PPH is a keeper...very happy with the result!
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PPH is a keeper...very happy with the result!
Subdued market reaction to this and the last announcement. Both very positive in my opinion, but did the stock get too far ahead of itself?
Way ahead of itself IMO. 450m market cap... should be around 300m max I would have thought given its low starting point for its growth rates. Big oppourtunity though so can understand why its higher. But be wary ANY bad news I would expect the SP to drop sharply. I can imagine Trumps big supporters (the evangelicals) jumping on to the protectionist bandwagon pretty quickly. In which case any overseas companies (to America) may experience a backlash... the last thing PPH would want is a couple of congregation leaders to start talking about the evils of overseas corporations and then come across PPH and hold them up as an example that has "infiltrated their church". Probably won't happen, but something like this may torpedo them.
A lot of expected growth already built in otherwise. But they don't seem to miss targets, if history is an indicator they keep exceeding them.
Personally I feel that it is undervalued, but that's what makes the market I guess. My reasons are that in just over 12 months time they will be generating over $100m ACMR and cash flow breakeven...everything points to this being achieved. We don't know the exact operating costs and margins etc, however we know that large costs are in sales for which there is a long trailing revenue and low variable costs given saas model. The higher the growth, the more the reported result at a point in time looks worse than it really is. If you consider some of the sales costs are investment the "Underlying" profitability at $100m ACMR may well be significant. Start applying a PE ratios on forward earning or even better PEG ratio on a business growing at say 100-200% by Dec 2017 (rather than 300% now) then it should look very enticing.
I can show you a perfectly reasonable growth 'curve' derived from the numbers in the interim report that says they will hit $100M ACMR in 2Q 19 ( two years time) [Deleted :eek2:: H2 FY20 ( three and one half years time)] .
I can come up with some variations of that that vary from a 'little better' to 'quite a bit better' (both widely recognised accounting terms).
So "in just over 12 months time they will be generating" is perhaps a little too definite statement of the future.
Best Wishes
Paper Tiger
Which is fine, but my advice is don't count your chickens until they hatch. Everything is going swimmingly and the market has priced in that growth for 12 months. My point is that every business has bumps in the road and bumps can be big or small. One big bump and PPH could be in trouble and the SP tanking.