PEB - Pacific Edge Ltd

[Balance]

Yeah with a Price/Trading Revenue (Unit Sales) ratio of 23,775x I believe you are right.

The market average for Biotech is 6.01x.

So when PEB reaches US$100m in sales, it's worth art least US$6 billion?

Or NZ$23 per share.

Sparky the Clown could well be right - NZ's next Xero is right in front of those who care to look beyond the 2 to 3 cents price movements.

[MAC]

Hi Whipmoney, some FA's project out 25 to 30 years of estimated revenues then apply a PG of 3% or thereabouts commensurate with long term inflation and OCR. I tend to only estimate revenues out as far as I think I can practically and accurately see into the future then apply a PG from that point forward based on prospective medium term company growth prospects, calibrated also against the other 40 or so stocks I research.

So my PG may seem higher but please appreciate it's applied in this case from year 6 rather that year 25 or 30, trust that explains ok.

Agree that medium term growth, let’s say during years 5 to 15, is an unknown and PEB have pragmatically only projected 5 years out themselves, but there seems every possibility that this product could well keep growing beyond the five year goal of achieving 10% market share. Harbour seem think so and have projected revenue growth out to FY20. As you say the market for this sort of test will also grow over time.

[Bobcat.]

Really???
The market capitalization for the level of commercialization is actually a little light when comparing the Company to similar companies from the US and other similarly developed countries.
BE.

Can you be more precise, BE? Which 'similar' companies?

[Whipmoney]

Really???

This is what most of these posts tell me - the vast majority of NZ investors do not understand the opportunity. The market capitalization for the level of commercialization is actually a little light when comparing the Company to similar companies from the US and other similarly developed countries.

Are you questioning the 6.01x average for the Biotech sector? I would justify my source but then again I seem to remember a few black marks / retracted posts against your name...

It is people like you who provide the opportunity to get in at reasonable prices.

Well if it was you who bought my parcel for $1.40 then I should be thanking you.

[Whipmoney]

Hi Whipmoney, some FA's project out 25 to 30 years of estimated revenues then apply a PG of 3% or thereabouts commensurate with long term inflation and OCR. I tend to only estimate revenues out as far as I think I can practically and accurately see into the future then apply a PG from that point forward based on prospective medium term company growth prospects, calibrated also against the other 40 or so stocks I research.

So my PG may seem higher but please appreciate it's applied in this case from year 6 rather that year 25 or 30, trust that explains ok.

Agree that medium term growth, let’s say during years 5 to 15, is an unknown and PEB have pragmatically only projected 5 years out themselves, but there seems every possibility that this product could well keep growing beyond the five year goal of achieving 10% market share. Harbour seem think so and have projected revenue growth out to FY20. As you say the market for this sort of test will also grow over time.

Hi MAC, I understand your approach but the problem is you seem to be blending medium term growth into the terminal growth rate (at perpeuity). The problem with this is that if your terminal growth rate is higher than the cumulative (maximum) growth factors (e.g. price inflation, world population growth and increases in the incidence of bladder cancer) then at some point invariably your growth trajectory will surpass 100% penetration of not only bladder cancer sufferers/test patients but the entire world population as a whole, meaning you are pricing in way too many tests into revenue at the tail end. I hope this makes sense?

[Whipmoney]

Lol... love the attitude!

Yes, you're right that is an average.

Not sure if I bought them. I might of.

Source: Aswath Damodaran (http://en.wikipedia.org/wiki/Aswath_Damodaran)

http://pages.stern.nyu.edu/~%20adamo...le/psdata.html

Bit of a guru in dcf valuation..

[Balance]

There has been some really good debate over the last few pages, some have put a lot of effort into their posts and it is great to see good analysis for anyone curious on PEB.

I have been a staunch advocate for the past 10 years and at the moment of PEB as you may know and I appreciate knowledgeable argument from both sides. I agree with Whipmoney about the share price and I respect the opinions of those that believe PEB is not an investment that fits their criteria.

I’m really looking forward to the coming months with extreme anticipation and excitement (Woo Hoo) because recently the planets have really lined up for Pacific Edge and I believe the future is looking really great.

I’m sorry I cannot offer a share price projection and if I did it would be tantamount to the Drake Equation anyway; the share price has been really robust which has surprised me, however, I’m certainly not complaining at all and I’m quite happy to pause at $1.27 for a wee while.

(The Drake equation has proved controversial since several of its factors are currently unknown, and estimates of their values span a very wide range. This has led critics to label the equation a wild guesstimate, or even meaningless).

Hancocks, thank you for your patience and fortitude over the years.

I do seriously wonder many times how many posters on this thread appreciate the opportunity they have been given - to assess the company and decide to invest or not.

A company like PEB comes across our path once in a long while and your research, information and willingness to share have given all those who care to acknowledge their interest, objectivity (and ignorance) the opportunity to invest or not.

In my own discussions with various investors and medical practitioners, the term 'disruptive innovation' when describing PEB's product comes up often.

It is the considered opinion of the doctors I talked to that it will take time for Cxbladder to breakthrough the existing diagnostic practices but breakthrough it will.

PEB must be very pleased with the number of medical practitioners who are appearing in PEB's register.

[Casino]

So when PEB reaches US$100m in sales, it's worth art least US$6 billion?

Or NZ$23 per share.

Sparky the Clown could well be right - NZ's next Xero is right in front of those who care to look beyond the 2 to 3 cents price movements.

0.6 billion or $1.88 per share.

[Whipmoney]

0.6 billion or $1.88 per share.

Which is around 9% penetration in the US hence why I suggested the market is pricing around 6.6%.

EDIT: sorry this should be ~5.5% had forgot to convert to NZD.

[Harvey Specter]

So when PEB reaches US$100m in sales, it's worth art least US$6 billion?

Are you sure that maths is right. $100m in sales at a 6.01x P/S ratio makes a market cap of $600m (current market cap is $400m).