* FY14 sales projections IMO are very conservative. Take Canada for example. It has an MRA with EU, and reimbursements for the whole country is through only one body. Approval there should be achievable by mid 2013, assuming EU approval is gained this year. Now, Canada is a 40% bigger market than UK, so the sales assumed for Canada/USA in FY14 could well be much higher than indicated. I would also expect that wealthy Americans with serious ulcers will travel to Canada and pay full price, rather than wait years for approval there, and lose their limb in the meantime. Australia should also be generating sales by then, too. A conservative approach for a change is a good move from TIS.
* My NPAT estimate for FY14 is around $10M, assuming a margin of around 35% on $28M sales (any other thoughts on the likely margin?). I feel this is conservative, based on the low cost of manufacturing a unit, and the likely risk/reward equation with its partner Quintiles. This would put TIS on ROE of 68% on today's equity, and a P/E of around 8. By the time TIS has a few approvals under its belt, and is announcing success in sales, margins and medically (hopefully), the P/E for a stock looking at many years of doubling profit each year should be much higher than this. Even if P/E stays the same, the share price should be doubling each year, as sales and profits double.
* I agree there is a high chance of a capital raising after EU approval and commencement of sales. There is a better option for shareholders, though. And that is a loan from Quintiles, which I seem to recall is a service that they provide to partners. That would be the best way of getting past the costs of the next couple of years until the cash flow starts to cover costs.
* Despite the recent frustrations, the end is now getting close, whether it is one or three months, after six years of being invested.
TIS Price at posting:
43.0¢ Sentiment: Buy Disclosure: Held
