The current market-cap is about $700 million, the book value (as of the HY report) was $1289 million, which includes intangibles of $1178 million. That's a price-to-book of about 0.55
In some generic segments we've seen revenue drop as much as 60% - but the market update said Generics had a drop of 30% on the whole. The TEVA portfolio had a purchase price of $652 million. The smart move for management would be to accept the current options have lapsed, and write it off entirely. A case could be made for a non-cash write down of intangibles for $200 million easily, or $500 million with a little more aggressive accounting.
| 1 | |
| Current Value | 0 million write down | 0 million write down |
|---|
| 2 | Book Value | 1289 million | 1089 million | 789 million |
|---|
| 3 | Market cap (PB 0.55 - current) | 709 million | 599 million | 434 million |
|---|
| 4 | Share Price (1.65 billion outstanding) | 0.43 | 0.36 | 0.26 |
|---|
| 5 | After write-down - market cap at
Long-run ASX average PB 2 |
| 2178 million | 1578 million |
|---|
| 6 | Long-run share price |
| 1.32 | 0.95 |
|---|
So, "back of the envelope" suggests that we could easily find ourselves around 0.35 - maybe as low as 0.25 - before we consider wider market panic, margin calls and the like. IF the write offs are the end of the bad news, and our company starts showing decent profit the company will be a bargain.
At 30 cents, which is possible with a market panic, substantial write off, and all the ensuing margin calls, the company becomes a potential 4-5 bagger. You better believe I'll become a buyer. But, for the moment I'm going to keep my powder dry (or dry-ish - there may be some down days where I'll buy with fresh cash).
