PBP - Probiotec

[Footsie]

This stock is underreasearched and un-loved.

Current EPS guidance is for 30% growth.

However, run rate to date is 112%. Guidance is expected to be revised at the half year.

This company has the potential to go from $1.45 to $5.00 in 18 months.

Current p/e is 13x assuming 100% eps growth FY08 p/e is <6.6x

Pengana... Aussie's best small cap manager have just gone sub with a 6% stake.

Watch this space.

[macduffy]

I'll second that, Footsie! I bought a few at $1-33 recently.
They manufacture and/or distribute some well known pharmaceutical brands - Milton, Lomotil etc. Plenty of info on their website.
A small company which is gradually shifting from contract manufacturing to higher margin business in its own brands.

[Lizard]

I have a few of these too. Just a few though - I'd like to see the free cashflows improve, especially on current balance sheet. Considerable "investment" in brands etc over past year.

Also, lots of inventory said to be buoyed by pipeline fill on Celebrity Slim launch - not sure what the shelf-life is on that product, but I imagine it will be towards the shorter end?

[Footsie]

celebrity slim is selling like hot cakes. Go to your nearest radius pharmacy. Ask them. U will probably find them out of stock.

Cashflow. Wait for the half yr. ! I haven't been this confident about a stock since abano . I have shifted a large chunk of my portfolio into pbp

[thereslifeafter87]

I agree re the potential of Celebrity Slim. You should see the bulk stacks in the Priceline pharmacys in Aussie. It has as much space as the rest of the diet products combined!

Also, a salesgirl at radius in queen st told me she'd lost 2kgs on the programme in the last week and said it's selling fast.

The issues I have with PBP are:

1. The high debt levels

2. The quality of earnings - product development costs are capitalised, meaning increasing present earnings at the expense of future earnings. I would say this is done so that the company is not in breach of EBITDA or NPAT based banking covenants.

3. The continuing spectre of a large legal liability that will put a big dent in cashflows and result in an increase in gearing for an already highly geared company.

[macduffy]

Yes, its difficult to quantify the extent of the potential legal liability but from what I can work out, its now a matter of costs, against which the co and its co-defendants are appealing, the damages cost having already been provided for in the accounts and paid. Can anyone confirm or advise?

At the AGM it was stated that Sales are +40%, EBITDA +63% and NP +113% for the 4 mths to 31/10/07, compared with the corresponding 2006 period, but I note that the previous NP forecast of +30% for the year still stands. We wouldn't expect a revision to that figure after only 4 mths but, as noted, the half year result will be eagerly anticipated.

[Footsie]

upgrade will come at half yr. Bulk of earnings comes in 2nd half. So too early to upgrade full yr.

Ppl you are talking about a company with potentially eps growth of 100% and fwd pe of 6 something. This wont last. Pengana funds are smart and theyhave gone sub. This is going to be the small cap story of 08.

Legal issue may amount to nothing

[Footsie]

January will be a good buying month i think for those who have guts.

PBP incredibly cheap. wont stay that way forever.
The market always flushes out inefficiencies.

[tommy]

Bummer, I had been picking up PBP lately under $1.20 but the latest announcement caused a bounce! Good news for PBP before half year results due to be released soon...


11 February 2008
Probiotec Appeal Successful


Probiotec Limited has made previous announcements (on 15 March 2007, 16 April 2007, 20 April 2007 and 24 May 2007) regarding its potential liability in a legal action referred to as the Phoscal Claim. In April 2007 three Probiotec group companies were ordered to pay the legal costs of the claimant in the proceedings. As previously advised, Probiotec appealed the decision and also commenced proceedings against its former legal representatives to recover all moneys payable as a result of that judgment.

The judgment in Probiotec's appeal was delivered on 8 February 2008. Probiotec was successful in the vast majority of its claims. The effect of the appeal judgment is that it has reduced Probiotec's liability from 100% of the claimant's legal costs to 10% of those legal costs. The claimant has also been ordered to pay Probiotec's legal costs of the appeal. Any appeal by the claimant must be commenced by 7 March 2008.

Probiotec's preliminary assessment is that its liability (which is yet to be quantified) under the appeal judgment will be for an amount estimated to be in the range of $50,000 - $350,000. This is a substantial reduction from the previous estimate of legal costs under the original order of $2.1m - $5m.

Probiotec intends to continue with its proceedings against its former legal advisers. It considers that it is likely to recover the majority (if not all) of the amount it pays under the revised judgment through this action.

Probiotec will advise the market immediately once a definitive amount is determined that the
company is required to pay as a consequence of both its successful appeal and the results of the action against its former legal advisers.

About Probiotec
Probiotec Limited is a brand owner, manufacturer, marketer and distributor of a range of
prescription and over-the-counter (OTC) pharmaceuticals, complementary medicines and
specialty ingredients. The company owns four manufacturing facilities in Australia and distributes
its products both domestically and internationally. Products are manufactured by Probiotec for
both its own products and on behalf of others, including major international pharmaceutical
companies.

[tommy]

Yeah baby, NPAT up a big fat 73%!!!! EPS up 62%!!!!

http://sa.iguana2.com/cache/75a6c223...PBP-196878.pdf

Sales Revenue UP 38.7% to $32.81 m
EBITDA UP 39.9% to $5.52 m
NPBT UP 69.5% to $3.50 m
NPAT UP 73.0% to $2.46 m
Earnings Per Share UP 62.7% to 5.29 cents per share

Plus 1c maiden dividend declared

Read da presentation:
http://sa.iguana2.com/cache/732537b9...PBP-196879.pdf

Wonder why they didn't upgrade full year forecast?