PPX strategy to conserve cash is a positive decision and very...

PPX strategy to conserve cash is a positive decision and very important in my opinion for the longevity of both PPX and the PPXua holders .

The current market cap of PPX is only $50m , and for a business that has $4.5 billion of revenue , 6200 employees , cash in the bank , and debt levels that have been serviced and has not broken any of its covenenats is almost unspeakable .

The market cap of $50m at 9c a share in my view is quite ridiculous but shows just how harshly the market has punished their underperformance of the last 3 years and just how the market feels about PPX now , it is no longer considred to be a company with 4b of revenue , 6000 + employees , but at this point in time almost a penny dreadful hopeful .

To recover from this smashing in market cap basically a complete new board has needed to take over, and in this case the board they have is very highly qualified to pull a rabbit out of the hat , but they need time and some capital to impement their changes to the business trading.

To pay some of this capital out in the middle of the restructure would be irresponsible to the long term plan , even if PPXUA shareholders , recogniszing these shareholders really dont care to much for PPX shareholders rights and invested for yield not in the actual business itself , hypothtically anyway. .

If however by taking this stance the company (PPX) can come through this period and be able to maintain say $4b of the $4.5b of revenue then PPXUA holders will have the most to gain , and should support or at least accept and understand this decision .

If revenue of $4b can be kept but transformed in to revenue that comes at acceptable margins the long term benefits to note holders and the core shareholders will be rewarded and guaranteed .

All of the property based shares that continued to pay high yields while hosting high debt , many knowing full well they were robbing peter to pay paul are now dead.

MFS, CNP, BEC, the list goes on .

No one should want to invest in a ponzi business , and sometimes the difficult decision to halt the distribution until the profit allows to pay it carries pain , but in the long run it is very sensible , unpopular at the time but compulsory for longevity .

The board of PPX has a responsibility to invest its capital for the longer term benefit of PPX, and this decision confirms to me they are doing it and take the jhob seriosuly even if they cop criticism in the difficut period .


Italy and greece are classic exmaples that you cannot just spend spend spend, at some time you need to pull your head in, create a surplus on your expenditure and then you can repay your debt.

The new board of PPX has basically changed the management team by 100% , openly stated savings of $15m in management costs alone , said the review will be complate by june 2012 , have got rid of nearly all the senior people who were in charge when the company went from chocolates to boiled lollies

The review progress is being kept very secretive I agree, but surely it needs to be , with so many businesses to decide upon , and 6200 employees futures to consider this needs to be kept in very few hands .

You would think a number of business may be sold or closed , and many employees relocated or retrenched , but managed properly the complete overview of a business with 4b recvenue could see massive returns to all concerned .

It will take time but to know if any of it is working will not take forever and this step to me confirms they are diligent and moving in the right long term direction for all owners of the business .

If the company is given the time to clean up its business in the current review of its corporate strategy every one will benefit

Personally I would like to see the company do a share buy back of shares in PPX to get rid of all of the stale holders but i doubt that will happen , it would also be good later if the capital allows do the same for PPXUA .

Looking forward I ask myself what market cap could one anticipate if the revenue was maintained at $4 billion but on a succesful overview and diligent capital protection they achieved a return of just 2.5% on the revenue

Just to highlight the numbers , 2.5% on revenue is considred poor , and because they have been so heavily smashed 2.5% on this revenue is $ 100 million

As a minimum I would expect that type of profit to get a PE of at least 10 , or 20 times the current market cap

A long shot , yes, but in my view one that is worth chasing and by not eating what little capital they have at this point in time welol worth it

The other point to rememeber before dismissing such blue sky pipe dreams it is worth having a look at the 2006 , 2007 and 2008 annual perfomances to see , PPX has been there before at much better margins than I propose is possible over the next 2 years .

on that basis i say well done on freezing the payment and good luck to the current board on turning this potential asx 200 company around to where it used to be

Of course I am a holder of ppx shares , and trying to convince the hubby we shoud be buying more whilst the markets are so weak and PPX is so unloved .