Thanks to WHO for posting the full Rapid Ratings report on Cellestis over on SS yesterday. I just have to get this off my chest so that I can have a good weekend. WR TU ===========================================================
MY VIEW This opening headline is bunkum, see below for reasons why.
Rapid Rantings Cellestis, the ASX-listed biotechnology company which researches, develops and markets QuantiFERON technology products used in blood test diagnosis, has in recent months seen no less than four of its directors sell significant numbers of their share options.
MY VIEW This is technically not correct, as only two directors sold any shares converted from options.The end result was Chairman Pitcher finished up with exactly the same number of shares that he had originally ie 160,000. Director Catanzaro actually finished with 185000 fully paid shares whereas previously he only ever had 200,000 options. This was simply an exercise in good financial housekeeping. We all know (on this forum anyway) the context of how Directors Radford and Rothel sold a very small proportion of their total holdings.These were unrestricted shares at a time, and they voluntarily once again continued to re-escrow the bulk of their total portfolio. They say the devil can be the detail, but conversely the TRUTH can also be the detail if you are prepared to read carefully, and do not have a hidden agenda.
Rapid Rantings Rapid Ratings has rated Cellestis at D3 (25) since 2002 – this is a sub-investment grade rating, which carries with it a high-risk of default and implies that the company’s assets are of speculative value.
MY VIEW This so claimed sophisticated software which Rabid Rantings use, was unable to conclude that a company with $17 mill in the bank largely as a result of a capital raising for the purpose of "increases in staff,logistical resources and inventory ," following FDA approval last Dec, was hardly at risk of default. Perhaps there was a glitch in the software this time around which didn't recognise the fact that the company had almost twice as much cash in the bank as opposed to any other time in the companies 4 year history, including immediately after the float..
Rapid Rantings The low rating is as a result of poor quantitative figures including a net loss after tax for June 2004 of $2.6m, while the company has also faced negative cash flows for the last five years in a row. As a company of its kind, the normal gestation period is five to 10 years, but Cellestis’ growth curve has not taken off since it was launched in 2000. Since the company has been rated in the ‘D’ category for the last three years, Rapid Ratings considers it a troubled company
MY VIEW The company floated in April 2001, so has only been in existence for 4 years not 5 as stated. I well remember when it floated at 25c, that the Intelligent Investor magazine described it back in April 01 as being one of the few blue chip biotech growth companies to come on the market. It seems to me nothing has changed in that regard. I certainly would love some other biotechs I have shares in to have performed as well.
Rapid Rantings Dr Patrick Caragata, managing director and CEO or Rapid Ratings, said: ‘Cellestis is a prime example of where the market has not reacted to the declining health of the company. Only now, with directors selling significant numbers of their shares is the market adjusting.’
MY VIEW Struth declining health in the light of the above and now with approvals in place for all major markets. Last but not least, directors still hold collectively in excess of 25% of the total company. What more can I say?.
================================== Yesssssssss, it is the ORIGINAL:-
Cellestis, the ASX-listed biotechnology company which researches, develops and markets QuantiFERON technology products used in blood test diagnosis, has in recent months seen no less than four of its directors sell significant numbers of their share options.
Among these, Dr Anthony Radford, the managing director and CEO and Dr James Rothel, the chief scientific officer, sold more than a million shares each with a combined value of $5.6m on 22 April this year.
This comes at a time that Brisbane-based Rapid Ratings, the global ratings agency, reveals that the company’s stock is significantly overvalued by the market, in comparison with the company’s underlying financial health.
Rapid Ratings has rated Cellestis at D3 (25) since 2002 – this is a sub-investment grade rating, which carries with it a high-risk of default and implies that the company’s assets are of speculative value.
The low rating is as a result of poor quantitative figures including a net loss after tax for June 2004 of $2.6m, while the company has also faced negative cash flows for the last five years in a row. As a company of its kind, the normal gestation period is five to 10 years, but Cellestis’ growth curve has not taken off since it was launched in 2000.
Since the company has been rated in the ‘D’ category for the last three years, Rapid Ratings considers it a troubled company
Comparing the credit rating with the share price, which has risen steadily since 2004 to peak at the $3.70 mark in November 2004, reveals that the market has significantly overvalued the company’s stock and has not taken into account or adjusted to its relatively poor financial health.
For this reason, the company is considered a Strong Sell, and remains a Strong Sell even at the current share price of $2.78.
In the last month the share price has fallen from $3.29 to $2.78, but according to Rapid Ratings’ buy/sell/hold recommendations, the stock is still recommended as a Strong Sell until it reaches a level below $1.99.
Dr Patrick Caragata, managing director and CEO or Rapid Ratings, said: ‘Cellestis is a prime example of where the market has not reacted to the declining health of the company. Only now, with directors selling significant numbers of their shares is the market adjusting.’
Rapid Ratings’ System
At the heart of Rapid Ratings’ software-driven research are 25 industry-specific quantitative financial models that generate credit risk ratings for approximately 15,000 global companies. Rapid Ratings utilizes publicly available corporate financial data as inputs to generate a risk rating. Each industry model employs 62 financial ratios and a sophisticated multivariate econometric global benchmarking system. The models include a database of over 250,000 companies that reference 25-30 years of financial data.
Rapid Ratings’ Background
Rapid Ratings provides corporate financial health research on both listed and unlisted companies in the US, Canada, Singapore, Australia and New Zealand for investment funds, brokers, banks, large creditors, financial planner networks, financial advisors, accounting firms and retail investors. Rapid Ratings is the only qualified Australasian research firm to provide equity recommendation reports to some top research firms on Wall Street such as Lehman Brothers and Bank of New York Jaywalk, through the global settlement selection. Rapid Ratings’ research is now available on Bloomberg and will shortly be seen on several global networks.
Rapid Ratings is 76% owned by Collection House Limited, an Australian company that is listed on the ASX. Rapid Ratings has offices in New York, Toronto, Singapore, Sydney, Brisbane and Wellington.
For more information contact:
Larry Schlesinger Senior Editor, Rapid Ratings Tel +61 7 3 017 3075 Mobile 0405 343 819 Email: [email protected] Website: www.rapidratings.com
Rapid Ratings Pty Ltd
Ends
CST Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
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