GXH - Green Cross Health (formerly PHB - Pharmacybrands)

[nztx]

probably more like jogging on the spot in a certain price range until Mr Market sees a vast improvement on the two
Div's passed on to date ..

[winner69]

Whome reported GXH discussed at ST meeting the other day

Look for the share price to rise as the clan pile in.

[Beagle]

Me ol mate and former well respected poster Crackity likes these. I haven't had much time to look into them because I had to leave for a three day trip early the morning after but at first (admittedly very, very brief) glance it would appear they are on cheap metrics for good reason(s). The trend downwards in pharmacy profitability appears well entrenched. I think the fast expanding and highly competitive Chemist Warehouse poses formidable competition and with the ever increasing propensity of customers to buy online one's "local" Chemist's profitability is under real pressure and likely to remain so or come under even more serious pressure going forward. I like Crackity and know he's a shrewd investor so when I get more time I'll give him a call and discuss and try and get a better sense of what he foresees going forward.

[Arbroath]

Me ol mate and former well respected poster Crackity likes these. I haven't had much time to look into them because I had to leave for a three day trip early the morning after but at first (admittedly very, very brief) glance it would appear they are on cheap metrics for good reason(s). The trend downwards in pharmacy profitability appears well entrenched. I think the fast expanding and highly competitive Chemist Warehouse poses formidable competition and with the ever increasing propensity of customers to buy online one's "local" Chemist's profitability is under real pressure and likely to remain so or come under even more serious pressure going forward. I like Crackity and know he's a shrewd investor so when I get more time I'll give him a call and discuss and try and get a better sense of what he foresees going forward.

I agree Beagle that it’s likely cheap for a reason. Here in New Plymouth I’ve seen two chemists close recently one that had been operating for decades. There are also two new big discount operators opening, one already has (can’t remember its name) and Chemist Warehouse is coming soon. The landscape is fundamentally changing and the little franchise pharmacies are toast. There is also a pharmacy in the Valley Countdown that does free prescriptions.

[Beagle]

I agree Beagle that it’s likely cheap for a reason. Here in New Plymouth I’ve seen two chemists close recently one that had been operating for decades. There are also two new big discount operators opening, one already has (can’t remember its name) and Chemist Warehouse is coming soon. The landscape is fundamentally changing and the little franchise pharmacies are toast. There is also a pharmacy in the Valley Countdown that does free prescriptions.

Not showing on their website yet but I noticed a big new Bargain Chemist outlet when I was down in New Plymouth yesterday, just down for the Warehouse. https://www.bargainchemist.co.nz/pag...d=11802&page=1 Its hard to see any other outcome than the erosion of market share of the traditional corner shop Chemist and more and more closing down as it can't be cheap to keep a qualified pharmacist on duty especially with more and more places offering free prescriptions...

[BlackPeter]

Not showing on their website yet but I noticed a big new Bargain Chemist outlet when I was down in New Plymouth yesterday, just down for the Warehouse. https://www.bargainchemist.co.nz/pag...d=11802&page=1 Its hard to see any other outcome than the erosion of market share of the traditional corner shop Chemist and more and more closing down as it can't be cheap to keep a qualified pharmacist on duty especially with more and more places offering free prescriptions...

To be fair - while Pharmacies delivered last HY 62% of the earnings, it is not the whole story. GXH do have as well a "doctors" division (basically a number of GP practices) and a "community health" division (community nurses).

Earnings for pharmacies dropped last HY (which included as well some prominent Covid lockdowns), while revenue for the doctors and community health increased (admittedly from a low basis). Obviously - all three divisions do have (or should have) a healthy tailwind from an aging baby boomer generation.

Forward PE (depending on somebody's estimates) and backwards PE (I take typically 10 years and get flamed from winner for that) both between 9 and 10, which looks not too bad. Earnings CAGR (backward) close to 9, which is good, but sure - who knows how future earnings development will look like.

I am overall cautiously optimistic, but agree that one would need a good team to exploit the tailwind without taking too much trouble in the turbulences of new competition. The still newish CEO (Rachael Newfield) started to improve the numbers and brought the community care division out of the doldrums), which is good, however - shareholder communication overall is not particularly good, which is a bit sad. At this stage it is still a bit of hope that their work behind the scenes is better than their shareholder communication.

Looking at the SP - I think the market does price in a fair chunk of future turbulences which may or may not come. I do see them at this stage conservatively, but fairly priced. Hold a medium sized parcel and could not bring me to sell them for the current price (Hey - who would sell a healthcare stock with a PE below 10 in an established and growing market). I see the opportunities for price rises as higher than the potential of further share price drops.

[Beagle]

Fair enough BP.
I noted this from the most recent announcement from the company

Pharmacy Revenue down 5% and Operating Profit down 11% at $10.9m due to the impact of COVID-19 on retail sales
- Medical division continues to grow, with Revenue up 8% and Operating Profit at $5.7m
- Community Health Revenue up 10% and Operating Profit at $2.4m
- Government wage subsidy amounts of $8.0m included in Group Revenue and passed on to employees

Emphasis added. To me the lions share of the current profit comes from pharmacies and looks very vulnerable to ever intensifying competition from sources as noted in posts above.
I find it hard to get enthusiastic about this one.

[nztx]

Watching GXH -- 12 months of no dividends so far . IMO if that doesn't change, interest despite
a reasonably tightly held share register could decline & SP back to a buck could be on the cards

Announcements on Jun Div could be worthwhile watching ..

[Beau]

Almost down to lows of COVID nation wide lockdown levels surely GXH would have had some headway since those times .

[winner69]

Almost down to lows of COVID nation wide lockdown levels surely GXH would have had some headway since those times .

GXH real dog ....will struggle for years ....and maybe one day might actually be worth something

And all those intangibles - $133m ....when equity is $145m — wow

That should be enough rubbishing to give the share price a boost

PERCY says ‘why bother’ a lot - seems appropriate for investing in GXH