PEB - Pacific Edge Ltd

**Snow Leopard** · 17-12-2014, 05:10 PM

Originally Posted by psychic

Okay - you got me stumped. A few more clues for the dim witted please? Increased Risk?

Interesting that Edison now concede the $100m Revenue target might be achieved one year later than PEB predicts - rather than the two years previously built in. And gee, they are lousy payers these Health boys eh when we need to budget on carrying Debtors for 8 - 9 months looking at 2016e. I thought these NPN's were supposed to faciltate fast payment?

Otherwise looks pretty good to me, all go.

Let us start with that bold statement: Edison have a figure of $11,614 and interestingly I have a figure of $11614.64 if I use my interpretation of their numbers and assume precisely 7 months to pay.

Co-incidence? May be! But let us run with it.

What I have is that sales exceeds expenses (accounting profitability

) in Oct 2015 and the company becomes cash flow positive in Jul 2016 with $791,000 cash still in the bank.

Now consider variation around those sales numbers and the ones where they run out of cash.

In the case of sales lagging a little then it is highly probably that the bank would give them a loan to tide them over as the company is essentially profitable.

In more extreme cases where the sales are lagging then you reach the point that you
a) run out of cash (earlier) and
b) profitability looks further off
c) the banks says no.

Fixing that changes the long term valuations.

This report contains an increased risk of this scenario happening.

Though Edison have increased the expected revenues they have reduced the expected profits for 2015/2016.

It is this sub 2 year target that they have to meet first.

Edison want more detail, don't we all?, on expenses.

Why they did not wait for the HY report and then issue an update, when maybe we all the wiser I do not know.

Best Wishes
Paper Tiger

**psychic** · 17-12-2014, 05:40 PM

Originally Posted by Paper Tiger

Let us start with that bold statement: Edison have a figure of $11,614 and interestingly I have a figure of $11614.64 if I use my interpretation of their numbers and assume precisely 7 months to pay.

Co-incidence? May be! But let us run with it.

What I have is that sales exceeds expenses (accounting profitability

) in Oct 2015 and the company becomes cash flow positive in Jul 2016 with $791,000 cash still in the bank.

Now consider variation around those sales numbers and the ones where they run out of cash.

In the case of sales lagging a little then it is highly probably that the bank would give them a loan to tide them over as the company is essentially profitable.

In more extreme cases where the sales are lagging then you reach the point that you
a) run out of cash (earlier) and
b) profitability looks further off
c) the banks says no.

Fixing that changes the long term valuations.

This report contains an increased risk of this scenario happening.

Though Edison have increased the expected revenues they have reduced the expected profits for 2015/2016.

It is this sub 2 year target that they have to meet first.

Edison want more detail, don't we all?, on expenses.

Why they did not wait for the HY report and then issue an update, when maybe we all the wiser I do not know.

Best Wishes
Paper Tiger

Thanks PT, I'll email DD and suggest they back off the growth a little.

I wonder how realistic that Debtor level is? Are they just projecting a high Debtor/ Sales ratio forward from FY2014 maybe? I could accept the high ratio back then given the very early stages of things, but I'd have hoped that they could collect the cash a lot faster going forward.

But a very good point you make. There is only so much funding of debtors they can handle with the reserves on hand

**psychic** · 17-12-2014, 05:48 PM

Oh wait - and I see now you are probably also alluding to the increased op cost 2015e (say 1.0m) What's that about I wonder?

**Minerbarejet** · 17-12-2014, 06:06 PM

Originally Posted by psychic

Oh wait - and I see now you are probably also alluding to the increased op cost 2015e (say 1.0m) What's that about I wonder?

more sales people?

**psychic** · 17-12-2014, 06:48 PM

I guess Miner, but wasn't this already factored in?
Will learm more I guess with the increased detail available with the complete HY report. Regardless, I'm sure it is well considered use of cash.

**skid** · 17-12-2014, 07:14 PM

Originally Posted by psychic

I guess Miner, but wasn't this already factored in?
Will learm more I guess with the increased detail available with the complete HY report. Regardless, I'm sure it is well considered use of cash.

Well..thats great that your sure,but I guess the rest of us will have to wait and see

**Minerbarejet** · 17-12-2014, 07:19 PM

Originally Posted by psychic

I guess Miner, but wasn't this already factored in?
Will learm more I guess with the increased detail available with the complete HY report. Regardless, I'm sure it is well considered use of cash.

Could also be an advancement to other product release timings. After all, HY was pretty encouraging, I thought, and FY would seem to be shaping up as at least equal, maybe a bit more?

**Baa_Baa** · 17-12-2014, 08:07 PM

Someone mentioned risk, which prompted me to dig out the monthly chart and re-evaluate PEB on my 'growth watchlist'. For the meantime that's where it's staying. Considering that a breakout at .97 around the 61.8% retrace resistance, would leave .12 on the table right now, the downside risk to .62 support loses .20 The current trendline support gives some comfort, as does horizontal support at .79 In any event, the monthly price chart is weak and trending down. Note that the MA's are set for long term, 12, 60 and 108 months.

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