HLS - Healius Limited

[nomore4s]

Some positive signs for this stock appearing on the chart imo.

Clear capitulation from its high flying days at around $9.

But massive volume came in around $6.50 to provide some support before a clear selling climax to around $5.00 followed by the rally back to $6.40ish.

The volume bubble of the last few months is a very postive sign imo, while someone(weak hands?) is off loading, the stock has clearly stopped going down, even the last wave down didn't break $5.60 causing a very shallow ST (probably becoming more like a last point of support then a secondary test as it didn't really test the $5.00 area again).

This large amount of volume changing hands could cause quite an explosive move if it does move up, alot of the floating supply could be held by strong hands looking for higher prices and alot of the weaker hands will already be out of the stock.

This smacks of accumulation imo, but time will tell. The reaction to todays weakness will be telling, another test of $5.60 - $5.80? Or maybe support at $6.00

I don't hold - yet but will be watching closely.

For discussion only.

 

[nomore4s]

Re: PRY - Primary Health Care Limited

Continuing postitive signs for PRY for the moment.

Has been very resilent in the current market weakness.

The last 3 days have closed off the lows.
And look at todays bar, very good close on high volume - someone willing to buy in during the weakness?

The line of least resistance appears to be up, it is certainly finding it difficult to go down atm (likely to change now I've posted this)

Looks to be building a springboard here imo. The response of course is all important.

 

[Dutchy3]

Re: PRY - Primary Health Care Limited

I'll kick this one along

For the last three days this one refuses to make up its mind.

The markets tanked (tanking) and yet this one not quite ready to join the throng ....

The big blacks have been absent for a bit and the white days have attracted reasonable volume.

5.30 looks to be an issue ... at the same time 4.80 seems to have some support .... how will this one sort itself?

 

[ectoplasm]

Hi Dutchy3,

DaveMac mentioned PRY in the "Practical Elliott Wave Trading" thread. Looks like gap resistance is the target - however commodities are probably where the action is ATM, unless you want a more pedestrian approach

Weekly chart:

 

[ectoplasm]

Hi Dutchy3,

DaveMac mentioned PRY in the "Practical Elliott Wave Trading" thread. Looks like gap resistance is the target - however commodities are probably where the action is ATM, unless you want a more pedestrian approach

Weekly chart:

Commodities have been where the action is last week, but I expect PRY to retest resistance next week before giving $6.60 a tryout on its way to $7 gap resistance..

Chart:

 

[rohdeo]

Is this stock a good buy at the moment?

I noticed that the stock has been severely sold down ($4.07) and yet the financial indicators seem to be favourable with a PE of 9.7, a share price to book value ratio of less than one and good growth prospects.

Can anyone help me out as to why a defensive stock such as this appears to so undervalued? Is it the popularity of the resource sector at the moment?

Cheers

Rohan

 

[ROE]

This stock reminds me of ABC learning but that is my opinion only....
Business model are similar.

I dont own the stock and I would never own it
if you want to know more you can PM me for a list of reasons for no go zones

 

[So_Cynical]

This stock reminds me of ABC learning but that is my opinion only....Business model are similar.

I dont own the stock and I would never own it if you want to know more you can PM me for a list of reasons for no go zones

What's with the PM? just tell us what you think...personalty i cant see any comparison, and i cant see PRY falling over with such manageable debt levels and consistent cash flows.

Is this stock a good buy at the moment?

I noticed that the stock has been severely sold down ($4.07) and yet the financial indicators seem to be favourable with a PE of 9.7, a share price to book value ratio of less than one and good growth prospects.

Can anyone help me out as to why a defensive stock such as this appears to so undervalued? Is it the popularity of the resource sector at the moment?

Cheers

Rohan

Hi Rohan..PRY has also caught my attention over the last few weeks and with Fridays low of 4.03 i thought i better have a decent look at the business as ive never been a follower.

• First listed 03 July 1998
• Market Cap 1,960,190,677
• Net profit 76 mill (6 Months Ended 31 Dec)
• Trading revenue 652 mill (6 Months Ended 31 Dec)
• Total Liabilities 1,158 Bill (6 Months Ended 31 Dec)
• Gearing Ratio 28.7 (Net Debt/Net Debt + Equity) (6 Months Ended 31 Dec)
• Top 20 hold over 75% (well did until all this selling )
• Has a 12 year fully franked, interim & final dividend payment history

http://www.primaryhealthcare.com.au...26&PageName=Presentation of Half Year Results

The balance sheet looks very good IMO, falling debt to equity ratios 6 months on 6 months. 45.7 > 36.3 > 28.7 so they probably wont need to raise any more money, the dividend reinvestment plan will probably do.

I think it would be easy to come to the conclusion that the worst is over, even if the industry uncertainty will be around for perhaps many years...what cant be argued against is the growth potential of the industry in general, the population is aging and health care is a growth industry...its the funding levels that are uncertain.

PRY's dividend record date is the 12th of March so perhaps the SP could keep falling over the next few weeks. :dunno: As the chart shows, buying at under 4.10 any-time over the last 3 years has been good buying...all capital raising have been at significantly higher levels.

Disclosure - i don't hold but am seriously considering....please do your own research as this is my opinion only.
~

 

[brty]

I purchased this stock at these levels, buying against support of $4.00. I am pretty much a technical trader, but even the fundamentals on this one looked OK to me.

I think what ROE was getting at is that the assets of the company are mostly goodwill, yet I would put the goodwill of medical practises well ahead of the goodwill associated with child-care in the ABC case.

Maple-Brown Abbott, a boutique investment manager have been purchasing, the managing director recently spent half a mil on more stock. Personally I think they are positive signs. At a current grossed up yield of >10% (assuming 2nd half divs are as expected), growth in new medical centre roll-out, I will back the truck up if it gets down to $3.60.

Maybe everyone is just too scared to do anything but follow the crowd these days, is the only reason I can come up with as to why this stock is at these levels.

brty

 

[Unnamed User]

Re: Technical Analysis from "Iced Earth" Point of View

No disrespect to any one here but i have to admit i am amazed at people asking why has the price fallen.

It should be blatantly obvious.

I'm not saying it should have fallen as much as it has, although i believe there is more bad news to come, but the reasons as to why it has is as follows,

Reduced government fee payments from November have impacted more than was expected on the Pathology business and the companies strategy of lifting co payments has turned out to be a very poor choice, in comparison to say Sonic Health, which rarely puts a foot wrong.

The Diagnostics Imaging division EBITDA fell almost 30% below expecations.

All 3 divisions had reduced revenue and profit.

In short i believe investors are now questioning the management of this company as they overpaid for Symbion and the way they have handled the new challenges that have been lumped on all in this space gives major cause for concern.

Not too mention the company refusing to give guidance for the full year.

Companies that downgrade their forecasts usually do it at least one more time as well......

 

[So_Cynical]

Well summed up brty and in total agreement with you.

I've had a buy order @ 3.99 sit there all week upped it to 4.03 today and still couldn't get filled....i really should stop being so cheap, its that sort of low balling that has allowed so many bargains to get away from me.

 

[Tarry Not]

Holding my breath, I 'jumped in' Friday at $4.09.

On a weekly basis, it looks like it may have made a double bottom and historically it has always come back from such a position. It traded up for most of the day on slightly increased volume hence my entry. I have a fairly tight S/L and the possible upside looks a fair bet against the downside.

U.U. (above) makes correct observations and like him/her, I am not sure it should have been sold off to such a degree. He/she doesn't say why it may fall further.

Now that I'm immersed, I'll keep holding my breath.

 

[So_Cynical]

I've got a funny feeling im gona make a balls up of my next buy...ive got an order in for PRY at 4.03 but still feel that CSR can rebound faster and now looking at Metcash seriously. :dunno: all the doubters are weighing on me.

Maybe just step back for a week and clear my head.

 

[brty]

When I usually look at the fundamentals of various companies, I get disappointed and quickly dismiss them from my trading as a general rule.

Perhaps I am missing something here, and would appreciate some expanded arguments from the bears on this stock.

What I see, from a fundamental aspect is the following...

A role out of more medical super centres, from 45 in June of '09, to 50 now with further expansion of 4 in '10. Acquisition of 87 new GP practises. As these grow (as they mostly seem to because of rising and ageing population), the benefits will flow over to the other areas of the company.

A comparison of the feature of profitability that I particularly like is cashflow from operating activities, especially per share.

Looking over the last few years we have for the Dec half year, to compare like with like....

year....05.....06.....07....08....09

cps.....17....23.5...27....13.7..21.2

SP.....$12....$12....$6....$4.....$4

A company that provides a cashflow of > 10%, a share price a third of what it was with a similar cashflow 4 years ago, has good growth prospects, debt under control, and pays a decent dividend 100% fully franked, what am I missing?? These sort of value plays don't seem to come along that often, in top 200 companies.

brty

 

[Unnamed User]

U.U. (above) makes correct observations and like him/her, I am not sure it should have been sold off to such a degree. He/she doesn't say why it may fall further.

My original post wasn't so much about the company as such but more about the reasons for it being slammed by investors.

My reasoning for further falls, that may not happen of course, is that generally companies that report downgrades very often follow up with another one or two.

I also believe that investors have lost confidence in the mangement after some very poor choices they have made and refusing to give full year guidance was the nail in the coffin for them , imo.

Investors have some other choices, such as Sonic Health, where there is little uncertainty with future earnings (Full year guidance disclosed) and have top shelf management with a track record second to none.

brty makes some good points and PRY is far from dead in the water but there are alternative businesses to invest in with less challenges, more transparency and better management.

 

[brty]

Thanks Unnamed User for your input.

Sonic Health, where there is little uncertainty with future earnings (Full year guidance disclosed)

And such things are fully priced into the share price. Between the 2 companies, both of which appear quite good, I would think that PRY has the greater chance of surprising on the upside than SHL. SHL has much of its business in UK, USA, Germany and NZ. By reporting in $Aus the potential volatility in earnings becomes much greater especially given what has been happening to the Euro and BP recently. I am also of the opinion that given the GFC effect on each of those countries balance sheets, one would expect the respective governments to start reigning in expenditures in the not so distant future, health will suffer along with the rest.

Australia on the other hand is in a relatively better position and with an election coming up this year, one could expect a slightly higher spending in the coming budget. This is likely to benefit both companies.

Given that cashflow per share (as a percentage of share price) is 5.1% for the Dec half for PRY, 3.75% for the Dec half for SHL, and that the Div of PRY is 100% franked compared to 35% franked for SHL, I can see a little more upside in PRY over the short to medium term compared to SHL.

Unnamed User, you have mentioned twice that....

generally companies that report downgrades very often follow up with another one or two.

.... where do you see this bad news coming from, which areas of the company, and how do you see this impacting cashflow???

brty

 

[So_Cynical]

Investors have some other choices, such as Sonic Health, where there is little uncertainty with future earnings (Full year guidance disclosed) and have top shelf management with a track record second to none.

brty makes some good points and PRY is far from dead in the water but there are alternative businesses to invest in with less challenges, more transparency and better management.

And such things are fully priced into the share price. Between the 2 companies, both of which appear quite good, I would think that PRY has the greater chance of surprising on the upside than SHL.

Given that cashflow per share (as a percentage of share price) is 5.1% for the Dec half for PRY, 3.75% for the Dec half for SHL, and that the Div of PRY is 100% franked compared to 35% franked for SHL, I can see a little more upside in PRY over the short to medium term compared to SHL.

brty

This kinda remind's me of a discovery i made many years ago on my travels.

"tangent warning"

Many years ago i stayed a few days in a nice, cheapish caravan park, well run with nice people and a great atmosphere...one day i was chatting with the owner and asked him why the first 70 or so meters of the road into the park was bitumen and the rest gravel.

Well he tells me that the bitumen costs $500 a meter and the gravel $100 a meter and at the moment he didn't have the money to do all the roads but had to do the first 70 meters because there were some caravaners that simply refused to travel on gravel roads.

Without the first 70 meters of bitumen he would lose half his business, and even then he still lost a lot of business because once the caravaners noticed the bitumen ran out, many changed there mind and would leave.

I though this was pretty bizarre...but ive come to understand some people need the road ahead of them all paved and pretty and secure 'looking' others can look beyond the gravel and simply see it as a road taking them to there destination.

AS suggested above by brty, the Sonic share price has all the positives factored in and in my opinion shows no value entry, while Primary clearly does...which is why im interested in the first place.

2 year comparison chart below.
~

 

[Unnamed User]

I had no intention in turning this into a Primary vs Sonic debate but was trying to point out to those that were asking why the recent fall, as to why.

I chose Sonic as an example of the converse nature of the directors but i'm sure there are other businesses that would show the same converse nature.

I wouldn't buy Primary yet but that's just me and everyone has their reasons for buying certain stocks, it's a personal choice.

 

[Tarry Not]

Hi Guys,

After 'jumping in' on 12 March (at $4.09) I am feeling a little smug atm (wrong, very wrong; I know), but I wonder what our more learned contributors feel about PRY now (in light of recent movements). In particular where it might go - up or down.
Should I take a breath, or bail out and take some profits? *smiles* (smug bar steward I am).
Seriously, I'd be interested to hear.

Cheers, Not so old Tarry Not.

 

[So_Cynical]

Hi Guys,

After 'jumping in' on 12 March (at $4.09) I am feeling a little smug atm (wrong, very wrong; I know), but I wonder what our more learned contributors feel about PRY now (in light of recent movements). In particular where it might go - up or down.
Should I take a breath, or bail out and take some profits? *smiles* (smug bar steward I am).
Seriously, I'd be interested to hear.

Cheers, Not so old Tarry Not.

Go ahead feel smug...i like that smuggy feeling you me and brty got it right (short term) ROE and Unnamed User got it wrong, at least so far...still an easy 10% is a wonderful thing.

I wish i hadn't been so cheap now and missed out on the low...The money i was trying to buy PRY with eventually was used to buy Gunns, and now GNS has turned against me oh well.

So Tarry care to tell us what your exit strategy was when u entered PRY? you did have an exit strategy right?, a price target, anything???