Paragon Care Ltd ("PGC") - Healthcare upside!!

[h2so4]

15 of the last 16.................hmmm?

[steve fleming]

I had a couple of PMs asking about PGC.

I have actually had some discussions recently with Mark Simari, the MD of PGC and who comes across as a very good operator, and remain pretty excited about PGC.

The queries I had with Mark basically were around FY11 profit guidance and stock liquidity.

Mark’s comments were along the lines that PGC is presently tracking very well and the integration of the 2 recent acquisitions has gone better than expected. He believes the PGC board almost has the necessary comfort to release profit guidance to the market.

It sounds as though Mark is spending a lot of his time visiting brokers and fund managers, doing his best to get the PGC story out there.

1.5m PGC shares traded last Thursday, making it the biggest volume day in over 4 years – so looks like slowly but surely the story is getting known and liquidity is on the improve.

This is the year that PGC really have to deliver, and from the sounds of it, they have started the year well!

[percy]

Thanks for the update Steve.

[shasta]

Thanks for the update Steve.

Thanks again Steve for bringing this to our attention, liquidity is a bit of an issue but surely it won't stay around 3c for much longer

[COLIN]

Yes, thanks Steve. I remain a patient holder of PGCOA, but wondering when the miracle will happen.

[percy]

The Rapini Pty Ltd.,acquisition should be a good fit.I went to their web site www.rapini.com.au / .Yes wire shelving and basket systems;however I did enjoy the Mortuary,fridges,Freezers and trolley section.....With an aging population great growth prospects!!!!!!!!!

[steve fleming]

The Rapini Pty Ltd.,acquisition should be a good fit.I went to their web site www.rapini.com.au / .Yes wire shelving and basket systems;however I did enjoy the Mortuary,fridges,Freezers and trolley section.....With an aging population great growth prospects!!!!!!!!!

Hi Percy,

I agree, another good acquisition

On rough numbers, sales would be running at $20m- $25m p.a. now.
At a 10% margin, EBITDA is at least $2m, and growing quickly,
Market cap remains at $6m, but EV probably closer to $10.

Very subjective but if a mining/resources spec had this good a fundamentals it would be trading at multiples of what PGC is.
The liquidity / hype / interest among resources means they trade at such a premium to micro-cap industrials.
Micro-cap industrials remain unloved with minimal liquidity.

You have to be in to win, though, which is why I have pretty much have given up on industrials to focus on resources.
I still however have a major soft spot for PCG, and now have a top 10 shareholding in PGCOA.

[COLIN]

Hi Percy,

I agree, another good acquisition

On rough numbers, sales would be running at $20m- $25m p.a. now.
At a 10% margin, EBITDA is at least $2m, and growing quickly,
Market cap remains at $6m, but EV probably closer to $10.

Very subjective but if a mining/resources spec had this good a fundamentals it would be trading at multiples of what PGC is.
The liquidity / hype / interest among resources means they trade at such a premium to micro-cap industrials.
Micro-cap industrials remain unloved with minimal liquidity.

You have to be in to win, though, which is why I have pretty much have given up on industrials to focus on resources.
I still however have a major soft spot for PCG, and now have a top 10 shareholding in PGCOA.

Steve, I'm greatly encouraged by your comments. I have held 1 mill of these little crumbs for a while now, but after seeing the muted market reaction to the Rapini acquisition I was fast coming to the conclusion that they didn't seem to be going anywhere and I would be better to quit, although it is not easy to unload that size of parcel in one chunk and I have held off meantime. However, your words give me cause to pause.

[percy]

On the bottom of page 64 of PGC Financial Report for the year ended 30 june 2010 ;
Unquoted equity securities,
Rapini Pty Ltd hold 6,000,000 options and 600,000 convertible notes. Interesting .I wonder where these end up after the takeover.NB, rapini takeover only just announced.This holding was at 30th June.

[steve fleming]

On the bottom of page 64 of PGC Financial Report for the year ended 30 june 2010 ;
Unquoted equity securities,
Rapini Pty Ltd hold 6,000,000 options and 600,000 convertible notes. Interesting .I wonder where these end up after the takeover.NB, rapini takeover only just announced.This holding was at 30th June.

Hi Percy,

Yes, i noticed that note in the AR.
Looks as though Rapini subscribed to the majority (600,000 of 1,025,000) of the convertible notes issued by PGC earlier this year.

I beleive that PGC is purchasing the business assets of Rapini from Rapini P/L, so after the acquisition completes, I would think that Rapini P/L will hold 2,275.000 convertible notes (600k + 1,675m).