Fundamentals

The key to PGC, and investing in most emerging industrial companies in my opinion is how we value the long term fundamentals of the business , against how the market views that in comparison.

In my opinion the market is currently discounting PGC in this area , and no longer see PGC delivering more than 10% growth revenue and being able to repeat the 2012/13 profit numbers.

I think this is an understandable conclusion to make if all you read was the reported in the Half year result and then most recent the January to March quarterly where there was an operating cash shortfall .

In my view looking deeper it is important to look back to be able to consider what might come next.

In July 2012/13 the share price was 0.32c and rising , after the annual result was released the market liked PGC , the company announced a maiden dividend , a few brokers put a 12 month 0.50c target on the stock and then three credible newsletters ( Eureka ( Kohler ) , Montgomery , and Jenny Prabhu ) created a level of interest in the stock that took the share price to almost that 0.50c level .

A capital raise at 0.37c of almost 40% of the market cap followed

It appears this issue was not given to long term holders, and after a slower half year result against the PCP and a slow quarterly in respect to cash receipts in March the sellers come out , and a 12 month low was created at low 20's.

The fact the 2013/14 Half year showed a drop in previous corresponding period ( PCP ) revenue and EBIT was enough to start the exits , but in recent days we seem to have found support from within the register and this forum fighting the down trend 0.23c

In my view the market has got it wrong and this buying is opportune to the point I think PGC has now bottomed technically and fundamentally will re rate as it did last year after the annual result was out .

I am not only expecting the reversal of the downturn in PCP in the first half , I am expecting the full year will show that this has been made up in the 2nd half numbers to the point we will see a full year PCP growth in double digits of all of the key valuation indicators

I make this assessment on the fact the company would now know if it was going to miss forecasts or not and because they have NOT published a profit warning I expect they will meet the forecast that saw the stock head towards 0.50c

In 2012/13 the KPI were

Revenue $ 17.1 million
EBIT $1.5 million
Dividend Per share .01c
Share price July 2013 0.32 c
On the date of the report of earnings 0.37c

The forecast PGC has made suggests we will see 2013/14 revenue of around $21-22 million.
( up more than 20% PCP )

The forecast PGC have made in respect to EBIT for 2013/14 is around $2.5m
(up 65% on the PCP )

The dividend expectation is unknown but if they hold the .01c at the end of the year in addition to the interim , that would mean the full year dividend is .015c , or
( up 50% on the PCP).

If I am right we might see all those who bought at 0.37c and charged for the exits at 25-35c wanting back in and the stock re testing 30c sooner than later and heading back towards the 0.50c valuation many brokers including CCZ had on it less than 6 moonths ago