Well not only the Prada bag but the bowling balls as well. I don't think that either has done badly but in reality the market was expecting more.
The cash flow once again showed that despite the change of business the cash flow is lumpy. You have to believe management when they say it will unwind. After all we have seen this happen before.
I think I overestimated the growth or it was still to be invoiced out. I still cannot fault the business and the commentary was fine. They definitely got marked down for not putting the decline in EPS up front and centre. It was really marginal - however flat is still not what the market wanted to see.
I still think its undervalued but not by as much as I thought - I think its value was or is around 80 to 85c but I think if they make some more progress it should get to the $1.00.
The real issue for me is that the news flow is really not there considering they are not making acquisitions. What we have to do is read between the lines:
1. Midas is an investment - Its not making money and is developing product. Note the comments its expected to contribute in FY2018... So that's capital being invested and must at this stage be losing money.
The company appears to previously have been named Spintech Oceania
This article after being awarded $1,5 million I think sums up what they are trying to achieve...
2. The Stralus aged care beds are changing the offering from agency to internal offering. That will probably only start to deliver in the second half on 2017 and beyond. This however seems to have been a strategic move which will drive value into the future.
3. Rubbermaid Healthcare added to range.
4. Electro Medical acquisition to undertake all product maintenance and preventive maintenance. That will only be modestly accretive in fy 2017. I suspect it will be a winner but 2017 is the first year- but needs to get all the equipment under its wing...
So there are a lot of things going for it but we are no longer a company living from hand to mouth we are now also investing and investing in longer term projects. When I invested here there was no way Paragon had the time or money to develop its own bed or invest in a software solution company...
This now looks like they are building a company for future growth and can afford and probably has to afford deferring profit in the pursuit of future profits and its own solutions.
So I am happy with this balance of investment and driving current returns.
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