ALC - Valuation Overview, page-9

Fellow ALC'ers - it seems the long winter is now behind us & we are going to see the sunshine & rainbows of spring!

This thread (pls go to first post) provides a timely reminder of where ALC stands from a relative value perspective against its peers, across the same metrics.

In a nutshell, we should be trading at close to 20c based on our performance & late last year we were making our way towards that benchmark until the 'xmas slow period' dawned and everything ground to a halt.

Those extremely lucrative NZ contracts which were whispered to be worth over $1m each were no where to be seen - or so it seems!

The annual report, or Ray's Chairman's Letter specifically provided a key clue for those who know what they are looking for!



This is huge & explains the delay in coming to market with that (those) contracts!

From a disclosure perspective, a company can only come to market with an announcement after the commercial contract is signed & hence binding. In the healthcare / tech space (or any highly technical service space really) the contract negotiation phase can take 3 or so months as all the finer aspects of the implementation etc are negotiated. Prior to this point, both parties are subject to a non-disclosure agreement which takes precedence over continuous disclosure as per the ASX rules.

So it seems from this paragraph, reading between the lines, we were awarded at least 1 major NZ contract (perhaps more given we are now the 'preferred vendor') and have been negotiating with the District Health Board ever since...

Once these negotiations conclude, the contracts are executed & they come to market with that big, fat juicy announcement - it has to be imminent now!

Also - another 'tea leaves' clue in the paragraph... This NZ contract (at least 1, maybe more given preferred vendor status) has to be very large for it to be in the hands of the District Health Board's hands for contract negotiations.

Think of a hospital hierarchy & approved spending delegations. They may go something like this:
- Hospital Department Head - sub $50,000 contracts
- Hospital CEO - sub $250,000 contracts
- Hospital Board - sub $1,000,000 contracts
- District Health Board - >$1,000,000 contracts

(Note that a $1m contract adds c. $20m in value to the business (3.5 cents) given the valuation metrics our peers trade on. One $1m contract would bump our fair value to around 23c)

Nathan & Ray are currently in the US drumming up interest / negotiating with partners for our US entry no doubt. Then towards the end of the month, the PR machine will be back in full swing with the round of investor road shows (TechKnow etc).

They say it is the darkest before dawn & congrats to all the LTers who had the intestinal fortitude to hold tight knowing you're invested in a cutting edge, cash flow positive med-tech company with global tailwinds at it's back, all the while when the SP was languishing... It seems the sun is about to breach the horizon & shine light on our wonderful investment again!