[POSSUM THE CAT]

Sparky The Clown They have been & gone or are they going to have another try.

[karen1]

Hi Sparky,

Curious where your knowledge on Boots comes from, have you got a link or any info you could post please?

[karen1]

Thanks Sparky, might just do some DYOR and see what I can find.

[karen1]

But that's one of the great things about this forum, it is about sharing, and learning, and for me a bit of DYOR won't go astray!

[Snow Leopard]

... I value at $1.20 ish, so think the current 86cps still reasonable value.

Ends the day at 90c. So, it's on it's way then ;)

best wishes
Paper Tiger

[Lizard]

Getting close to target with bid at $1.17... hard to believe we're in retail. Looks more like the chart of a tech share.

4055

[Lizard]

AGM speech didn't give any exciting forecasts that I could see, but it had a positive enough tone to make PHB a safe hold. Div should now be formally declared, given approval of resolutions to allow major shareholders access to the DRP.

Depth solid enough so may not have plateaued quite yet, although possibly post-div could expect a dormant period until half year.

[Snow Leopard]

I see that a $300 buy has taken the SP to $1.40. :ohmy:

Wonderfully silly:t_up:

best wishes
Paper Tiger

[percy]

Interesting comments at yesterday's EBOS AGM.Peter Mereton left EBOS board to concentrate on PHB.Appears EBOS felt it was their loss and very much PHB's gain.Very highly regarded and made a very big contribution to EBOS board while he was there.
EBOS have entered a five year,with 5 year right of renewal supply contract with PHB,so maybe there was no conflict of interest with Peter Mereton no longer on EBOS board.Bet Mereton negotiated very slim margins for EBOS.!!!!

[noodles]

Any thoughts on the results? Sales were down at the retail outlets. This is a concern. Especially as the supermarkets are looking to move in on their patch.

Share price seems to be rallying. Maybe I missed something?

[benjitara]

I saw that too (sales down) There's increasing competition in the retail sector and most of their profits through acquisition seem to be with increased efficientcy of operations. I like the stock but i'm put off by the "growth" when you consider the fast rate of acquisition.

[Food4Thought]

Are the recent announcements in regards to Director aquisitions of any interest? Confidence in their own company? Does this company not have a good position in the NZ market?

[percy]

Are the recent announcements in regards to Director aquisitions of any interest? Confidence in their own company? Does this company not have a good position in the NZ market?

Easy to answer.
Yes,Yes and Yes.

[Lizard]

I thought that was a good result - 33% growth in profits and increase in dividend and cash position. Market not so impressed - although to some extent it's a case of value catching up with the share price after it ran ahead a tad.

Looks solid here with plenty of room for further development in medical business.

[Food4Thought]

This stock gets so little attention, why?

[In4a$]

This stock gets so little attention, why?
Anyone got any ides on why this is falling ?. I was thinking of getting some in last few days and price just dropped.!
Thought $1.20 was getting cheap, will hold out for $1.00 now. :t_up:

[Food4Thought]

Anyone got any ides on why this is falling ?. I was thinking of getting some in last few days and price just dropped.!
Thought $1.20 was getting cheap, will hold out for $1.00 now. :t_up:

Doubt they will hit $1!, current price low, worth a look for many people looking for a more certain return and diversifying their portfolio after exiting shares that may seem a bit too risky soon. I'm all for the whole concept of PHB. Not great volumes traded, a lot of staff own shares, sell out when need the money for Xmas/holidays...

[In4a$]

Doubt they will hit $1!, current price low, worth a look for many people looking for a more certain return and diversifying their portfolio after exiting shares that may seem a bit too risky soon. I'm all for the whole concept of PHB. Not great volumes traded, a lot of staff own shares, sell out when need the money for Xmas/holidays...
I agree, got some at $1.18. Been a long time holder. Top up when price drops, sell a few when it peaks. Been good to me has PHB.

[Food4Thought]

I agree, got some at $1.18. Been a long time holder. Top up when price drops, sell a few when it peaks. Been good to me has PHB.

Current price is as low as I have seen it for a while (apart from that dip to $1.10, subsequent NZX enquiry, today's answer etc). I thought PHB has an end of year Divi coming up in December. Long term, this business should align with an ageing population..., larger dependency on medical *cures (*easy way out) and perhaps be lagging a bit behind the growth of these retirement village operators... I consider PHB to be an investment with less risk, but by no means slow growth... In other markets, large pharmacy operators have done very well over the long run, and pharmaceuticals don't seem to be slowing down. Not a current glamour stock.

[Lizard]

Yes, just hoping it wasn't someone with knowledge on the upcoming result - a little soon though, as not due till end of month... maybe the seller just in a rush to buy XRO :eek2:

[gv1]

Also of govt regulations, I know some people who run pharmacies, margins are tight.

[Food4Thought]

Also of govt regulations, I know some people who run pharmacies, margins are tight.

Have margins not improved (still tight) for pharmacies in the last few years as direct prescription prices have increased from $3 to $5, and prescription trend is upwards, steep. Going to the Doc for a prescription, subsidized by the government, is much more cost effective then buying direct from a pharmacy...

Also, this is a large player, buying out the small guys and putting smaller operators out of business because they offer a wide variety of services.
(I don't see this as a great result for long time, small operators, just stating the point) Much like the Briscoes Affect in every town around New Zealand that gets one on their doorstep. Margins are tight with super markets too... volumes are up. I hear them moaning, yet still doing very well.

[Food4Thought]

Yes, just hoping it wasn't someone with knowledge on the upcoming result - a little soon though, as not due till end of month... maybe the seller just in a rush to buy XRO :eek2:

I also hope it's not in relation to up and coming announcement. I do often wonder about the holders of certain shares, their reasons for selling, timing etc. I hope it was someone simply needing to fund some up and coming project, or perhaps as you said Lizard, buy into XRO and perhaps make some serious money. Maybe they are after some PEB

[Lizard]

Half year result looked good to me. Should be good for $1.40 for now? Currently $1.27, but feels like some distribution here still. Needs institutional interest.

[benjitara]

I've been keeping a close eye on this one for a long time but haven't acquired any at current Share price levels. i'd become interested if there expansion into medical facilities started to ramp up. At the moment this side of the business is too small to become overly confident in increased revenues going forward. Still 10% overpriced for me to get in considering the market is peaking now and exchange rates must be helping them out a little too?

[Food4Thought]

Half year result looked good to me. Should be good for $1.40 for now? Currently $1.27, but feels like some distribution here still. Needs institutional interest.

I think this was great https://www.nzx.com/files/attachments/185867.pdf

Certainly worth the current price and I speculate it to become one of the shares that many people who also invest into aged care consider. And perhaps those people in aged care invest in, as it is trending into a good income share. Slow and steady. The Briscoes effect.

Solid outlook. Medical centers and pharmacies are more and more depended on by the consumer. I also guess they would be a worthy business for a buy out, as their presence in the market is growing in an industry that takes major profits. Watching them stores grow with interest "margins are tight etc etc say's the pharmacist" as he climbs into his late model Audi...

[GarryB]

Have margins not improved (still tight) for pharmacies in the last few years as direct prescription prices have increased from $3 to $5, and prescription trend is upwards, steep. Going to the Doc for a prescription, subsidized by the government, is much more cost effective then buying direct from a pharmacy...

*****

This misses the way the funding model is structured. The " was $3.00 , is now $5.00 " fee is a co-payment set by the Ministry of Health ie not in pharmacy's control. That co-payment is in effective a user tax - from the pharmacist's perspective the total payment per script hasn't grown - it's just the proportion that has changed ( more coming from the end user rather than being funded by the Govt.

[Food4Thought]

Have margins not improved (still tight) for pharmacies in the last few years as direct prescription prices have increased from $3 to $5, and prescription trend is upwards, steep. Going to the Doc for a prescription, subsidized by the government, is much more cost effective then buying direct from a pharmacy...

*****

This misses the way the funding model is structured. The " was $3.00 , is now $5.00 " fee is a co-payment set by the Ministry of Health ie not in pharmacy's control. That co-payment is in effective a user tax - from the pharmacist's perspective the total payment per script hasn't grown - it's just the proportion that has changed ( more coming from the end user rather than being funded by the Govt.

Hi GarryB. Thank you for updating me on this small, but important piece of information. I certainly got that wrong. What is your perspective on PHB as a long term investment?

Cheers

[Food4Thought]

Pharmacybrands Limited is New Zealand’s only listed retail pharmacy group and comprises the Unichem,
Amcal, Life Pharmacy, Radius Pharmacy and Care Chemist brands. In total the Company represents 301
retail outlets operating throughout New Zealand. Of the 301 retail outlets, the Company has an ownership
interest in 74 pharmacies. The Company also has an ownership interest in 11 Radius Medical Centre
companies.

That is a lot of businesses under one Umbrella Brand.

[Food4Thought]

Does anyone think that PHB has a few too many brands under their control? Would they not be better to sell down their less favorable operations and focus on the core business?

[zigzag]

Does anyone think that PHB has a few too many brands under their control? Would they not be better to sell down their less favorable operations and focus on the core business?

They in the process of consolidating their brands at the moment. I'm not sure which ones they're keeping, and which ones will be rebranded, but the info. is most likely in their latest report. I think this stock is a quiet little achiever, and flies under most peoples radar.

[benjitara]

yes they're restructuring their brands under "life' and one other and also doing store refits. To me the stock is a interesting study... Their retail has remained flat for the last couple of reports and their margins are under pressure. The pharmacy is also regulated outside factors. The main positive to come out of recent reports is their buy in to medical centers which would be most progressive thing they could do in my opinion. I still have the stock overvalued by some 10%

[noodles]

yes they're restructuring their brands under "life' and one other and also doing store refits. To me the stock is a interesting study... Their retail has remained flat for the last couple of reports and their margins are under pressure. The pharmacy is also regulated outside factors. The main positive to come out of recent reports is their buy in to medical centers which would be most progressive thing they could do in my opinion. I still have the stock overvalued by some 10%

Gross Margins and NPAT improved in the last Half Year result.

[Food4Thought]

Thanks. I have a feeling this is still an under valued stock. Long term, I see it trending upwards with an ageing population. Certainly recommend this share if RYM, SUM, are in your portfolio. They go hand in hand in my eyes.

[noodles]

Same store sales need to start increasing for me to buy in again.

Like all retailers, the internet is an issue.

[Lizard]

So from April PHB will become "Green Cross Health" with ticker GXH... I do hope we don't get mixed up with the aussie Greencross Ltd, GXL, or we may find ourselves crossing the human-pet divide like EBOS!

[Food4Thought]

Ticker change soon... does this mean a new Thread needed? Or can we stay Retro and keep the old name for style and specialness. Someone's been selling 10k of shares a day, for about the last week, someone else buying them, nothing else happening... what for/why/reasoning?

[Food4Thought]

Anyone else struggling to access the depth of the share, every day, for the last week or so, and $12300 of shares sells on each of those days. Why? Why? Why?

[Lizard]

Because they are now called "Green Cross Health" and the code is GXH... try that :) For some reason, the ticker hasn't just transferred over (at least in Direct Broking) like it normally would.

[Food4Thought]

Because they are now called "Green Cross Health" and the code is GXH... try that :) For some reason, the ticker hasn't just transferred over (at least in Direct Broking) like it normally would.


Hi Lizard. Yes, you are totally right. I was thinking it would happen automatically with ASB and I guess it doesn't. I checked the GXH ticker and presto. Meh... maybe a note to the market on the day things change.... they probably did, and maybe I have not read a info post for PHB on the 1st April somewhere... or maybe they didn't...

[percy]

A good result.Net profit up 15.57% on Revenue up a modest 3.81%.

[noodles]

A good result.Net profit up 15.57% on Revenue up a modest 3.81%.
A very good result. As I recall revenue was down at the half year, so they have turned that around.
However, look at the chart. This result was already priced in! Price has risen 15% in the last month on no news.
Anyway, this is retail. I thought you didn't touch retail Percy?

[percy]

A very good result. As I recall revenue was down at the half year, so they have turned that around.
However, look at the chart. This result was already priced in! Price has risen 15% in the last month on no news.
Anyway, this is retail. I thought you didn't touch retail Percy?

I don't hold[retail].Yet I know Peter Merton's reputation .He joined the Ebos board after they brought Propharma from Zuellig group.A very clever business man.

[benjitara]

A interesting stock that I've been following but don't hold. It came close a couple of months back around the $1.10 mark. I'd still like to see the breakdown of medical vs retail and see if the retail is sustainable over a extended period of time as competition was surpressing that part of the business over the last 18 months. the medical acquisitions would surely have less margin in them? A slow burn but I'm still following it.

[Lizard]

Yes, I am happy with that result - right on target, although another 0.25cps on the dividend would have been nice... my husband would say that we women are never happy! :p

Overall, happy with that, and relieved that the price has finally picked up a little of late. Think it is probably my second largest NZX holding (for now) after percy's favourite... HNZ.

[janner]

Hope you do not have 3rd 4th 5th and 6th as your competition picks Liz :-))

[zigzag]

Yes, I am happy with that result - right on target, although another 0.25cps on the dividend would have been nice... my husband would say that we women are never happy! :p

Overall, happy with that, and relieved that the price has finally picked up a little of late. Think it is probably my second largest NZX holding (for now) after percy's favourite... HNZ.

I also thought the dividend might have been a tad higher, even 4c, but I will take what is on offer. It is still 7c for the year and 2c higher than last year. Overall I am quite happy with my investment in this company.

[Lizard]

I was just about to change the title on the thread when someone beat me to it... just as well, I might have been tempted to tease an old friend about post #2.

[Food4Thought]

Good result. Will be better next year at this rate of winter wonderfulness and the amount of people crook, getting crook etc. Clothing, heaters, blankets... they seem to be selling well too. For some of us a long winter is a good winter. (I prefer sunnier conditions myself)

[Snow Leopard]

I was just about to change the title on the thread when someone beat me to it... just as well, I might have been tempted to tease an old friend about post #2.

But what about this post (http://www.sharetrader.co.nz/showthread.php?7646&p=374418&viewfull=1#post374418) ?

Mind you liquidity is still not it's strong point is it ?

Best Wishes
Paper Tiger

[Food4Thought]

It is an interesting business to be in, Pharmacies and Health Care. It is well exposed to an increase in users due to the ageing population requiring more medication and care/services. I haven't visited any pharmacies recently... I hope that they are also starting to offer more Eco friendly products and a wider range of alternatives on the shelves. Maybe looking into a different channel... A better online presence... Whose had look at the proximity of resthomes to these pharmacies?... Convenience is key for the less mobile markets segments.

[Food4Thought]

Any idea where the sudden 150000 shares are just appearing and being bought from? Hardly any buyer depth and then, boom. Its not huge, yet noticeable.

[Food4Thought]

http://www.stuff.co.nz/national/health/10299734/How-bad-is-this-flu-season

Could help this years income.

[Food4Thought]

The recent news has certainly given GXH a good boost. Not surprised, yet I am optimistic on this business, I see GHX on the up.

[James108]

Did anyone go to the annual meeting?

[Food4Thought]

Did anyone go to the annual meeting?

I wish I was able to go James. With the S/P rising at a steady rate, there must have been some great snacks on offer at the annualmeeting. I am also keen to hear from anyone who attend the meeting.

[zigzag]

No great snacks at the AGM. Just your regular type muffins, apple or blueberry, if my memory is correct. Nothing extraordinary was revealed at the meeting. Really, if you read the transcript of Peter Mertons address then you're pretty much in the loop. He did add that they expect opportunities to arise in the healthcare field, but also said that it was hard work out there, especially in retail. As for the recent rise in the share-price, I doubt if it is anything to do with anything said at the AGM. My guess is that a fund has decided to take a stake, or increase an existing holding. Because this company is so tightly held, they have had to bid up the price. The top twenty or so shareholders control about 80% of the stock. While one shouldn't grumble at a rising share-price, I was quite happy buying the stock at around $1.20, but it would seem as though those days are now in the past.

[Food4Thought]

No great snacks at the AGM. Just your regular type muffins, apple or blueberry, if my memory is correct. Nothing extraordinary was revealed at the meeting. Really, if you read the transcript of Peter Mertons address then you're pretty much in the loop. He did add that they expect opportunities to arise in the healthcare field, but also said that it was hard work out there, especially in retail. As for the recent rise in the share-price, I doubt if it is anything to do with anything said at the AGM. My guess is that a fund has decided to take a stake, or increase an existing holding. Because this company is so tightly held, they have had to bid up the price. The top twenty or so shareholders control about 80% of the stock. While one shouldn't grumble at a rising share-price, I was quite happy buying the stock at around $1.20, but it would seem as though those days are now in the past.

How is the NZ flu season going? Long winter?
Thanks for the info on how tightly held it is. That was my understanding too. Hence the low volumes and the increasing price. Kind of like how Briscoes use to be. Then again... I could be wrong. I like the tightly held aspect. Shows good support and clever thinking, why have many many small holders.

[Food4Thought]

Up and coming dividend. Any one know what the divi may be?

[benjitara]

Very happy with recent acquisitions by GXH. Pity I didn't get in at $1.15 when the stock was on my watchlist but management certainly seems hell-bent on a expansion into healthcare which looks a better long-term play than retail in pharmacy businesses. I wonder if we'll see them sell off that arm of the business in years to come?

[Food4Thought]

Hi Benjitara. I don't believe they will sell the pharmacy side out too quickly. On another matter if someone visits the doctors, they need a pharmacy, more doctors visits, more pharmacy use. Growing population with a dependence on doctor prescribed remedies. I look at America in regards to the growth of prescription rates. For me, this one is a keeper long term. Most interested in the up and coming dividend news... when ever this may be. I wish they would offer more shares to current holders to raise capital for further expansion/acquisition as well.



Very happy with recent acquisitions by GXH. Pity I didn't get in at $1.15 when the stock was on my watchlist but management certainly seems hell-bent on a expansion into healthcare which looks a better long-term play than retail in pharmacy businesses. I wonder if we'll see them sell off that arm of the business in years to come?

[benjitara]

Hi Benjitara. I don't believe they will sell the pharmacy side out too quickly. On another matter if someone visits the doctors, they need a pharmacy, more doctors visits, more pharmacy use. Growing population with a dependence on doctor prescribed remedies. I look at America in regards to the growth of prescription rates. For me, this one is a keeper long term. Most interested in the up and coming dividend news... when ever this may be. I wish they would offer more shares to current holders to raise capital for further expansion/acquisition as well.

I agree that this now a long term hold. With pharmacy retail stagnant I think they are on the right track with recent actions.... It'll be a nice ride over the next few years with this one.

[bull....]

if i didnt pick snk and sli this stock may have had me leading the competition lol

[Food4Thought]

Anyone know when the DRP shares would hit your holiday for GXH?

Very Merry Christmas to all the GXH holders and people who bother to read this thread. Let 2015 be another excellent year.

[Lizard]

Anyone know when the DRP shares would hit your holiday for GXH?

Very Merry Christmas to all the GXH holders and people who bother to read this thread. Let 2015 be another excellent year.

You will have received them on Friday at $2.115 per share:
https://www.nzx.com/files/attachments/206004.pdf

[Food4Thought]

Cheers, notice came through by email today. Merry Christmas.... ho ho ho


You will have received them on Friday at $2.115 per share:
https://www.nzx.com/files/attachments/206004.pdf

[Food4Thought]

Would GXH make an interesting buy out/take over by a much larger overseas based company?

[Food4Thought]

Nice to see Grant Bai - CEO of GXH purchasing 104 080 shares on market for a lazy $2.10 per share.

If a man in the loop knows a thing or two about running a profitable company with a forward driven market segment, I would anticipate that his expectancy on return is better than average, plus chances of achieving this, to be nicely weighted.In my view, a good time to buy after a high of $2.40 only earlier this year. Still a good option for those considering their portfolio egg mix.

[Food4Thought]

Operating revenue should increase a bit due to recent acquisitions. Look forward to this years end of year results.

[Nasi Goreng]

I'm expecting results to be published next week but can't find any date on their website. Is there any formality required to the date that a company reports? It seems quite backyard to just post without setting a date.

[BlackPeter]

I'm expecting results to be published next week but can't find any date on their website. Is there any formality required to the date that a company reports? It seems quite backyard to just post without setting a date.

They need to publish results within 3 months of the end of the financial year. Some companies announce their publication dates in advance, others don't. However - if you really want to know, just ask their investor relations person. The announcement date is not normally a secret, some just decide not to publish it.

[benjitara]

Disappointing result for mine. Flat profits on revenues being 25% up and the Pharmacy margins actually down. With medical acquisitions only being about 10% of turnover I'll have to take a very long-term look on this stock.

DISC sold some on report.

[James108]

Sold my remaining shares today. I was expecting a narrow margin on the home care aquisition but it was less <1%, which is lower than I expected. Was also not expecting pharmacy side of things to be down.

[Food4Thought]

This company is one I can see getting eyed up for a buy out or acquisition, if they don't try to dominate this sector themselves.
Well run business, not the easiest environment to be operating in, yet a sector the community can't do without. Not letting the slight sidestep effect my holding position.
Long term. Big win.

[Food4Thought]

This company is one I can see getting eyed up for a buy out or acquisition, if they don't try to dominate this sector themselves.
Well run business, not the easiest environment to be operating in, yet a sector the community can't do without. Not letting the slight sidestep effect my holding position.
Long term. Big win.

Big heavy start to winter, spring will see a huge increase in pollen's. BGR, WHS, KMD, THL, GXH, AIR, ELECTRIC providers... going to be an interesting end of year.

[sashadidi]

You might need to factor the actual declining rate of of return on the core business of the pharmacy sector being dispensing with its lack of increase in remuneration since 2001 ongoing lower drug prices causing diminished returns from wholesaler rebates
caused by constantly lowering drug prices, the move to robotics causing a decline in the customer count because of the lack of interaction between patients and the pharmacist. they are buying pharmacies for well over the odds ,my friend got 40% ($500000.00) more than he expected from the market as they are splashing out shareholders money willy nilly and putting in managers who do not care enough to grow the business , the idea of having a manager will never match a owner operator although they have their own version of that but it is not a long term winner because of their business model.

disclosure, I am a pharmacist in business and have had them take over near me, we gained 10% business within a year because of their management style... being uninterested staff who do not really care for the customer

[percy]

You might need to factor the actual declining rate of of return on the core business of the pharmacy sector being dispensing with its late of increase 2001, lower drug prices causing diminished returns from wholesaler rebates
caused by constantly lowering drug prices, the move to robotics causing a decline in the customer count because of the lack of interaction between patients and the pharmacist. they are buying pharmacies for well over the odds ,my friend got 40% ($500000.00) more than he expected from the market as they are splashing out shareholders money willy nilly and putting in managers who do not care enough to grow the business , the idea of having a manager will never match a owner operator although they have their own version of that but it is not a long term winner because of their business model.

disclosure, I am a pharmacist in business and have had then take over near me, we gained 10% business within a year because of their management style... being uninterested staff who do not really care for the customer

Very interesting post thank you.
I agree that owner operator businesses seem to have it over company run businesses.

[Food4Thought]

Very interesting post thank you.
I agree that owner operator businesses seem to have it over company run businesses.

I agree, Owner operators are much more passionate and have a better, personal approach.
Market power, size of network reach.

I love visiting small boutique retail stores, this sector has shrunk dramatically in recent years. Pharmacies, which I have had several friends own and operate successfully, are under the same pressures. Some people I know through work, customers have been pharmacy owners. I know that I prefer personalized service, this normally comes at a cost. Paying a premium to buy out the competition is normal business practice, especially if you can afford it. Briscoes and GXH have some interesting similarities in the approach. Slow and Steady.

Slowely, the little holders sell up, and the bigger guys, accumulate. I see this company doing exceptionally well long term, if they can keep a steady pace on. Discount Pharmacy stores and online competition are certainly a threat. yet I have the feeling that they will take hold of this opportunity and also join in on this business growth area. Current sellers are selling in low volumes, and after Ex Div date. Perhaps a few staff who want to have a warm holiday away from the cold NZ winter, or go to enjoy the snow. No surprises there.

How many brands of pharmacies and blood testing practices/GPS do you see out there? If your sick, you want to get your doctors visit and medication today, not once payment clears and delivery happens. A lot of the people visiting pharmacies and doctors are time poor and in need of the service, so the wallet opens.

Certainly there will be challenges, yet they are doing a darn good job, in my opinion, at working through the implications that their environment puts them against.

This winter will see a huge number of people down with the flu, climate related depressions and spring, could be a wet one if the winter continues like it has started. I don't go to the pharmacy to get my sunscreen, yet I do go there to get my prescriptions when I need them.

Happy Thursday thinkers and doers, looking forward to the weekend.

[Food4Thought]

Small parcels selling low. Wouldn't be concerned long term. This winters numbers are going to make for interesting figures come the interim 2015 results. Only a couple of percent increases in sales and numbers could spell good improvements in performance.

[Nasi Goreng]

The most illiquid stock in my portfolio. The thing that prevents me from topping up is this exact reason.

While I don't think current overseas events will have a dramatic effect on GXH, if there is ever a reason that I have to get out of this stock, its going to be real painful.

[James108]

In my opinion to justify SP >$2.00 earnings growth need to be >5% p.a. Recently GXH have been a disappointment in this department and I don't see that changing in the short term.

Disc: sold out after last report

[benjitara]

I also sold out last report due to the fact that their core business (pharmacy) continues to struggle to produce profitability while the margins from their medical acquisitions tended to be smaller than I originally thought they would be. This led me to believe I couldn't/wouldn't PURCHASE the stock for it's trading price at the time so I sold out.
A business I monitor closely and I could well be in again if I see better operations in future reporting.

[Food4Thought]

http://www.stuff.co.nz/business/money/70183652/seven-wealth-secrets-of-the-superrich

Think there are some interesting points in this article that can relate to this enterprise and also the retirement sector, as they do have some synergies. Then again, it is from stuff.

I'm highly optimistic about GXH. Happy guess says $3+ by 2019. There will be a big shake in this sector that will cause a positive for this business. I only go on a hunch from what I see overseas. And ever more so, buyer behavior.

I know there are negative signals for retail, yet that's currently in transition. *Hold*

[Nasi Goreng]

ka ching!

https://nzx.com/companies/GXH/announcements/267535

[Food4Thought]

ka ching!

https://nzx.com/companies/GXH/announcements/267535

:eek2: This is prior to a exceptionally well performing year at a guess...

Oh heavens... This is so good

[Food4Thought]

:eek2: This is prior to a exceptionally well performing year at a guess...

Oh heavens... This is so good

Speculators can even take a good gamble with a 15 cent special dividend for on the book holders by 7 August... Payment Mid August...
:D

[Buffett Jr]

How much room for growth is there for GXH?

Being an NZ based business, there is only so much acquisitions they can complete without straying from their core business.

[BlackPeter]

How much room for growth is there for GXH?

Being an NZ based business, there is only so much acquisitions they can complete without straying from their core business.

Good question. I guess their pharmacy wing looks quite saturated. Probably still lots of opportunities in the rest of the medical market (medical centre's, care), but they have not yet proven that they are able to make money in these other areas.

I would see as well lots of potential in increasing efficiencies in the pharmacy market. From a user perspective - they are are hopelessly inefficient compared to many overseas pharmacies, but this might be as well related to requirements of the NZ health system.

So I guess, I do see potential in NZ for a company in this industry to grow their profits, but I am not sure yet, whether GXH management demonstrated so far the skills to utilise this potential.

[Buffett Jr]

I've looked into companies that grow primarily by acquisition and also held some. When they start to sway from their bread and butter business, they tend to not do so well in terms of margins and return on incremental capital. Feel this might be the case with GXH.

Other thing is in order to grow eps, they start to pay more P/E multiples for the businesses they acquire.

[BlackPeter]

Director buying (roughly 25k shares): https://www.nzx.com/files/attachments/240188.pdf

[Jerry]

Ingenuous question here. Why did they give out such a great special dividend when their borrowings are so high?

[Lewylewylewy]

What's the debt gearing on gxh?

[BlackPeter]

What's the debt gearing on gxh?

liabilities to total assets was 59% at last balance date (March 2016). Quite normal I would have thought ...

[winner69]

What's the debt gearing on gxh?

You think $73m debt v $94m equity too high?

I assume you suggesting that is an issue.

[BlackPeter]

Directors don't seem to be concerned about the gearing ...

Both Andrew Bagnall as well as
https://www.nzx.com/files/attachments/245710.pdf

Peter Merton slightly pop up their 43,6m odd shares (each) by roughly 31600 shares:
https://www.nzx.com/files/attachments/245711.pdf

(Not sure - could be DRP or director fees, but still good sign - they certainly have skin in the game)

[Lewylewylewy]

+7.8% so far today. My question is: huh?!

[BlackPeter]

Gosh ... the SP graph looks not very inspirational these days - does it? Cross of death in November and downhill from there on no news.

Suppose markets don't believe anymore in the growth story ... and on a pure PE / low growth basis they are obviously still significantly overvalued.

Discl: sold out around the XoD ...

[Nasi Goreng]

I think that volumes are so low, that its really easy for share price to go up and down on no news at all.

Its a good business and theres still a growth story there. Good buying around these levels I reckon.

[BlackPeter]

I think that volumes are so low, that its really easy for share price to go up and down on no news at all.

Its a good business and theres still a growth story there. Good buying around these levels I reckon.

Volumes not that low - and we are talking now already the 5th month after the XoD, i.e. it is not a blib either.

But sure - markets can be wrong - that's what astute investors exploit. Not sure though, whether I'd see them at this stage as a bargain:

Looking into my spreadsheet: average P/E 23, forward PE (based on my guess ...) 16 and growth rate (based on the HY report): 7.7%; I'd say the current SP looks about right, but certainly not a bargain. For it to go up again, they need to pull in my view another rabbit out of the hat (which they might ... but I just don't see it).

[Food4Thought]

Volumes not that low - and we are talking now already the 5th month after the XoD, i.e. it is not a blib either.

But sure - markets can be wrong - that's what astute investors exploit. Not sure though, whether I'd see them at this stage as a bargain:

Looking into my spreadsheet: average P/E 23, forward PE (based on my guess ...) 16 and growth rate (based on the HY report): 7.7%; I'd say the current SP looks about right, but certainly not a bargain. For it to go up again, they need to pull in my view another rabbit out of the hat (which they might ... but I just don't see it).

I agree BlackPeter, not really exciting news here. I was hoping they were going to be able to improve their pharmacy business and come up with some better results. Price went a bit too high for what I perceived their value and return... so I sold out and with my gain purchased another lot of SUM.

Long term, still think they'll do better than average and not much competition, especially competition that is listed on the NZX etc.

[James108]

I sold out a few years ago now after the substantial rerating in terms of P/E. I never thought the growth prospects supported such high valuation.

[value_investor]

A bit of a head-scratcher this one. Had so much hype behind it but a lot of money being spent by management on acquisitions that were perhaps not the greatest. I also think investors got ahead of themselves a little bit on its future growth prospects.

A lot of the profit still coming from the Pharmacy side of the business, with the other two business units still looking like problem children. Also it would make me nervous that they haven't looked to be bold on any front.

[noodles]

Steve Browning (CFO) speaking in Auckland on Nov 15.
Details here:
https://www.sharetrader.co.nz/showthread.php?10844-NZSA-Auckland-Meetings-and-Events&p=691467#post691467

[hardt]

A bit of a head-scratcher this one. Had so much hype behind it but a lot of money being spent by management on acquisitions that were perhaps not the greatest. I also think investors got ahead of themselves a little bit on its future growth prospects.

A lot of the profit still coming from the Pharmacy side of the business, with the other two business units still looking like problem children. Also it would make me nervous that they haven't looked to be bold on any front.

The pharmacy side of things is going to come under pressure once the chemist warehouse arrives in NZ.

[value_investor]

I don't think GXH are prepared in competing with a company such as Chemist Warehouse. I think that the online platform is about 2 or years late and given that NZ is a small population as it is, it could be a rocky path ahead.

[Jerry]

Chemist Warehouse is not a real pharmacy as far as I can see, their online catalog is not much medical. But then I don't know how much GXH depends on sales of cosmetics and snake-oil for its profits either.

[Pipi]

What do you mean by snake-oil?

[Vish]

Chemist Warehouse is not a real pharmacy as far as I can see, their online catalog is not much medical. But then I don't know how much GXH depends on sales of cosmetics and snake-oil for its profits either.

The stores I went to in Australia they were a pharmacy (prescriptions and all), not sure about our one. They stock a lot of products from medicinal to health and skin care. Have always made a point of dropping by (oz store that is) and usually come out with a few things. Glad they've opened in NZ, hoping for health competition in our over-priced consumer market.

[Food4Thought]

I don't think GXH are prepared in competing with a company such as Chemist Warehouse. I think that the online platform is about 2 or years late and given that NZ is a small population as it is, it could be a rocky path ahead.

They will need to act fast if they want any chance against Chemist Warehouse. Chemist Warehouse is ruthless and knocking back the higher wages for employees as a lot of pharmacies are simply not able to keep up with the discounts offered (in Australia).

The buying up of medical practices was a clever position as there is great profit potential as it is a technical enterprise, often with many many years of patient loyalty.

I sold out over a year ago as I was concerned for their long term as their pharmacy side did not impress me anymore. Prices are often a bit high in the pharmacies, where the service is getting ever less capable. Online companies such as Iherb and places where you can buy specialised products are also growing very quickly. Super market general consumer products which pharmacies provide has also increased a lot. I really like GXH and hope that they make some evasive maneuvers to keep ahead or watch their market share shrink very fast, and shareholders returns will dwindle. Keep your loyal costumers loyal.

[Onion]

What do you mean by snake-oil?

Being able to buy homeopathic remedies in pharmacies is odd I reckon. Then again the placebo effect is real.

https://www.pharmacytoday.co.nz/news/2015/march-2015/16/pharmacists-defend-sale-of-homeopathic-products.aspx

[Justin]

Hi all. It’s good entry point now $1.66?

[percy]

Hi all. It’s good entry point now $1.66?

The share price appears to be still in a down trend,having fallen in the past year, from $2.50 to $1.60.
Current eps are 12.87 cents,the PE is 12.9 and the yield is 4.22%.
It would appear the arrival of Chemist Warehouse in NZ, has spooked the market.
So if you are thinking of buying,take care.
At some stage I expect Ebos will take them over,but at what price,I do not know?

[Justin]

The share price appears to be still in a down trend,having fallen in the past year, from $2.50 to $1.60.
Current eps are 12.87 cents,the PE is 12.9 and the yield is 4.22%.
It would appear the arrival of Chemist Warehouse in NZ, has spooked the market.
So if you are thinking of buying,take care.
At some stage I expect Ebos will take them over,but at what price,I do not know?

Very good suggestion. thank you Percy

[winner69]

Very good suggestion. thank you Percy

You obviously like them Justin

Share price way down from the close to 3 bucks not that long ago ..... when do you think the downtrend will stop ..... 150 ... 125 ....100

Good luck anyway .....might be an inspired pick for 2018


Percy - Ebos tend to not pay over the odds do they?

[winner69]

Have to admire how they do a plain language set of accounts ....more companies should follow their example.

[percy]

Percy - Ebos tend to not pay over the odds do they?

Well buying GXH on a PE of 12.9 while their [EBO] PE is 21.19 would be seen as eps accrective.
EBO's 40% shareholder Zuellig, already is a joint holder with Andrew Bagnell via Peter Merton of control of GXH,so it would depend on either Andrew Bagnall wanting to sell,or EBO,Zuellig making an acceptable offer to Bagnall.
I have always thought Bagnall, with his interest in planes and cars, would be happier having a large holding in TRA.
Interesting things happening in Australia, with The Chemist Wholesale putting their supply wholesaler/distributor up for "tender".
The fun would be if Ebos won that agreement/contract.

[winner69]

Well buying GXH on a PE of 12.9 while their [EBO] PE is 21.19 would be seen as eps accrective.
EBO's 40% shareholder Zuellig, already is a joint holder with Andrew Bagnell via Peter Merton of control of GXH,so it would depend on either Andrew Bagnall wanting to sell,or EBO,Zuellig making an acceptable offer to Bagnall.
I have always thought Bagnall, with his interest in planes and cars, would be happier having a large holding in TRA.
Interesting things happening in Australia, with The Chemist Wholesale putting their supply wholesaler/distributor up for "tender".
The fun would be if Ebos won that agreement/contract.

EBO would pay cash wouldn’t they?

[percy]

EBO would pay cash wouldn’t they?

GXH's current market cap is $237.6 mil,so EBO, as you point out they could pay cash.
I don't think they would issue shares,as Zuellig own 40% of EBO ,and issuing them shares would mean Zuellig would have to make a full takeover of EBO.

What I would find interesting is seeing where Andrew Bagnall invests,should he sell out of GXH.

[value_investor]

The share price appears to be still in a down trend,having fallen in the past year, from $2.50 to $1.60.
Current eps are 12.87 cents,the PE is 12.9 and the yield is 4.22%.
It would appear the arrival of Chemist Warehouse in NZ, has spooked the market.
So if you are thinking of buying,take care.
At some stage I expect Ebos will take them over,but at what price,I do not know?


There is a term in behavioural finance called overreaction bias which I think is at play. Basically, bad news is reacted upon twice as much (sometimes more) as good news. This is mostly due to an emotive response by people who have their money tied into a security. Certainly can see that with the slide from about 2.75 all the way down to 1.60 now.

I still think the longer term prospects on the company is very good given the trends at play in the sector. Would be a good time to get in and add too if you had a retirement portfolio. Short term, a lot of the heavy lifting is being down by the pharmacy side of the business.

I agree with you on EBO coming in and taking this one but its already pseudo owned by them behind the scenes by the looks of it.

[percy]

There is a term in behavioural finance called overreaction bias which I think is at play. Basically, bad news is reacted upon twice as much (sometimes more) as good news. This is mostly due to an emotive response by people who have their money tied into a security. Certainly can see that with the slide from about 2.75 all the way down to 1.60 now.

I still think the longer term prospects on the company is very good given the trends at play in the sector. Would be a good time to get in and add too if you had a retirement portfolio. Short term, a lot of the heavy lifting is being down by the pharmacy side of the business.

I agree with you on EBO coming in and taking this one but its already pseudo owned by them behind the scenes by the looks of it.

I think your summary is very clear,and I agree with all your points.

I agree also with W69's point about plain language set of accounts.
The business is very well run.
My only concern is just how profitable are Mall chemist shops ?

[value_investor]

I think your summary is very clear,and I agree with all your points.

I agree also with W69's point about plain language set of accounts.
The business is very well run.
My only concern is just how profitable are Mall chemist shops ?

I'm not too sure on mall shops. I'm guessing the play for GXH is to be paired next to medical centres that they own as well because the medical and pharmacy aspects really complement each other. People need to get their prescriptions, so this is what would drive foot traffic into the door. I also like the whole idea of offering flu shots in store bringing more people in.

Convenience is key I think, hence the online platform as well which looks like its mostly for their higher end, higher margin product.

[JeremyALD]

Quite a spectacular bounce, missed the boat on this one!!

[BlackPeter]

Quite a spectacular bounce, missed the boat on this one!!

Well, yes - but still below MA 200 (i.e. still in a downtrend), and to be fair - while the volume was above daily average, it is not that spectacular!

You might get well another chance to buy in ... though I am not sure, whether this chance will be an opportunity. I see lots of competition both for their prescription supply (Supermarket pharmacies) as well as for their cosmetics (online) and haven't really seen yet any innovation from GXH in this area.

NZ pharmacies are so incredibly inefficient compared with many countries overseas - and if GXH is not improving the system, than somebody else will and reap the benefits instead of them.

[Filthy]

great little uptick here. maybe still another 10% left in this run...

don’t think the (growing) older generation are really going to be that keen to ‘shop online’ for their health products

provided they can go into a well-run store, get great face-to-face assistance, quality health advice and good ‘old-fashioned’ service, no reason not to keep coming back, especially if stores can be ‘well positioned’ next to medical centres to help drive extra foot traffic…

filthy

[Nasi Goreng]

I’m an online shopper for heaps of stuff but have rarely bought any medical supplies online.

Lets face it, when you are sick, you tend to want medical supplies asap. I can’t imagine too many people leaving their doctors with a script and then ordering online.

[whatsup]

Cannot quite understand the recent price increase bearing in mind the entry into N Z of the Aussie discount chemist which has captured such a meaningful share of that market, but time will tell.

[value_investor]

Hmm this is interesting, possible news incoming soon? Unless this is a sharp correction in the downturn.

[winner69]

Well buying GXH on a PE of 12.9 while their [EBO] PE is 21.19 would be seen as eps accrective.
EBO's 40% shareholder Zuellig, already is a joint holder with Andrew Bagnell via Peter Merton of control of GXH,so it would depend on either Andrew Bagnall wanting to sell,or EBO,Zuellig making an acceptable offer to Bagnall.
I have always thought Bagnall, with his interest in planes and cars, would be happier having a large holding in TRA.
Interesting things happening in Australia, with The Chemist Wholesale putting their supply wholesaler/distributor up for "tender".
The fun would be if Ebos won that agreement/contract.

Chemist Warehouse tending towards an IPO rather than a trade sale.

They touting as being worth $5 billion as well.

Maybe astute punters have taken this on board and applied same sort of multiples to GXH and worked they are cheap cheap cheap ......or maybe Chemist Warehouse have thought about buying GXH

[percy]

Chemist Warehouse tending towards an IPO rather than a trade sale.

They touting as being worth $5 billion as well.

Maybe astute punters have taken this on board and applied same sort of multiples to GXH and worked they are cheap cheap cheap ......or maybe Chemist Warehouse have thought about buying GXH

To buy GXH you would have to get the major shareholders Bagnall and Merton on board.The Merton holding is tied up by Zuellig who are 40% owner of EBO.With EBO bidding for The Chemist Warehouse's wholesaler contract,it could be said "we live in interesting times."

[peat]

I’m an online shopper for heaps of stuff but have rarely bought any medical supplies online.

Lets face it, when you are sick, you tend to want medical supplies asap. I can’t imagine too many people leaving their doctors with a script and then ordering online.

yeh this is the advantage GXH have, those locations right next to the doctors office. of course the money is made on the other products not the antibiotics etc, but one thing (purchase) leads to another....which is of course a song by The Fixx - ​perfect!

[hardt]

I have been buying stuff on chemistwarehouse.au for the past year now.

Cologne, anti-histamines, toothpaste, shampoo etc.

Orders are usually free shipping for me and are received within 4 days... dirt cheap as well.

Telfast 180mg fexofenadine HCL NZD per pill

Life Pharmacy = NZD 0.92 pp
C. Warehouse = NZD 0.47 pp -49%

Nicorette gum 2mg NZD per piece

Life Pharmacy = NZD 0.39 pp
C. Warehouse = NZD 0.22 pp -43%

Lower prices are across the board with most OTC medicines on offer.

Until virtual doctors visits are finally introduced here, I will be getting scripts from the local chemist.

[stoploss]

I have been buying stuff on chemistwarehouse.au for the past year now.

Cologne, anti-histamines, toothpaste, shampoo etc.

Orders are usually free shipping for me and are received within 4 days... dirt cheap as well.

Telfast 180mg fexofenadine HCL NZD per pill

Life Pharmacy = NZD 0.92 pp
C. Warehouse = NZD 0.47 pp -49%

Nicorette gum 2mg NZD per piece

Life Pharmacy = NZD 0.39 pp
C. Warehouse = NZD 0.22 pp -43%

Lower prices are across the board with most OTC medicines on offer.

Until virtual doctors visits are finally introduced here, I will be getting scripts from the local chemist.

Hardt why not when you go to the DR get a prescription for the anti histamine ? I get loratide, and usually a 3 month supply so 90 pills for the prescription cost of $ 5.00 .
I just have a little list of what I need to stock up on , so when i sporadically goto the Dr I get a new Asthma inhaler ,Antihistamines , etc , etc as needed . Can't beat the cost of that .

[hardt]

Hardt why not when you go to the DR get a prescription for the anti histamine ? I get loratide, and usually a 3 month supply so 90 pills for the prescription cost of $ 5.00 .
I just have a little list of what I need to stock up on , so when i sporadically goto the Dr I get a new Asthma inhaler ,Antihistamines , etc , etc as needed . Can't beat the cost of that .

Last doctor visit I had was in 2016...

Far lower prices across the board from CW, I wish I had a kiwi alternative...

Chemists here are more medical than retail centric... this obviously means the low prices are not on the cards.

[whatsup]

Last doctor visit I had was in 2016...

Far lower prices across the board from CW, I wish I had a kiwi alternative...

Chemists here are more medical than retail centric... this obviously means the low prices are not on the cards.

There is a C W at St Lukes in Auckland and they will mail purchases, phone them.

[BlackPeter]

I’m an online shopper for heaps of stuff but have rarely bought any medical supplies online.

Lets face it, when you are sick, you tend to want medical supplies asap. I can’t imagine too many people leaving their doctors with a script and then ordering online.

Not online, but why not carrying your prescription into the next supermarket and pay only $2.50 (and sometimes no prescription fee at all) vs paying $5 per medication at the pharmacy to subsidize them for being inefficient? Many people need regular medication - all these $5 per medication do add up ...

[bull....]

nice bounce was a good pick i reckon to bounce

[winner69]

Good on 70 year olds driving their racing cars as fast as they can
https://www.stuff.co.nz/sport/motorsport/101162437/kiwi-driver-andrew-bagnall-in-hospital-after-crash-in-bathurst-12-hour

Good news the 40% plus shareholder in Greencross will be OK and back racing again soon I expect

Wonder what his wishes are for this shareholding are if next crash doesn't have a good ending

[value_investor]

Dropped to 1.60 yesterday and then back up to 1.69.

I see this one as mostly more of a retail play at the moment with most of the heavy lifting being done by the pharmacy sector. Obviously the long term play is on the healthcare side in NZ of rising population and also the retiree's.

My rule is to never invest in retail hence I haven't yet got in but tempting it is. Perhaps 1.50?

[BlackPeter]

Dropped to 1.60 yesterday and then back up to 1.69.

I see this one as mostly more of a retail play at the moment with most of the heavy lifting being done by the pharmacy sector. Obviously the long term play is on the healthcare side in NZ of rising population and also the retiree's.

My rule is to never invest in retail hence I haven't yet got in but tempting it is. Perhaps 1.50?

I guess the pharmacies alone are in my view quite inefficient, low (no?) growth and under heavy attack from supermarkets. The stock becomes more interesting if they manage to implement their vision of an integrated health care company, but it looks like the markets don't really believe anymore into their growth strategy. Show us the money - and the SP will take care of itself.

Not sure what it would be worth just based on the old pharmacy brands. One dollar would bring the long term PE (8 yrs) down to 10 ... and if we just take the last 5 years, than it would be even $1.20. Why pay more?

[winner69]

Chemist warehouse continue to apply the pressure

https://www.stuff.co.nz/business/105706347/free-prescriptions-competition-shakes-up-pharmacy-industry

Must be hard for the smaller pharmacy’s that they still have to pay the govt $5 for every script even if they don’t charge the consumer

[BlackPeter]

Chemist warehouse continue to apply the pressure

https://www.stuff.co.nz/business/105706347/free-prescriptions-competition-shakes-up-pharmacy-industry

Must be hard for the smaller pharmacy’s that they still have to pay the govt $5 for every script even if they don’t charge the consumer

They don't have to pay the government ... the article used a particularly strange way to express that the government subsidizes pharmacies in a big way.

The government calculate the retail cost of the medicine. This calculated retail price is high enough to make sure that even the most inefficient and worst run pharmacy in the country still will make a handsome profit.

Given that pharmacies are allowed to charge $5 prescription fee is the government than deducting $5 of this fictive retail price - and pay the reminder to the pharmacy for dispensing the medication.

Any pharmacy working a bit more efficient that the worst run pharmacy in the country makes a steal - and the discounters are prepared to return some of this steal back to the consumer.

Coming from overseas and with the benefit of knowing some different health systems I found NZ Pharmacies always expensive and highly inefficient. Good to see now some competition coming in.

[nocomment]

poor old gxh investors hanging in there hoping for a comeback ... unichem maxx not quite the miracle cure then ...

[value_investor]

According to the latest FS, the company makes 8.4% of profit on sales in the pharmacy segment (bottom line). Not impressive at all, and an introduction of a competitor that sells so much cheaper will lead that down.

With the current govt in charge and healthcare being viewed as a public good in NZ, its hard to see this being a home run. Even if it does well, regulation will get it eventually (see pay equity deal).

[nocomment]

6% drop in the last 5 days ... sinking ship?

[BlackPeter]

6% drop in the last 5 days ... sinking ship?

Don't think they are sinking, just coming down from the hype bubble of investors expecting a fast growing and profitable integrated health concern ...

Pretty sure they will stay afloat ;);

[hardt]

CW are taking larger and larger bites out of GXH's pharmacy business.

GXH need to focus less on operating standalone pharmacy's and more on the centres performance... Medical is going well.

Not a holder

[value_investor]

CW are taking larger and larger bites out of GXH's pharmacy business.

GXH need to focus less on operating standalone pharmacy's and more on the centres performance... Medical is going well.

Not a holder

Yikes! This is an awful result. That operating cash flow could be bringing in warning bells to go from 17m to 8.7m in just one year. It makes you wonder because pharmacy is so big and medical/community health really doesn't contribute that much right now

I'm not sure what they can do on the pharmacy side given the fact Chemist Warehouse want to expand like crazy. I went into the one in St.Lukes and the price differences are night at day on most things, so driving there to pick up a few things is actually worth it. Either way, GXH loses if they keep dropping their margins or keep margins the same imo because the market is so small.

Disc: Not a holder

[DarkHorse]

Relative who's worked in pharmacies for years says losing custom to CW, despite being a 20 minute drive away

[RTM]

Hopefully a good sign.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GXH/327850/291821.pdf

[BlackPeter]

Wow - SP at $1.14 more than 60% down compared to its peak value of $2.90 in May 2016 - and basically a textbook downwards slope since then.

10259

Average (backward) PE is now 11.3 - still not really cheap, particularly considering that we might move into PE contraction territory.

On the other hand - for the right competitor they might move into takeover territory. At what time are they cheap enough for a clued up overseas competitor to just buy the lot for a song and show the NZ healthcare system how efficient pharmacies could be operated?

Assuming they won't run NZ largest pharmacy chain (with some other health ad - ons) into the ground - where is the bottom PE? At 10? At 5? And will these margins continue to shrink given that any newcomer will be cheaper and better. Hard not to.

[winner69]

You going to have a punt then BlackPeter

[percy]

Wow - SP at $1.14 more than 60% down compared to its peak value of $2.90 in May 2016 - and basically a textbook downwards slope since then.

10259

Average (backward) PE is now 11.3 - still not really cheap, particularly considering that we might move into PE contraction territory.

On the other hand - for the right competitor they might move into takeover territory. At what time are they cheap enough for a clued up overseas competitor to just buy the lot for a song and show the NZ healthcare system how efficient pharmacies could be operated?

Assuming they won't run NZ largest pharmacy chain (with some other health ad - ons) into the ground - where is the bottom PE? At 10? At 5? And will these margins continue to shrink given that any newcomer will be cheaper and better. Hard not to.

You need to research the largest shareholder.[controlling interest].
It is a joint venture between Andrew Bagnell and Peter Merton,who look to have premptive rights on each other's shareholding.
Then you have to research who Peter Merton holds for.Himself or Zuelig?
Then look at what company Zuelig holds 40% of.
If you find it is Ebos then you are on the right track.
At this point in time you would most probably be right to think EBO already controls GXH,as well as being their major supplier.
My guess if Andrew Bagnell ever wants out, then EBO will take it over.
Otherwise, should EBO decide there are more benefits for them to have, they will make a takeover bid for GXH.
Note Zuelig representitive and EBO director Peter Williams is a GXH director.

[BlackPeter]

You need to research the largest shareholder.[controlling interest].
It is a joint venture between Andrew Bagnell and Peter Merton,who look to have premptive rights on each other's shareholding.
Then you have to research who Peter Merton holds for.Himself or Zuelig?
Then look at what company Zuelig holds 40% of.
If you find it is Ebos then you are on the right track.
At this point in time you would most probably be right to think EBO already controls GXH,as well as being their major supplier.
My guess if Andrew Bagnell ever wants out, then EBO will take it over.
Otherwise, should EBO decide there are more benefits for them to have, they will make a takeover bid for GXH.
Note Zuelig representitive and EBO director Peter Williams is a GXH director.

Interesting - EBOS market cap is 20 times the size of GXH. A takeover certainly wouldn't be a problem for them, but than - FMA might intervene ...

Unfortunate situation for the remaining retail shareholders.

[winner69]

Interesting - EBOS market cap is 20 times the size of GXH. A takeover certainly wouldn't be a problem for them, but than - FMA might intervene ...

Unfortunate situation for the remaining retail shareholders.

Any takeover will probably be one of those dastardly Scheme of Arrangement things with the Independent Directors recommending the deal at some price perceived to be cheap as (a steal in other words)

You’ll hate that BP so best to avoid getting involved?

[forest]

You need to research the largest shareholder.[controlling interest].
It is a joint venture between Andrew Bagnell and Peter Merton,who look to have premptive rights on each other's shareholding.
Then you have to research who Peter Merton holds for.Himself or Zuelig?
Then look at what company Zuelig holds 40% of.
If you find it is Ebos then you are on the right track.
At this point in time you would most probably be right to think EBO already controls GXH,as well as being their major supplier.
My guess if Andrew Bagnell ever wants out, then EBO will take it over.
Otherwise, should EBO decide there are more benefits for them to have, they will make a takeover bid for GXH.
Note Zuelig representitive and EBO director Peter Williams is a GXH director.

Great info Percy, much appreciated.

[RupertBear]

You need to research the largest shareholder.[controlling interest].
It is a joint venture between Andrew Bagnell and Peter Merton,who look to have premptive rights on each other's shareholding.
Then you have to research who Peter Merton holds for.Himself or Zuelig?
Then look at what company Zuelig holds 40% of.
If you find it is Ebos then you are on the right track.
At this point in time you would most probably be right to think EBO already controls GXH,as well as being their major supplier.
My guess if Andrew Bagnell ever wants out, then EBO will take it over.
Otherwise, should EBO decide there are more benefits for them to have, they will make a takeover bid for GXH.
Note Zuelig representitive and EBO director Peter Williams is a GXH director.

Thanks for sharing Percy, great researching, really helpful info :)

[Balance]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12202567

Hard to get excited about this stock with this kind of news!

[BlackPeter]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12202567

Hard to get excited about this stock with this kind of news!

NZ Pharmacies quite inefficient compared to many other countries. Where else would they ask a customer during a quiet time to wait 15 min to dispense their prescription medicine?

About time competitors moving in and creating a bit of excitement ...

[bull....]

more big competition

more competition with the arrival of cut-price operator Bargain Chemist

https://www.stuff.co.nz/business/111308458/cut-price-bargain-chemist-moves-into-central-wellington

[Food4Thought]

more big competition

more competition with the arrival of cut-price operator Bargain Chemist

https://www.stuff.co.nz/business/111308458/cut-price-bargain-chemist-moves-into-central-wellington

Good points. GXH has some strategic advantages with their acquisition of general practises, real estate and locations.

Feel it is currently relatively undervalued yet there is additional pressure
The company is proactive and needs to keep up with the competition or outperform in service and convenience.

A fast growing market with a bigger population base and more and more out of the box demand for personally solvable health issues.

Had myself my first over 100% RIO with this one some years ago. Was a great performer. Feel that cycle is coming close to potential again.

[Food4Thought]

Good divi stock at this price with a big upswing potential in share price increase.

Disc. Hold small parcel

[BlackPeter]

Hmm - don't follow them that close, but why would the appointment of an interim CFO be marked as "price sensitive"?

https://www.nzx.com/announcements/334716

This guy that good - or that bad? He seems to have a history with GFX, which probably is good. However - just wondering - given he worked as well with Evolve Education, maybe he is deemed as too experienced in processing red numbers?

[Food4Thought]

Hmm - don't follow them that close, but why would the appointment of an interim CFO be marked as "price sensitive"?

https://www.nzx.com/announcements/334716

This guy that good - or that bad? He seems to have a history with GFX, which probably is good. However - just wondering - given he worked as well with Evolve Education, maybe he is deemed as too experienced in processing red numbers?

Good point BP.

IMO it is showing credibility and ability to manage the current situation.

Some reporting due in the next week. Divi date Mid June. Paid towards end of June.

Let's hope there's some good news in there. Plenty of scope for pharmacy and medical. Online store and home delivery options.

Disc. Holding small parcel. 👌

[Food4Thought]

Company info

Spike in price probably attributed to results and pre divi due 19 June

https://www.nzx.com/companies/GXH/analysis

👌💛

[Food4Thought]

GXH Annual Report Out.

Result summary
• Revenue of $567m (+5.6%)
• EBITDA at $36.9m (+2.3%)
• Operating Profit $29.4m (-2.2%)
• Net Profit after Tax Attributable to the Parent Shareholders
of $16.1m (+3.2%)
• Pharmacy Revenue flat at $340m, Operating Profit down 5.5% at $27.3m
on the back of a record low cold and flu winter season and a decline in
gross margin as the company responded to competitive pressures
• Medical performed strongly with Revenue up 33.8% and Operating
Profit up 20.4% to $4.4m driven by an increase in enrolled patient
numbers from organic growth and selective acquisitions
• Community Health Revenue up 9.3% but Operating Profit $0.1m (down
$1.1m) as the division continues to struggle with under-funding from
various legislative changes
• Operating Cash Flow $29.5m (down $3.7m)
• Net Debt $32.5m (reduction of $6.0m)

Long term I believe this business has many more opportunities for growth. I am in favour of their direction with medical centre operations. Aware the pharmacy side is taking a slower growth path due to competition, yet they could grow in online sales themselves if they were to increase their focus in this area.

Reasonable divi 👌

[RTM]

GXH Annual Report Out.

Result summary
• Revenue of $567m (+5.6%)
• EBITDA at $36.9m (+2.3%)
• Operating Profit $29.4m (-2.2%)
• Net Profit after Tax Attributable to the Parent Shareholders
of $16.1m (+3.2%)
• Pharmacy Revenue flat at $340m, Operating Profit down 5.5% at $27.3m
on the back of a record low cold and flu winter season and a decline in
gross margin as the company responded to competitive pressures
• Medical performed strongly with Revenue up 33.8% and Operating
Profit up 20.4% to $4.4m driven by an increase in enrolled patient
numbers from organic growth and selective acquisitions
• Community Health Revenue up 9.3% but Operating Profit $0.1m (down
$1.1m) as the division continues to struggle with under-funding from
various legislative changes
• Operating Cash Flow $29.5m (down $3.7m)
• Net Debt $32.5m (reduction of $6.0m)

Long term I believe this business has many more opportunities for growth. I am in favour of their direction with medical centre operations. Aware the pharmacy side is taking a slower growth path due to competition, yet they could grow in online sales themselves if they were to increase their focus in this area.

Reasonable divi ��

Thanks FFT.
I was out cycling and missed this.
Disc: Holder, enjoying dividend and little else.

[percy]

I thought it was a good result.

[BlackPeter]

I thought it was a good result.

I guess "good" is relative, I would probably describe it as a mixed bag. While their health centers are doing well - the community service has clearly problems (only the government can fix) and the pharmacies (still their biggest business unit) do feel the squeeze.

Having said that - it appears they can stand the onslaught from discount pharmacies - and I think the medical centers may be the way to go (particularly integrated with pharmacies). In the short term - people say this flu season will be worse than the last one (which must be good for the pharmacists). Country running out of flu jabs at $29 or so per shot.

TA - wise: There are indications the share bottomed out and based on fundamentals it looks reasonably priced:

Forward PE (if we believe the analysts) is 8.3, forward earnings CAGR nearly 5. Not stellar, but not too bad for a healthcare stock. Good as well to see further debt reductions.

Ah yes - and one other wee thing I like about them - they try to make their financials readable even for people without a beancounting degree. Sure - this does not make the picture prettier, but much better understandable. I could think about one or two OCA-r companies who could learn from them ...

Discl: bought a small parcel and hope it will do better than TRA :);

[Leftfield]

I guess "good" is relative, I would probably describe it as a mixed bag. While their health centers are doing well - the community service has clearly problems (only the government can fix) and the pharmacies (still their biggest business unit) do feel the squeeze.

Having said that - it appears they can stand the onslaught from discount pharmacies - and I think the medical centers may be the way to go (particularly integrated with pharmacies). In the short term - people say this flu season will be worse than the last one (which must be good for the pharmacists). Country running out of flu jabs at $29 or so per shot.

TA - wise: There are indications the share bottomed out and based on fundamentals it looks reasonably priced:

Forward PE (if we believe the analysts) is 8.3, forward earnings CAGR nearly 5. Not stellar, but not too bad for a healthcare stock. Good as well to see further debt reductions.

Ah yes - and one other wee thing I like about them - they try to make their financials readable even for people without a beancounting degree. Sure - this does not make the picture prettier, but much better understandable. I could think about one or two OCA-r companies who could learn from them ...

Discl: bought a small parcel and hope it will do better than TRA :);

Good review and good luck with your investment..... looks sound to me.

[percy]

I thought it was a good result.

A good result for shareholders, in a company with so many challenges and low growth prospects.A credit to directors and management.
However I certainly would not be adding it to my portfolio.
Only prospects for shareholders of capital appreciation ,would be a takeover from EBO.As EBO already have virtual control, they may decide not to bother.
Perhaps EBO would be a sounder investment.

[winner69]

Chemist Warehouse taking over New Zealand ...mention of 70 stores

https://www.stuff.co.nz/business/115847919/chemist-warehouse-could-spell-the-end-of-the-local-chemist-as-it-spreads-across-the-country

[BlackPeter]

Chemist Warehouse taking over New Zealand ...mention of 70 stores

https://www.stuff.co.nz/business/115847919/chemist-warehouse-could-spell-the-end-of-the-local-chemist-as-it-spreads-across-the-country

Must be good for consumers ... and while I see some small pharmacies going down the drain, if GXH (ex Pharmacy brands) are not able to compete, than they better go home!

[Lisa]

I’m not going to drive 23mins to my nearest Mega Mall, when my local doctors (a Green Cross medical centre) has a pharmacy (a Unichem) right next to it. The Green Cross model is different to the Chemist Warehouse one and suited to New Zealand’s distributed population.

[BlackPeter]

I’m not going to drive 23mins to my nearest Mega Mall, when my local doctors (a Green Cross medical centre) has a pharmacy (a Unichem) right next to it. The Green Cross model is different to the Chemist Warehouse one and suited to New Zealand’s distributed population.

Welcome to the forum ... and you are absolutely right, some (probably most) people will pick the most convenient option for them to buy their medicines but some will pick the (for them) cheaper alternative, which will often be the discounter (e.g. because they are anyway going the mall).

We do have next to our GP a Unichem pharmacy (charges prescription fees and holiday / late hour penalties) with lots of often idle staff. Across the road is a Countdown with pharmacy which doesn't charge a prescription fee nor any penalties for the weekend. Haven't seen their staff idle yet. As well - lots of parking in front of the Countdown and people can use their NZ special waiting time for preparations to do other things than just sit around. Guess, where many people in this area get their medication from?

I think it is blatantly obvious that discounters will eat into GXH's market share for prescriptions, unless they smarten up. I don't think however it would be hard to dispense medication a bit smarter, faster and with less human involvement. It should be much easier for a big chain like GXH to improve their service and make it cheaper, than for a small pharmacy, i.e. I don't think it is a lost cause for them. They just need to smarten up.

As a share holder as well as a consumer I would be delighted if they would just do that.

[jg8512]

Welcome to the forum ... and you are absolutely right, some (probably most) people will pick the most convenient option for them to buy their medicines but some will pick the (for them) cheaper alternative, which will often be the discounter (e.g. because they are anyway going the mall).

We do have next to our GP a Unichem pharmacy (charges prescription fees and holiday / late hour penalties) with lots of often idle staff. Across the road is a Countdown with pharmacy which doesn't charge a prescription fee nor any penalties for the weekend. Haven't seen their staff idle yet. As well - lots of parking in front of the Countdown and people can use their NZ special waiting time for preparations to do other things than just sit around. Guess, where many people in this area get their medication from?

I think it is blatantly obvious that discounters will eat into GXH's market share for prescriptions, unless they smarten up. I don't think however it would be hard to dispense medication a bit smarter, faster and with less human involvement. It should be much easier for a big chain like GXH to improve their service and make it cheaper, than for a small pharmacy, i.e. I don't think it is a lost cause for them. They just need to smarten up.

As a share holder as well as a consumer I would be delighted if they would just do that.


Anyone have a sense what GXH's current market share is?
(In other words, what proportion of the market might chemist warehouse and GXH be able to take from the un-smartened pharmacists - before they are just fighting it out between themselves and countdown?)

[Lisa]

Thanks for such a well explained reply. I agree with you entirely and hope that the governance/management of GXH are thinking along the same lines.

[BlackPeter]

Anyone have a sense what GXH's current market share is?
(In other words, what proportion of the market might chemist warehouse and GXH be able to take from the un-smartened pharmacists - before they are just fighting it out between themselves and countdown?)

From their recent annual report - they (GXH) do have 360 stores. According to Dr Google are there overall 900 pharmacies in NZ. Obviously - there are smaller and larger pharmacies and I don't know whether GXH's pharmacies hit or exceed the "average turnover per NZ pharmacy", but based on the store numbers would I assume that their current market share is roughly 40%.

[BlackPeter]

Double bottom (red potatoes)?

RSI crossing back over the 20 (blue potato)

promising volume (yellow potato)


10807

Indicators starting to look friendlier - but obviously early days.

From a fundamental perspective: Backward PE (10 years) is 10 in combination with a backward CAGR of 12.

Forward PE is 7.1 ... but sure this involves forward looking estimates ;);

And sure - there are risks with new discount pharmacies coming up, but they appear to be fully priced in. And hey - the future market looks rosy: aging baby boomers need not just retirement villages but will need to buy as well more health care, medication as well as beauty products ...

Analyst consensus (4-traders) is $1.41, DCF valuation is $1.56.

In my view great buying around $1 ...

Discl: holding :);

[Filthy]

Double bottom (red potatoes)?

RSI crossing back over the 20 (blue potato)

promising volume (yellow potato)


10807

Indicators starting to look friendlier - but obviously early days.

From a fundamental perspective: Backward PE (10 years) is 10 in combination with a backward CAGR of 12.

Forward PE is 7.1 ... but sure this involves forward looking estimates ;);

And sure - there are risks with new discount pharmacies coming up, but they appear to be fully priced in. And hey - the future market looks rosy: aging baby boomers need not just retirement villages but will need to buy as well more health care, medication as well as beauty products ...

Analyst consensus (4-traders) is $1.41, DCF valuation is $1.56.

In my view great buying around $1 ...

Discl: holding :);

great summary BP thank-you!!

[peat]

I am surprised this has gone so low but am still a bit wary that management can turn it back into growth.
Even as static business though it is priced ok, if you have confidence.
Double bottom still happening though and it still may break down. So personally I'd wait for the old 1 , 2 before jumping

[Food4Thought]

I am surprised this has gone so low but am still a bit wary that management can turn it back into growth.
Even as static business though it is priced ok, if you have confidence.
Double bottom still happening though and it still may break down. So personally I'd wait for the old 1 , 2 before jumping

Confidence... (personally not)

If I can lend one observed lesson... these 70 New stores will be a real bite into the market share for GXH in beautiful New Zealand.

I hope they compete and out compete the new entrants... they are a big machine in Australia and certainly carving old style pharmacies a new sink hole.

I've been visiting some pharmacies in AUS and the older model pharmacies often look boring and dul. These previously strong brand pharmacies don't seem to be spending on shop improvements and aesthetics.

Also a friend is a pharmacist as a locum. Their view doesn't sound excited for the new entrants and was sure they were giving older pharmacies a big bite in the bottom line.

I sold out a while ago. I'd be cautious.
It's possible to compete, yet something will have to give.

I hope I'm wrong for the holders - I like kiwi run companies keeping profits in New Zealand.

[Nasi Goreng]

Confidence... (personally not)

If I can lend one observed lesson... these 70 New stores will be a real bite into the market share for GXH in beautiful New Zealand.

I hope they compete and out compete the new entrants... they are a big machine in Australia and certainly carving old style pharmacies a new sink hole.

I've been visiting some pharmacies in AUS and the older model pharmacies often look boring and dul. These previously strong brand pharmacies don't seem to be spending on shop improvements and aesthetics.

Also a friend is a pharmacist as a locum. Their view doesn't sound excited for the new entrants and was sure they were giving older pharmacies a big bite in the bottom line.

I sold out a while ago. I'd be cautious.
It's possible to compete, yet something will have to give.

I hope I'm wrong for the holders - I like kiwi run companies keeping profits in New Zealand.

I agree with what you got here. I’m not convinced management have figured out what they need to do so we can’t look at historical EPS with much confidence.

[BlackPeter]

I am surprised this has gone so low but am still a bit wary that management can turn it back into growth.
Even as static business though it is priced ok, if you have confidence.
Double bottom still happening though and it still may break down. So personally I'd wait for the old 1 , 2 before jumping

Wow - nearly 1.4 million shares changing hand today for $1.05!

Is this the "2" in "1, 2 and jumping"?

[winner69]

Wow - nearly 1.4 million shares changing hand today for $1.05!

Is this the "2" in "1, 2 and jumping"?

You’ve been itching to buy for a while — now must be the time, esp if a punter has capitulated

Low PE / high yield

[BlackPeter]

You’ve been itching to buy for a while — now must be the time, esp if a punter has capitulated

Low PE / high yield

Problem is just - no sellers anymore around at the nicely discounted price of around $1 :crying:. But hey, no problem ... I managed to get a few over the recent weeks :);

[BlackPeter]

Hmm ... I think on the other thread for some other stock some gurus called a similar shape "inverted bell curve". No idea what the TA implications are, but it sounded positive ...

10830

And obviously - there is still the double bottom and now a push through the EMA 100 ...

Just wondering, how the half year financials (due end of November) will look like? I recon the supply shortages this winter (first flue jabs and later on measles jabs running out) and the long cold and wet spring could be seen as indicators that this might have been a busy year for pharmacies and GP's?

[winner69]

Hmm ... I think on the other thread for some other stock some gurus called a similar shape "inverted bell curve". No idea what the TA implications are, but it sounded positive ...

10830

And obviously - there is still the double bottom and now a push through the EMA 100 ...

Just wondering, how the half year financials (due end of November) will look like? I recon the supply shortages this winter (first flue jabs and later on measles jabs running out) and the long cold and wet spring could be seen as indicators that this might have been a busy year for pharmacies and GP's?

TA and charting stuff is just seeing things you want to see (or being blind to the obvious) and feeling happy about it

Yep, there is an inverted bell curve somewhere amongst those lines ...and that’s generally good news ...but the inverted bell curve seems to be almost complete ...not so good

[lissica]

I recon the supply shortages this winter (first flue jabs and later on measles jabs running out) and the long cold and wet spring could be seen as indicators that this might have been a busy year for pharmacies and GP's?

Busier increases profit up to a point.

About a third of general practice income is from capitation, and significantly more since the introduction of $19 community services card and free visits to under 14s. The greater the utilisation the lower the profit per patient, and it will be negative if the capitation+copayment is less than the marginal cost of a standard consult. In the case of under 14s, as soon as they present to the doctor, the practice is losing money.

The measles vaccines are a public health %c&! up because they can't get a consistent message across. GP practices spend a large amount of time answering calls from public, for free. It's not a high margin service. Pharmacies should not be allowed to administer MMR, but they are looking for new sources of revenue due to increased competition from Chemist Warehouse/Countdown.

[BlackPeter]

Wow - nearly 1.4 million shares changing hand today for $1.05!

Is this the "2" in "1, 2 and jumping"?


Nice end to the week: finishing with $1.15. This is a clear break over the MA200 (at $1.13).

The ascent continues ... but I lost count of all the positive indicators ...

[winner69]

Nice end to the week: finishing with $1.15. This is a clear break over the MA200 (at $1.13).

The ascent continues ...

Looks like you are onto a winner here Peter

[BlackPeter]

Looks like you are onto a winner here Peter

I guess we will see when they publish the HY numbers end of November ... but so far market seems to be optimistic.

[value_investor]

Current PE of about 10.2 which could mean that the only move is up right?

I'm not so sure, the pharmacy game is pretty homogeneous in product so price sensitivity is a contributing factor. Another CW opened in the CBD, close to a few unichems. I've yet to see the other two sectors (both medical and community health) bring anything meaningful to the bottom line.

As Warren Buffet says, he's looking for 1 foot hurdles to step over and not 7 foot bars. I'd pass for now.

[BlackPeter]

You’ve been itching to buy for a while — now must be the time, esp if a punter has capitulated

Low PE / high yield

Well, yes - good buying below $1, wasn't it?

At this stage it looks like the $1.20 offers some resistance, though.

I suspect markets want to wait for the HY financials (must be due in a week or so).

If we assume GXH to deliver over the next couple of years "average" results (no growth baked in and slightly below the already disappointing 2018), than the current SP looks about right (equals a long term PE of 11.8).

If however this years flu and measles season combined with the new CEO (with retail experience) made a difference, than we should get some growth for free.

Time will tell. As we saw with Abano, it is possible to screw up a health enterprise, but as we saw with Ebos, it is possible to make a killing with them as well. And hey, the industry as a whole clearly should have some tailwinds thanks to the aging population structure.

[Dlownz]

Are gxh paying a divi in Dec or have I missed something?

[percy]

Are gxh paying a divi in Dec or have I missed something?

No divie shown on NZX's site in upcoming divie section.
I sat outside Chemist Warehouse's Rockdale Plaza,Sydney store on Tuesday.Fitted out like a $2 dollar store.Looked dreadful,but they were doing flat out business.Their NZ stores will make trading very difficult for GXH's stores.

[BlackPeter]

Are gxh paying a divi in Dec or have I missed something?

Here are the historic dividend payments: https://www.nzx.com/instruments/GXH/dividends

Whether we get one in December has to the best of my knowledge not been announced yet, but I suppose it might be worthwhile to wait with that info for the financials which should be due next week.

[winner69]

Pretty solid result

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GXH/344883/312643.pdf

[BlackPeter]

Pretty solid result

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GXH/344883/312643.pdf

Better than I expected - markets clearly have been too pessimistic.

Particularly pleasing:

While revenue is slightly down for the pharmacy division, there seems to be not a big dent in the margins (well, but for the change in accounting standards) - i.e. while the discount pharmacies seem to take a very thin slice of the cake, they don't seem to have an impact on the icing (margins).

Great to see double digit growth rates for "the doctors" - this is clearly an area with lots of future ...

And great to see the Community Health making a profit again ...

The new CEO seems to be worth her money ...

PS: Great buying around $1 :p;

[percy]

"Pharmacy Revenue down 4.5% and operating profit down $1.7mil at $12.2 mil."
I expect the competition in pharmacy to intensify,and expect GXH pharmacy's operating profit will further deteriorate.
I doubt we will see a takeover offer from Ebos.Somehow I think Ebos are looking at a bigger fish to fry
Take care.

[RTM]

This is good to.
“27% improvement in Net Debt to $32.2m”

Not happy with my investment in this one. 3.1% of my portfolio, used to be more. ��
I underestimated the impact of the Chemist Warehouse. Mostly I guess because we buy very little from those kinds of shops. And assumed others were the same.

[BlackPeter]

Not happy with my investment in this one. 3.1% of my portfolio, used to be more. ��
I underestimated the impact of the Chemist Warehouse. Mostly I guess because we buy very little from those kinds of shops. And assumed others were the same.

I guess - as everywhere in life timing matters.

Not sure when you bought in, but at their peak in 2018 (around $2) their was clearly a lot of optimism (or ignorance of the market?) priced in.

On the other hand - just recently below $1 markets clearly traded it too cheaply.

At this stage - my short term "goal"would be the mid 120' ies ... and if the analysts are right, then they might move up again to something like 150 ... 160.

Obviously - if they manage to grow the doctors with last years CAGR, then only the sky is the limit.

[value_investor]

Declining stock performance overall. The effect of CW will continue driving down Pharmacy performance as they open more stores, I've been to the one in the CBD and its very busy and more stores are obviously not good.

The growing segments are now the medical portion and the community health parts. If they can just maintain the pharmacy side and grow the other two, then perhaps there is something here. One thing that is admirable is that debt is not a large part of their equation and they aren't paying dividends from borrowings, or trying to grow with silly acquisitions.

Its not all doom and gloom but if you're brave enough to invest where you think the bottom is, then this could be your place. There's easier places to make money on the market I think.

Disc: Not a holder.

[Food4Thought]

I agree, bit harder with the competition from CW. CW are a "category killer". Think of them like the Briscoes of pharmacy. They will move in an take market share and fairly quickly.

The value with GXH in my opinion is in the GP and Healthcare businesses. The pharmacies need to get highly competitive to compete with the CW reach.

Disc. Not holding.

[BlackPeter]

Anybody noticed this nice break through the 120 resistance? It tried the days before, but this time the 122 stuck.

[winner69]

Anybody noticed this nice break through the 120 resistance? It tried the days before, but this time the 122 stuck.

I think you onto a real winner here bp.

All discussion seems to be about Chemist Warehouse kicking GXH into oblivion .....just like a year or so ago Top Shop, H&M and others were going to kick HLG into oblivion.

One needs to focus on the good things GXH has going for it.