API - Australian Pharmaceutical Industries

[smoothsatin]

Is anyone following this stock?

I have been short the last few days, but today's volumes were up a bit, maybe 2.5 mill by 4pm. This didn't fuss me, but on close volume ended up 9.5 mill, with large buy orders being put up in the initial moments of post market trade. I am no authority on this matter, but i believe there is a bit of M&A activity in the industry at the moment, i just wonder if we might get some price movement early next week, possibly a significant announcement also?

The stock is close to a long term downward resistence line at the moment....

Any thoughts?

 

[UMike]

From Memory......

API has already (possibly foolishly) knocked back a take over offer from Sigma resulting in the share price plummeting from high $2 to around $2. The price has recovered somewhat but with recent profit warnings I'd still avoid this stock.


FYI Westpac broking give API an intrinsic value of $1.65.

 

[boxon]

This was from Southern cross around the 10th of mayHEALTHCARE



Australian Pharmaceutical Industries (API)



Reviving with Priceline



A fast-growing health and beauty retailer, with a drug wholesale business that is turning around . Australian Pharmaceutical Industries (API) is a drug wholesaler that also owns several retail operations including Priceline, a health and beauty chain. Priceline dominates the health and beauty category in Australia, and a programme to franchise the brand to retail pharmacists is adding strong growth momentum. API's wholesale business is recovering after a difficult 2006. We like API's rising earnings' profile from FY08, its low level of gearing, and its low capex requirements looking forward. We have initiated coverage with a Buy recommendation and $3.00 price target. We value the stock on a DCF basis at $2.53 per share base case and $3.33 optimistic case.

Priceline is the primary value driver. With health and beauty a strong retail category, and mini-majors the preferred new retail format, Priceline has been able to grow strongly for several years now. We argue in this note that valuation gains related to Priceline have the potential to offset any declines in the intrinsic value of API's wholesale business.

API is enjoying great success in building its franchised Priceline Pharmacy model. From 68 Priceline Pharmacy franchises in August 2006, there are now 111 franchises, making this one of the fastest growing retail brands in Australia.

API's wholesale business is slowly recovering a difficult 2006. Anecdotal evidence suggests that better management has helped stabilise the business at higher margins.



Recommendation: Buy Previous Close: $ 2.33 Price Target: $3.00

 

[giss]

Api share price will be rerated in the near future. It is attracting attention with the phenominal growth of its pharmacy franchise model.

 

[giss]

In My opinion this share has potential for the future. It seems to have been oversold.

Is anyone besides Solomon Lew following it? He bought in at $1.40. You can see the 20mil share volume jump in late March.

Share price now at about $1.30. Its always hard to pick the bottom but Mr Solomon has taken a opportunistic punt. He's a hardcore retailer & has probably noticed that Priceline Pharmacy is the fastest growing franchises in Australia.

Metcash is investigating a Sigma pharmacy distribution partnership for Symbion assets. Who knows what other the other grocery giants Coles & Woolworths will do if that occurs? Perhaps buy the only other big pharmacy distributor API?

There obviously needs to be some positive news for the stock to get up off the bottom.

Mr Solomon would be working on that don't you think?

API's end of year results are due in August. A $49 mil estimate compares favorably to last year & a recent half yearly result of $6.5mil

Anyway, I've noticed API in the papers a bit lately & that it hasn't had any coverage for a long time.

 

[Rainmaker2000]

I too was connecting Metcash moves to the current predicament of API......I don't follow API but have read of Solomon Lew's interest.....

Not sure if I like the Priceline business but have heard its rapidly expanding......I'd have to do some serious numbers to get a grip on it.......I imagine most of priceline falls outside the 'pharmacy' area which probably lowers people's opinon of it....still its interesting

 

[giss]

I'm obviously a die hard supporter of API, you would have to be to follow it from $2 TO 45c today. However there will be an announcement soon as the end of their financial year which is October.

In the past the company has had some terrible results. Need I mention a loss of 17 mil.

Before that though this company had solid returns of about 18c per share/annum @ about $2. Considering the abysmal share price now it could be good stock to hold for dividends if it returns to previous profitability.

I truly believe that this stock has been oversold all the way down because it stopped paying dividends.

Comparable stocks like sigma have a much higher P/E.

As long as API delivers a solid recovery at the end of this month all should bode well & rerate API after a horror last couple of years.

Consider that recent company media reports indicate a $50 mil profit for a company that has a current market cap at the moment of about $130mil.

The market sentiment is moving back to holding shares that return dividends. If the company has sorted it self out, which I think it has, then the share price should head back up & healthy dividends become available.

Especially if you buy at current prices.

 

[UMike]

I am also supporter of API and very annoyed with myself for not topping up at a planned 42c when I had the chance.

I'm sure you'll find that the reports indicate a $50 mil EBIT rather than Profit.

Heres hoping for more positive action at API.

 

[Fool]

I see a cup and handle pattern forming, watch for the handle breakout on volume (~ 4M shares).

Price Target of 77-78 cent using -
• Target: The projected advance after breakout can be estimated by measuring the distance from the right peak of the cup to the bottom of the cup.


API is Insider Trader’s pick of the week and has these comments

- 5 Directors have been buying recently
- Brokers re finally increasing their recommendations
- Buyer demand and smart money has been increasing substantially
- It's also currently trading at below its stated net tangible assets.

DYOR
I hold API

 

[ectoplasm]

Hello Fool,

(not sure that I like your handle but each to their own - you may not like my avatar)

The chart below also shows a Cup & Handle (diagram a bit different but the target similar).

Daily chart: Volume still dropping and still close to support - may just bounce off support on any weakness monday

 

[Fool]

Hey Ectoplasm,

Thanks for a proper chart, my skills in paint are… well see above lol. Good to see we have a similar target, that’s what matters in the end. I guess now we just have to wait and see what happen when the traders return from holiday.

 

[jing]

It's been a ling time since the last post - but is anyone following this stock?

 

[kingkev]

I have been in and out a few times with this one and now OUT. Losses are mounting and sp is still heading South. The floods have been blamed but........................

Any lowing of the sp might be an opportunity to get in...................just looking

 

[UMike]

Wow There was some activity with this one today on Masive volume. (well for API anyway).

Started the day at 46.5c then dropped to 36c to recover to close at 44.5c.

Anyone have any info as to why??? Rumours????

The AGM was just yesterday and seemed to go without a hitch.

:1zhelp:

 

[skc]

Wow There was some activity with this one today on Masive volume. (well for API anyway).

Started the day at 46.5c then dropped to 36c to recover to close at 44.5c.

Anyone have any info as to why??? Rumours????

The AGM was just yesterday and seemed to go without a hitch.

:1zhelp:

The things that can throw API around like this for real would relate to either PBS changes or drug company doing their own distribution (like Pfizer last year). The fact that SIP didn't move much today suggests it is an accident.

It all happened within a minute and the share price recovered straight away. So it was just a fat finger who found a hole in the market depth. Not that much volume below 40c got hit and the VWAP is still 44c.

As you said the AGM wasn't glowing but it didn't contain major bad news as far as I could see.

 

[Garpal Gumnut]

Wow There was some activity with this one today on Masive volume. (well for API anyway).

Started the day at 46.5c then dropped to 36c to recover to close at 44.5c.

Anyone have any info as to why??? Rumours????

The AGM was just yesterday and seemed to go without a hitch.

:1zhelp:

I have no idea why it fell.

I have some skin without any stop losses in API.

I had a look at the action around the fall.

250,000 shares traded around lunchtime, when it went from about 0.43 to 0.36 and in a few minutes back up to 0.43. Action lasted 2-4 minutes.

Total shares traded for the day were about 3.7 million.

Somebody snorting too much coke on their mouse?

gg

 

[UMike]

Well it is now at the levels not seen since late Sept 2012 on volumes 3.3mil (Yesterday) and 2.3 mil (today) where usual trading volume are in the 2-8 hundred Thousand mark.

I got rid of about a third of my holding around the 50c mark and was supposed to buy on the dip.
I haven't yet as I do not know what to make of these last two days action.

 

[skc]

Well it is now at the levels not seen since late Sept 2012 on volumes 3.3mil (Yesterday) and 2.3 mil (today) where usual trading volume are in the 2-8 hundred Thousand mark.

I got rid of about a third of my holding around the 50c mark and was supposed to buy on the dip.
I haven't yet as I do not know what to make of these last two days action.

Yesterday appeared to be fat finger but today's action had me less certain...

Surely no one will fat-finger the same stock two days in a row.

 

[Garpal Gumnut]

Well it is now at the levels not seen since late Sept 2012 on volumes 3.3mil (Yesterday) and 2.3 mil (today) where usual trading volume are in the 2-8 hundred Thousand mark.

I got rid of about a third of my holding around the 50c mark and was supposed to buy on the dip.
I haven't yet as I do not know what to make of these last two days action.

Yesterday appeared to be fat finger but today's action had me less certain...

Surely no one will fat-finger the same stock two days in a row.

Me and thee too.

Interesting.

I will watch.

Watching is better than a stop loss atm imo.

gg

 

[brty]

Hard to believe how quiet this thread is. I would have thought that the FA guys would be really interested in the numbers and the TA guys all over it recently.

From the FA perspective the cashflow was $45m in '11 and $47m in '12. First half '13 $44m. Interestingly last year the second half had higher cashflow than the first half. With the annual results coming out next week, I'm expecting a 'surprise' to the upside. Any company with $3.2b turnover, NTA of $.77, bookvalue of $1.17, is going to be worth way more than today's 53c/share and a market cap of $258m, if they start getting things right, as they have been.

Technically, a couple of weeks ago a new high for over 2 years was produced, then a pullback, and now a break upwards out of the downtrend, and a 2 year closing high. Getting new highs leading into the annual report is a very bullish sign to me.
I bought my first position a few weeks ago as it broke upwards out of the prior downtrend at 44c on technical grounds, then added today at 52.5c on both the TA and FA. I looked up the FA because of the rise in price.