PBP - Probiotec

[Footsie]

Mgmt is very conservative....
Which is good in times like this.

+ bulk of $$ come in 2nd half so expect the upgarde to come as soon as they are confident its in the bag.

surprised it hasnt rallied more.

[tommy]

mmm, potentially bad news, further update needed on this one. I sold out of PBP after this news... good luck to holders.

CLAIM AGAINST SUBSIDIARY

Probiotec Limited (“Company”) advises that one of its subsidiaries has received a claim (“the
claim”) from one of its customers, Pfizer Australia Pty Limited (“Pfizer”).

The claim arises from a recall of product manufactured by the subsidiary using a raw
material which the subsidiary subsequently found to be counterfeit and the subject of a
forged certificate of compliance. The subsidiary informed Pfizer of those circumstances
when it learned of them. The presence of the raw material did not give rise to any health or
safety issues. The subsidiary acquired the raw material from a reputable Australian third
party supplier specifically approved by Pfizer to supply the material. It was this approved
third party supplier who provided the certificate of compliance in question.
The Company has taken legal advice. Its board believes that its subsidiary has strong
grounds to defend the entirety of the claim and the subsidiary will strenuously defend the
claim. Solicitors, senior counsel and a barrister have been appointed to represent the
subsidiary.

The third party supplier of the raw material has been informed that the subsidiary will be
bringing a cross claim against it to recover from that supplier any amount for which the
subsidiary might be held liable to Pfizer, along with its legal costs. The Company is confident
that the subsidiary will be held entitled to fully recover those amounts from the supplier.
The claim does not quantify the damages sought. The Company’s assessment is that the
limit of any exposure the subsidiary could be found to have is $3 million. The Company
believes that any such amount will be held payable by the third party supplier. Having
considered all relevant information presently available, the Company’s board considers that,
in their final outcome, these proceedings will not result in a material payment by the
subsidiary, or by any other group company.

Further updates will be provided to the market as more information becomes available.

[tommy]

3 mil equates to about 6c per share. Shares dropped by that much at one stage today,
too much of an over-reaction imo.

Big buyer of almost 1 mil shares just appeared on market thinks so too.

What I am worried about is NOT ONLY the potential damages (legal costs and damages claimed) BUT ALSO loss of sales (revenue!) in terms of clients taking their business to someone else (Pfizer and some other customers who may suspect quality control at PBP).


Anyway, "The subsidiary acquired the raw material from a reputable Australian third party supplier specifically approved by Pfizer to supply the material" so I hope they will be able to resolve this matter amicably. In the meantime, I have better use of my capital in other areas :-)

[Footsie]

who is the mystery 1m bidder?

will be interesting to see over the next few days if they are real.

PBP is a good cash earner and a potential takeover target...

contracted revenue is low margin and they are now focusing on own branded good high margin and export.


Happy to hold.

[The Big Ease]

30% down from its peak after a 73% increase in earnings.
is the claim the only thing hanging over this stock?

[Footsie]

Its still the last of the Opes stock

OPes had over 800k..... and for whatever reason its taken them this long to get it out.

I THINK.... that might be the last of their line.....


Saw a big display of Celeb slim in an NZ pharmacy today.... Im told its selling well
Certainly if you read about it on the blogs.
http://www.productreview.com.au/show...?item_id=48944

[macduffy]

Its still the last of the Opes stock

OPes had over 800k..... and for whatever reason its taken them this long to get it out.

I THINK.... that might be the last of their line.....


Saw a big display of Celeb slim in an NZ pharmacy today.... Im told its selling well
Certainly if you read about it on the blogs.
http://www.productreview.com.au/show...?item_id=48944

I think you're right - the Opes holding has had a big, depressing effect on a very thinly traded stock.
Under continuous disclosure, any bad news should have been announced by now?
At least today's quotes are a little firmer.

[Footsie]

I still think 100 110 120

who cares...... its the value in 3 years..... right of $3.00+

[The Big Ease]

my concern is more around the general sentiment in the consumer market, rather than the company itself.
it looks shaky beyond the next 3-6 months.

inflation is going at a cracking speed. the rba has left rates in the belief that this is the peak before it moderates to acceptable levels. if they are wrong, which they have been in a few instances recently, it will require another couple of taps on the brakes. i think we are at the threshold of what people can cope with.

pbp is at full speed growth, good strategy and seemingly executing very well.
cant ask for more than that!

$3.00 easily within 2 years.
they could get that with this year's growth in earnings and a reasonable PE re-rating to 15.
but i still have this nagging doubt in the back of my mind.

[thereslifeafter87]

Any re-rating on a PE basis will depend on how much they are frontloading earnings by capitalising product development costs (not disclosed in the HY). They've done this in the past to make NPAT look better than it is, and probably also to comply with banking covenants.

At some point those capitalised costs need to be amortised (assuming celebrity slim isn't a runaway success forever).