One really has to wonder what is the agenda of these stock brokers. A quick comparison of HTM Wilson 26 August Report with the 23 October Report shows their continuing exuberance of an ever increasing EPS as follow:
FY09 (7.1 revised to 7.3; increse by 3%) FY10 (5.4 revised to 5.7; increased by 6%) FY11 (1.3 revised to 1.9;increased by 46%)
To justify maintaining their exuberance; this stockbroker had increase his predicted EPS by as much as 46%in the 2 months from 26 Aug to 23 Oct! What on earth gave rise to the increased EPS prediction?
Could these reasons account for the increased exuberance?
The cash balance at 30 June 08 is $60.2M and was bumped up 3% as $62M in sheer exuberance
Quote: GSK reported their Q3 results last night which included Relenza sales of £12M ($27.1M). This corresponds to an indicative royalty to BTA of $1.9M.The GSK Q3 Relenza figure has been the weakest quarter, historically, so this small number does not come as a surprise.
The poor expert may have missed a decimal placing in the June 08 quarterly sales of $6.2M. He should read puppet’s posting that $27.1M is definitely greater than $6.2M
To get a better perspective and to account for “seasonal variance”, let us take an accumulative 3 quarterly sales ending 30 Sep 07: $442.9M ($220.8+158.2+63.9) compare to 30Sep 08 $85.8M ($52.5+6.2+27.1) a drop of 80% The statistics show a definite plummeting sales, yet the poor SOD exponentially increased the predicted EPS year upon year by 3% for FY09 to 46% by FY11.
Lest we forget; the Relenza royalty for 07/08 was $20.5M. Let us move to the statement QUOTE” But it does put pressure on the Q4-2008 and Q1-2009 numbers, which have to be stronger now to bolster our faith in this product, and in gauging whether the renewed GSK/BTA commitment to Relenza is real.”
This understatement deserves a Gong! These brokers had future relenza royalties increasing from $20M to over $30M per annum. This is 10x to15x the 1st Q sales and the renewed GSK commitment is evidenced by the falling sales. Another clear indicator is using the $20.5M 07/08 royalty. Sales in the last 3Q were down 80% of the same period last year, implying 08/09 royalty of $4M (20% of $20.5M) which is a far short of $20M to $30M predicted with exuberance. This will deteriorate further considering GSK commenced selling Relenza Call Options immediately after the legal settlement for which BTA will receive royalties when the buyer exercise the Call options in a full blown bird flu pandemic.
Quote: “BTA has completed its on-market share buyback scheme. This effort will have reduced their share capital base by ~5%” The cancellation had already been diluted by free executive share options which increased 336% from a total of 894,666 executive options on 30 Aug 07to 3,006,614 executive options on 19 Sept 08. This 2,111,948 free executive options is approximately 1/4 of the share buy back! In the coming AGM shareholders will be honored to approve rewarding Peter Cook with 976,300 free options.
This is the most telling: QUOTE “BTA is forecasting a cash-neutral FY09 even after the buyback expense”. If you believe what Peter Cook forecast then you should believe:
Peter Molloy is to be blamed for launching the legal case which led to the 07/08 FY loss and; The last GSK offer of $100M with legal costs was in 2006 conveniently ignoring reports that GSK again offered to settle for $75M with costs in 2007 and; Peter Cook has iron clad credentials for creating shareholders wealth. At the time he joined OEC as their gifted CEO, OEC was trading around 70 cents and in 3 short years the sp plunged to around 10 cents when he left and brought his gifted talent to BTA. From 1 Dec 2005; sp at $1.71 (Peter’s appointment was announced on 2 Dec) had plunged to close today at $0.33. What a remarkable set of executive performance!
BTA Price at posting:
33.0¢ Sentiment: Sell Disclosure: Not Held
