time to buy more, page-65

Saw this about PGC on another forum, any thoughts???

i quote:

"Hmm my analysis of the latest annual report raises a few FA issues.

They have increased their gearing levels significantly to currently approx 94 Million, they have done 2 capital raising at approx 91cents, and 75 cents (So all those guys have done their dough so far) The capital raising bought in about 68 million in revenue, but costs of almost 10%!. They have increased their dividend significantly this year to around 6Million per year, this makes up quite a significant amount of their net profit. The short term debt is approaching their total net profit pre abnormals!.

The notes for the debt facility say provided by NAB, extended by Westpac, to allow financing of OS equipment (Sounds complicated!). I note a large share holding is by a Chinese based company, so I wonder if that is a nominee of a supplier of some of the equipment they sell?.

The PE ratio is under 10, so is looking more attractive, however they have acquired a significant amount of debt which in the current climate is worrisome (the terms of the debt facility aren't explained in the notes to the financial statements that I could find).

Their product range is huge, it reminds me of going to a restaurant and being confronted by a 20 page menu?. Much of it is large equipment items which would be infrequent purchases, and likely to be driven by price and scale (From the point of view of a purchaser), there seems to be a deliberate strategy to move away from consumables.

Apart from the "MC chatter recently, there are only 2 other broker reports on from Petra Capital which was commissioned by Paragon in 2017 so old, and another by Harley Grosser in 2012 even older.

On the TA side the chart looks terrible, looking like it could go a lot further down, hasn't shown any signs of consolidation as yet, my suspicion is that its going to go down further?

i would suspect there will be a cheaper entry point at some stage and there has been a significant increase in gearing which I find problematic, so I would consider it relatively high risk."