PEB - Pacific Edge Ltd

[barney]

I thought Chalkie wrote a very fair article.Tim Hunter [present Chalkie] is a very experience jurno and investor. Although prospects look excellent any investor who has invested in this sector in NZ,Aussie,US,or UK will tell you it is near impossible to value such a company.Many a fool has tried and failed.Hunter is no fool.

I don't think the article was unfair but if a jurno is going to say that the shareprice is overvalued then he must have an idea in his mind as to what the shares are worth, otherwise how can he say they are overvalued ? I would agree that putting a value on the company at this point is very difficult as you are really looking into the future, but that's the case with most companies.

Another jurno a few weeks ago speculated that PEB could be in talks with Harvard University which lead the company having to make a NZX announcement that this was not the case.

[Balance]

I agree - no qualms with the article. I'm bullish on and reasonably exposed in PEB and thought it was quite fair.

Just remember that by now, some people will have doubled their money, that's a good psychological trigger to sell.

Although I considered 38c a good buying point a few weeks ago and collected a number then, I now have all the shares I want. Any more would be either greedy and risky.

The overpriced comment is unfortunate, as there is equally every possibility that the current buying level is extremely cheap.

I think it is great that PEB is finally getting some decent coverage. Tim Hunter is a good journo and it is to his credit that he has given a good assessment of where he sees PEB.

The key point I always ask myself is whether an article adds new information to the reader and in this case, I think it does - overwhelmingly.

Not that I agree with him, especially the overpriced bit, but he is entitled to his opinion. If you are a trader, you may well be unhappy but if you believe in the PEB story, see it as a temperory setback and for those who missed the run to 48 cents, an investment opportunity.

Those who participated in the Diligent and 42 Below stories would be eternally grateful to the journos out there who kept expressing doubts about the two companies - providing outstanding opportunities to pick up cheap stocks all the way up.

All the best, PEB - make NZ proud of you!

[percy]

Sparky The Clown and barney.
Yes I think you are right,if you are going to state the SP is over-valued you should state what you think is "fair" value.
There I would think he would have 'no idea".
Balance.Would love you to be "right on the money".!

[Balance]

This is an article that caused 9.1% down for today. Good on the author.

I think the panic sellers are out of the way and the longer term buyers are back in again, building up on the bid side.

If you have paid 44 cents the other day for 1.2m shares, here's an opportunity to pick up a few more at under 44 cents. But maybe, the volume is not there?

[barney]

I see Superlife have increased their holding over the past few weeks, so they must have been happy to pay the higher price. They have been a shareholder for quite a while so they must be satisfied that the company is heading in the right direction.

Both their NZ share fund and Gemino fund have large holdings, with PEB being the biggest investment by far in their Gemino fund.

[zs_cecil]

I don't think the article was unfair but if a jurno is going to say that the shareprice is overvalued then he must have an idea in his mind as to what the shares are worth, otherwise how can he say they are overvalued ? I would agree that putting a value on the company at this point is very difficult as you are really looking into the future, but that's the case with most companies.

Another jurno a few weeks ago speculated that PEB could be in talks with Harvard University which lead the company having to make a NZX announcement that this was not the case.

The company still needs some time to validate their claims on the market size even though the estimate on the customer numbers is attractive. Chalkie seems not very optimistic on this. Chalkie also mentioned that it is better to have overpriced shares in a promising hi-tech company (I think he is talking about Xero) other than this company. This may hinted at the fact that companies like PEB are far more difficult to obtain the customers at the early stage of the product than the hi-tech company like Xero. I guess most of us have already understood this. But I think you are right, overprice is not a proper word for both companies because they just can't be valued for now. The best results for these companies which have a niche product is probably an acquisition by other companies at a high $$$$ value.

[CJ]

Chalkie also mentioned that it is better to have overpriced shares in a promising hi-tech company (I think he is talking about Xero) other than this company. This may hinted at the fact that companies like PEB are far more difficult to obtain the customers at the early stage of the product than the hi-tech company like Xero.

Probably refering to both Xero and DIL. The fact is both of those have a viable product and an expanding customer base. It is still unclear whether PEB will get a viable product (though I think this is more likely than not now) and then whether doctors will be happy to change to it. Anyone who held on to Xero or DIL (in the early days) know that it is expensive to grow sales rapidly. So even once they get their viable product on the shelf, the cash burn will still be high for years to come.

[Balance]

Oh oh .....not a good look at all.

https://www.nzx.com/files/attachments/166026.pdf

CEO sold 1.275m shares at between 42 cents and 44 cents, after exercising options to purchase shares at 9 cents.

From AR, looks like he was paid $230,000 p.a. for last 2 years.

I thought disclosures have to be made within 48 hours when an officer of a company makes purchases or sales?

[Balance]

I agree, it doesn't do much for a vote of confidence in the future when the CEO of a small 'start-up' company exercises his options and then flogs the lot on the market as soon as the price picks up, unless of course he's planning to move on?? I wonder how many shares (if any) he has left? It wasn't clear from today's announcement or the 2012 annual report.

305,292 shares left according to SSH notice.

I actually have no problem with officers of companies exercising options and selling shares - they all have their own reasons for doing so and more often than not, they have no idea where the shares are going to go in the future. In fact, they provide cheap entry to shares for that reason - e.g.. Diligent when a few of the executives exercised options and sold on the way up to $1.00.

The ones you have to watch are the principal investors and directors like Masfen. He buys, you buy. He sells, you better get the hell out in a big hurry! Luckily, they tend to sell only via trade sales so you can go along with the ride.

What I have a real problem with is disclosure - disclosures must be timely. In this case, he sold 250,000 shares on 26 Oct and only reported it today.

[barney]

I don't have a problem with it either. David Darling is not listed as a substantial shareholder, in fact is not in the top twenty shareholders. As CEO of the company part of his remuneration is obviously in shares. At some point he has to sell some of those shares to realise that remuneration. As an employee of the company he is exposed to a larger degree of risk than most if the company fails. He looses not only his salary but also the part of his remuneration which is tyed up in shares. I don't know the reason he has sold these shares but part of it may well be to reduce some of his exposure to risk. I would do the same.

PEB also has an employee incentive plan where key staff can be issued shares over a four year period but cannot sell them for two years from issue date. The company must also be trading in a cash flow positive way and the shares must be trading on the NZX at a minimum price of $1.00. I would guess that the CEO may well be participating in the scheme so realising some profit on shares previously issued would make sense.

If the shareprice rises as a result of the CEO doing a good job then my feeling is that he is entitled to sell some shares issued in an incentive plan to realise some of that reward.