short term trading week starting - 21st apr, page-15

Entry for STT list

PBP - Probiotec

Multinational manufacturer of dairy protein, pharmaceutical and diet supplements.

Long

FA:

MC: $32.2m
H1 Turnover: $32m, down 5.4pc.
H1 EPS: 1.89c, up 227pc.
NTA: 76.1c

1. Dairy protein: Australia's fourth largest producer of infant formula ingredient, lactoferrin after Warnambool Cheese & Butter, Bega Cheese and Murray Goulburn Coop.

New $20m plant at Jervois, SA can produce 14 tonnes of lactoferrin grossing $14m and 50,000kg of immunoglobins grossing $5m. NB. Capacity can be doubled with capex of $2m-$3m.

2. Weight management: About to launch CSIRO subscription-based weight program into 200 pharmacies with each store paying PBP an annual fee and budgeting for a turnover lift of $500,000-$1m per annum.

Using the brand name Impromy, the program will feature a CSIRO weight management app and on-site testing of weight, cholesterol, blood pressure and blood glucose.

3. Manufacture: Cranking up production of a range of diet/health related pharmacy products being marketed under various PBP brands and the Pharmacy Guild's iconic Blue Cross brand.

H1 manufacturing sales up 90pc.

4. Distribution: Recently negotiated deal with Canadian Big Pharma, Valead, MC $50b, under which Valeant will accept responsibility for sales, marketing and distribution of key PBP brands.

TA:

After hovering near 52 week highs at a time when many biotech stocks have fallen 20pc, PBP has now eased back to 52.5c on low turnover.

This gives a cheap entry point ahead of the launch of the company-transforming weight management strategy.

A re-rate may be imminent.