Australian Pharmaceuticals - API

[Lizard]

Put this one on watch list recently, as shares carry one of the highest potentials for re-rating in terms of "value investing" that I could currently find - i.e. very low Price/Sales ratio of 0.04 and Price/NTA ratio of 0.41. Either they go broke or they work their way towards a more appropriate return on invested capital.

There's some risky metrics here (debt and the associated possibility of dilution), but not insanely so and my call would be odds in favour of investors at this point. Presentations have been consistent in terms of strategy and execution to date and the latest one continues earlier themes in greater depth.

Rally today to 30.5cps on the back of a presentation looks interesting.

They run odd reporting dates, with year ending 31 August, so HY result due April. AGM outlook statements were for a positive bounce-back in earnings for 2012 due to one-off problems in 2011 year.

I don't hold these for now, but may consider a trade here.

[drillfix]

Hi Liz,

Well, for what is its worth, may as well add some technicals whilst a new thread has been started hey.

API Intraday > http://www.imageurlhost.com/images/m9kbxwv101ip0rep520_API.png

Seems to be strong on the indicators though it would be nice to see OBV movement upward.

IMO, it would be better to buy the breakout of 32c should it manage to get the momentum or thrust.

Currently all the EMA's are at a convergence point which also could signal a time for a decision of up or down which so far up seems to be the go with 13ema making the first cross, however the current candle (a doji) could be considered bearish at present unless the momentum is maintained.

To close, on the left side of the daily chart are the intraday charts which are also showing 13ema being ridden upward and on the 60 min chart below a nice ema alignment also starting to form, yet worth keeping an eye on the MACD histogram as it slightly teeters off.

There you have it for now.

Back to you for the Fundamentals Dr. Liz :)

[Lizard]

Thanks Drilly. Yes, at this stage, I would say definitely one that needs a chart and a trade plan - the fundamentals are very much in the "potential".

[Lizard]

Half year result came out this week at NPAT $18.3m, but included some reasonably large one-off gains from insurance gains/reversal of prior year flood-damage losses. HY dividend of 1.5cps, so continuing at 3cps annual div or 7.7% yield (plus franking).

My calculations suggest they are on track for about $25m in underlying NPAT for the FY or $34m including one-off gains. At the former, they are on a forward PE of about 7.6 at current price, which has run up 28% to 39cps since my post a month ago. Given this is a recovery trade, there is potentially more in it and probably still worth a trade at these levels. However, longer term, fundamental investors should keep an eye on the ongoing reforms in the dispensing area - these would require more knowledge of the industry to determine likely future impact. It would be good to locate an analyst report that can cover this, but without that, the chart and stops will probably give enough safeguard.

[soulman]

Decent result....and the SP react positively. Rob Millner buying a few at near 50 cents gave me the confidence to buy a few on the dip. Still cum 1.5 cents FF div. EPS sitting at about 8. Future PE unknown. Quite a log jam at 50 but will eventually get taken put IMO.

Liz, you got this nice uptrending stock?

[Lizard]

Hi Soulman - sadly still haven't actually got around to buying these. Never enough cash to go around at the right time! Glad to see you are making hay though. :)

[soulman]

A decent rally pushed API to as high as 67 cents in Nov. A massive declined has emerged and API was given a 'please explain', which they duly said 'no explanation'.

Closing at 50.5 cents. A 20 percent drop in 5 days.

[soulman]

Nice little update yesterday re: sales growth of 8.2% to Nov and 5.4% on a comparable basis.

Shares closed today at 54.5 cents.