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14/08/17

12:18

Post #: 26479419
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Originally posted by Wini ↑

Had some spare time over the weekend so I crunched some back of the envelope numbers for the upcoming report based on the last couple of results post-restructuring and management commentary in reports and presentations. My thoughts segment by segment:

Contract manufacturing looks set to be the engine driving core earnings, I have revenue increasing from $41.1m to $44.8m. 9% revenue growth, should be easily supported by new $10m annualised contract coming on line progressively over the half. I have margins at slightly less than last years results after management stated new work would be roughly in line with existing margins. This results in an increase from $4.5m to $5.1m in contract manufacturing earnings.

Obesity and weight management is the other growth segment, I have revenue increasing from $13m to $13.8m. 6% revenue growth is modest, but keep in mind there has been some product range rationalisation that has hurt the top line. Margins have been expanding strongly though, which management forecast to continue at the half year report. I have used a 15% margin for the 2H17 which seems fair. This results in an increase from $1.1m to $2.1m for obesity/weight management. I have to admit this is the segment where I feel I have been most conservative based on the activity lately on Seek for 3 regional sales managers for Impromy and a second shift being set up at the Laverton plant due to increased demand.

Branded pharmaceuticals looks set to be consistent low growth, I have slight revenue growth from $7.3m to $7.5m, nearly 3% growth in line with the like for like at the half. Margins should improve a little from the rationalisation of the product range and I have earnings going from $0.8m to $1.4m.

Europe and Specialty/Other are both non-material. I have neither impacting the bottom line in any way.

Add it all up and I think we could be looking at $6m EBIT profit across the segments. I have corporate expenses ticking up to $2m due to extra growth, plus a slightly higher interest bill from extra debt a the half year resulting in a net profit before tax of $3.8m. PBP have $5m in deferred tax assets that can be used, but even at a full 30% tax rate it would be a NPAT of $3m.

Not bad a for a $24m market cap. I have tried to be conservative with these numbers, I can argue there is upside to these. If the $10m contract manufacturing work is more weighted to the 2H like others then top line could be stronger than 9%. Obesity and weight management could be stronger as well, particularly with the margin. I am not sure where that margin will settle after this high growth phase, it could certainly be much higher than I have modeled. That said, it seems like they will be incurring some sales and marketing costs up front before new initiatives will ramp up so I am happy being conservative for now.

Any thoughts or comments appreciated.

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Just looking at the half year to 31/12/16 Revenue $28.6 mln EBIT $886k NPAT $545k.If your figures come through as forecast will be a massive turnaround in 2nd half.

PBP Price at posting: 45.0¢ Sentiment: None Disclosure: Not Held
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