AZV - Azure Healthcare

[Lizard]

When I bought this one up a year ago on the micro-cap thread at 2.6cps and $4.4m market cap, a poster (post since deleted) accused me of ramping illiquid stocks. With a forecast value of 16-18cps, I could see their point, so I decided it was probably best not to put up a thread.

A year later, with bidders at 10cps and a market cap of around $19m, it is still illiquid and a big chunk of the possible gains have probably already been made. However, despite the illiquidity, Pie Funds have managed to acquire 11% of shares over the past year, which perhaps shows that illiquidity is not always a huge hurdle.

Anyway, as AZV gets closer to exiting "micro-cap" status (i.e. Steve's $20m market-cap limit), I thought it could be a good time to give it a thread of it's own.

Although AZV has been effectively listed since 2006, when "Austco" was acquired by 2004 listed, TSV Ltd, it has only really been able to emerge as a listed entity in its own right since the failure of TSV in June 2011. With an initial acquisition cost of $15m plus earn-out, Austco was then earning $17.9m in revenue and $3.26m EBIT.

In terms of business, Azure Healthcare (http://azurehealthcare.com.au/investor-relations/latest-news/) is based mostly on the Austco Nurse call and clinical workflow solutions systems and technology. Their flagship product is the Tacera Nursecall system (http://www.austco.com/nz/tacera.php). Distribution is global and supported by a large network of local resellers (even have one in Omaha - Warren, take note :p).

2012 was a year spent largely "clearing" the decks, with a change of directors and new name/ticker. Revenue came in at $18.2m and EBIT at $500k. Returning to growth, the company went on to post a 29% increase in revenue for the first half of 2013, with $11.3m revenue and 720k EBIT. Outlook was positive, although no forecast provided.

Since half year, several significant contracts have been announced - mostly with overseas hospitals. Guessing likely profit is therefore difficult (guidance may still be given prior to the result, as it was last year), but will almost certainly be a dramatic improvement on prior year. How dramatic - and whether it justifies further share price re-rates - is yet to be seen, but I am happy to hold in anticipation.

[Lizard]

Someone had a clean-up on the close to push it up to 12.5cps and take it to $23.7m market cap. Not a lot of depth below though, so could easily drop back tomorrow.

[percy]

I am enjoying the ride.Saw you picked them in the Aussie competition,so brought a few.
Spoke to my friend Murray tonight, and he also brought some.He thinks you are wonderful too.

[Lizard]

I am enjoying the ride.Saw you picked them in the Aussie competition,so brought a few.
Spoke to my friend Murray tonight, and he also brought some.He thinks you are wonderful too.

Thanks percy... had better cross both fingers and toes for the FY result too then, as I would hate to lose my halo! :cool:

[Lizard]

The FY result out late yesterday. Good result, with 23.5% increase in revenue to $22.5m and a profit from continuing operations of $1m.

Revenue seems likely to continue to grow, with North America strengthening and recent contract in Singapore to support sales into Asia. However, it is more difficult to gauge where NPAT will head in the coming year, as current years result includes a $680k R&D grant and reduced tax. It is also not clear whether there will be additional costs in opening up the new manufacturing and/or inventory building to come from there.

Definitely seems a growth story and I still value at 18cps, but with a caveat to possible short term weakness until further guidance becomes available.

[percy]

The FY result out late yesterday. Good result, with 23.5% increase in revenue to $22.5m and a profit from continuing operations of $1m.

Revenue seems likely to continue to grow, with North America strengthening and recent contract in Singapore to support sales into Asia. However, it is more difficult to gauge where NPAT will head in the coming year, as current years result includes a $680k R&D grant and reduced tax. It is also not clear whether there will be additional costs in opening up the new manufacturing and/or inventory building to come from there.

Definitely seems a growth story and I still value at 18cps, but with a caveat to possible short term weakness until further guidance becomes available.

Missed the result>!!
Loved the commentary.Looks as though we are "dangerously well positioned." !!!!!
"beginning to GAIN TRACTION and MOMENTUM,with INCREASES in revenue,gross margins and profitability,"
"We continue to be EXCITED by the EMERGING OPPORTUNITIES."
"Has seen us EXPAND our traditional markets in Australia and New Zealand,whilst recently obtaining SUBSTANTIAL and ESCALATING GROWTH in North America and Asia."
"We expect this GROWTH TO CONTINUE for THE FORESEEABLE FUTURE'. !!!!
Great stuff.!!!

[percy]

The huge increase is spend on research is welcome.

[Huang Chung]

Interesting acquisition by Hills this week.

http://stocknessmonster.com/news-item?S=HIL&E=ASX&N=753899

[percy]

Nice to see Pie Funds taking their holding from 12.8% to 14.25% and helping to push the SP up to 15cents.
You are doing a great job!!!
We are all "well positioned."

[Lizard]

Yes... thanks Pie Funds!... hope their buying is going to get me to Omaha in the Pie Funds share picking comp (http://www.sharetrader.co.nz/showthread.php?9001-Pie-Funds-Stock-Picking-Competition)! Lol.... though CLQ might have pulled the plug on that one. Fortunately, my "compulsory" pick from their newsletter was EPD, which had a good run earlier in the year. So still in with a chance??

[Lizard]

Hit 19cps today. No quarterly on this one, so let's hope there's a good outlook at agm time...

[False Profit]

Hi, new to this board and have just started reading the literature out there. I understand they have a new manufacturing plant opening up in December in the States. Have the potential benefits of this been reflected in the current price do we know?

[mark100]

Yes... thanks Pie Funds!... hope their buying is going to get me to Omaha in the Pie Funds share picking comp (http://www.sharetrader.co.nz/showthread.php?9001-Pie-Funds-Stock-Picking-Competition)! Lol.... though CLQ might have pulled the plug on that one. Fortunately, my "compulsory" pick from their newsletter was EPD, which had a good run earlier in the year. So still in with a chance??

Lizard, any idea where we can find an update on the Pie competition? They stopped putting it in the monthly newsletter after only a month or so

[Lizard]

Lizard, any idea where we can find an update on the Pie competition? They stopped putting it in the monthly newsletter after only a month or so

No, I had a hunt around the site when I posted that, but nothing... guess we should hear in the December newsletter? I don't think they actually gave a final end date, but did say they would announce results in December.

[Lizard]

Hi, new to this board and have just started reading the literature out there. I understand they have a new manufacturing plant opening up in December in the States. Have the potential benefits of this been reflected in the current price do we know?

I think we don't have enough to go on yet as. The current share price implies something like being able to get to $2m NPAT in 5 years and $3m in 10 years (on existing capital), so probably not too arduous an expectation. But there isn't alot of guidance.

[Lizard]

Well the chart and depth says I'm premature, but I've still sold a few at 26.5cps, as my position as grown a little large for comfort with the rapid gains of late.

[Lizard]

AGM presentations were interesting, but not too much concrete to go on in terms of forecast. On the positive side, they did paint a very positive picture of the market opportunity and growth rates, in which they appear to be advancing beyond the "well-positioned" stage...

[Joshuatree]

5 cent jump today on profit update

[Joshuatree]

5 cent jump today on profit update

[percy]

5 cent jump today on profit update

That was a massive profit upgrade.!!!

[noodles]

That was a massive profit upgrade.!!!

Yes, I picked up a few between overs during the cricket.

They should have a lowish pe (10-13) by year end at current prices. Seems quite reasonable given the growth.

I'm quite late to the party on this one as they reached a new high today.

I am the greater fool.

[Lizard]

Great to finally have some guidance - and I am impressed! At $2.1 - $2.5m NPAT in first half, this is well above what I would have foreseen for the half year period - I would have been happy to get this NPAT for a full year!

Current share price at 27cps may still have room to double in next 6 months if the half year NPAT is able to be maintained in second half, although I would guess things may be a little bumpier than that.

[Joshuatree]

Thanks lizard maybe there is still time to get set here.I missed the cricket (Im Over it:) and lost this in my far too big watch list.

[mark100]

Ditto, I had a buy order in at 9c and then decided not to chase the price up. More fool me. Hurts when you let one get away. However, rule #862 of investing is to not let a previous big price run discourage you from buying in at higher prices, it can still double or quadruple over the years to come.

I did a tiny trade from around 6c to 8c and sold because the holding was too small. At 25c I thought it was way overpriced until that forecast yesterday. I'm in this morning at 26.5 - 27.

The past is the past, more gains look likely from here over the next 6 months

[percy]

Well I brought in at 4.5cents.Thought it was on far to high a PE and sold out at 24.5cents a few weeks ago.Brought back in this morning at 28cents.

[False Profit]

Now available at 25.5c.

[Joshuatree]

Think i got some @ 25c

[noodles]

Now available at 25.5c.

Surprised to see you follow this one False Profit. AZV is not fashionable or loss-making. Perhaps we finally have a common stock? Or are you just enjoying someone else's pain:-)

[Lizard]

Sold the rest of mine yesterday at 26.5cps. Suspect Pie are reducing further and capping the price.

At these prices, I'm not patient enough.

[percy]

Sorry to see you go,and thank you.

[stoploss]

Sold the rest of mine yesterday at 26.5cps. Suspect Pie are reducing further and capping the price.

At these prices, I'm not patient enough.

He did say "we are going to ride this to the beach " so shouldn't be more than a small rebalance .....

[soulman]

Sold the rest of mine yesterday at 26.5cps. Suspect Pie are reducing further and capping the price.

At these prices, I'm not patient enough.

As long as other funds buying pie funds slice, then it should be all good here. What is the odds of a maiden dividends?

[False Profit]

Surprised to see you follow this one False Profit. AZV is not fashionable or loss-making. Perhaps we finally have a common stock? Or are you just enjoying someone else's pain:-)

Noodles!!! I like my shares like my mates i.e. not fashionable or loss making. How are you by the way :)

[stoploss]

He did say "we are going to ride this to the beach " so shouldn't be more than a small rebalance .....

Got that one wrong , sold 50 % of his holding past few days left with 7 % of the company according to the filing.

[mark100]

I got this wrong. Sold out prior to the results when it was looking weak. Despite the guidance I didn't (and still don't) know how sustainable the profit will be in the second half. So I took a 10% loss which would now be a 10% profit...

[Joshuatree]

Like both your styles guys; but:t_up: you can't be both right all of the time and thanks for sharing your skillsets, i know there are a lot of lurkers here who will do too. I bought @ 25c too ,re 2 months back. C'mon lurkers be great to see your involvement and thoughts in SharetraderStreet.

[Lizard]

you can't be both right

Actually, sometimes both the buyer and the seller can be right... just measured over different timeframes and opportunity costs. :)

[Joshuatree]

"All of the time" Lizard (keep lurking btw:t_up:) .Wheres that 2 headed coin; the golden one.

[Joshuatree]

Trading halt regarding" potential acquisition"

[Joshuatree]

Glowing write up in Eureka and elsewhere. Hills suggested as poss suitor. Mid 40's to50c plus to take AZV out?

[Joshuatree]

PDF (http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01514989) Cessation of proposal and AZV are happy about that so they can "return to executing its successful strategy"

[steve fleming]

ALan Kohler's interview with Ted Pretty from HIL has some interesting comments on Azure and the nurse call / healthcare space - see the HIL thread

[Joshuatree]

REV UP 39.2%
NPAT UP 271%
EBIT up 207%
EPS up 300%
NTA up 55%

[DarkHorse]

REV UP 39.2%
NPAT UP 271%
EBIT up 207%
EPS up 300%
NTA up 55%

Price DOWN 6% - what's up with that???

[Joshuatree]

Yeah ; 2nd half a little down on the first but a one off cost to take into account. S/P had tracked up for quite some time and often some sell into the news.

[Joshuatree]

Sold half today and fortunate to be re free carried on the rest. Taking a bit more cash out of mkt.

[Ricky99]

Did the same a couple of weeks ago, as while I have made very good money since buying in around 5c I couldn't see what would drive this higher or the market overall higher.

[Joshuatree]

Lumpy grAZVy!!?. Guidance for 6 months to Dec 14. NPAT from $0.8mill to $1.2 mill compared to $2.17 for pcp. S/p down re 22% to 35c.

[Joshuatree]

Now re 23 c

[percy]

What a huge disappointment this is for me.This along with GLH and KME were my picks in this years's Pie Fund competition.
I was so looking forward to my trip to Omaha.
Luckily I sold 28/4/2014 at .3867.

[percy]

And I am feeling even better after noticing you have it as a pick in the ST competition, looking forward to overtaking you Percy :D

You may overtake with my good wishes.!!! lol.

[Joshuatree]

Closed @ 24c re 7 million shares thru; 20c low. One comment" CEO still holds re 18%; increased R&D and staffing costs impacted profit and some lower contract rev in NZ, Canada, Asia" haven't verified this atp.

[DarkHorse]

OUCH, lumpy grAZVy and what a disappointment indeed! Azure had grown to be one of my largest holdings. Not a high risk sector or highly geared company, real profits...didn't seem vey high risk or have I missed a trick? (Hope I can learn something from this so feedback welcome)
In many years of investing in shares I don't recall ever seeing an announcement and reaction quite like this - nothing unforeseeable affecting revenues or gross margins but profits and share price plunging... Is it oversold now or was it overbought previously?

[noodles]

OUCH, lumpy grAZVy and what a disappointment indeed! Azure had grown to be one of my largest holdings. Not a high risk sector or highly geared company, real profits...didn't seem vey high risk or have I missed a trick? (Hope I can learn something from this so feedback welcome)
In many years of investing in shares I don't recall ever seeing an announcement and reaction quite like this - nothing unforeseeable affecting revenues or gross margins but profits and share price plunging... Is it oversold now or was it overbought previously?
You might feel a bit miffed at the language Grey gave on 21/8/14.
"All in all, it looks like a promising year ahead and we expect our growth to continue for the foreseeable future "

However, 2H14 was actually quite poor compared to 1H14. This should have been a signal to sell. Yet the market like the result and rallied. ???

If you double the forecast 1H15, you have AZV sitting on a FY15 pe of around 22. I'll let you judge if that is good value.

Clearly, the company has POTENTIAL, but can it execute?

[Joshuatree]

Back unto 30.5c atm ; a lot more buyers then sellers; 5.6 mill shares thru so far.

[Westboy]

Oversold Yesterday but care needed here as the business has very lumpy earnings. I got some close to the lows yesterday but I wont hold them forever. NPAT for full year will be in the range of $3M to $3.5M so not alot more in it at current prices in the short term IMHO

[Joshuatree]

http://www.theage.com.au/money/inve...lesson-to-all-small-caps-20141114-11mpe7.html (http://www.theage.com.au/money/investing/azure-healthcares-pr-blunder-a-lesson-to-all-small-caps-20141114-11mpe7.html)

This article agrees with you both.:)

[percy]

Looks as though my buying at 8.65 cents [average] on Friday the 14th July may have been premature after all.?

[percy]

Well maybe not.
Result out.
Solid foundations laid for the future.