PGC use a fairly sophisticated it system SAP Hana - I am not sure if all the companies within the group are now on it. I think the WA business may still be on its own but has a good system as I understand it. So I don't think its a build up of stock that is not controlled - in fact the company has a good track record of improving the businesses it acquires.
The business still has a very significant capital equipment focus and those contracts determine the level of stock. If a ship arrives and you take delivery but cannot install or if an installation date is delayed the capital equipment sits on the books.
They are releasing their own bed systems which would have had a capex investment and in fact they do some manufacture here. They are innovative in that they seek to satisfy the customer need so will seek how best to do that as I understand it.
Then you have the fact that this industry requires you to have sufficient stock or you lose the customer.
I think the first half stock was higher than expected and results flat on EPS level - the fact that management held their forecast suggests that stock was earmarked and that the poor cash flow ( was an investment in stock related to orders held) will reverse in the next half as that stock flows out to customers.
Not the first time we have had this and management have delivered so we have to await the full year results.
I think this end of the market feeds on news - this year the news from PGC has been very little so I think its still just part of the digestion process.
PGC Price at posting:
75.5¢ Sentiment: None Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)