PNV - Polynovo Limited

[peter2]

Since my last chart post, price went down slightly more than I'd like, then rallied above 2.75 but struggled to hold the 3.00 level.

Price has formed another ledge on the daily chart, with a HL. I've started a trade with a tight iSL anticipating that price will get back above 3.00 soon.

 

[rnr]

Since my last chart post, price went down slightly more than I'd like, then rallied above 2.75 but struggled to hold the 3.00 level.

Price has formed another ledge on the daily chart, with a HL. I've started a trade with a tight iSL anticipating that price will get back above 3.00 soon.

View attachment 125297

and if the higher low, as referred to by @peter2, doesn't hold then the above chart provides an alternate view.

Cheers,
Rob

 

[peter2]

@rnr I think your scenario is a higher probability than mine. The wave C completion will put the oscillator in the oversold zone. A good place for the 123 Low reversal is at the completion of wave C.

Price can go a little higher but shouldn't close above your #1. I'll have to use a tight TS on this one in either direction unless the move up looks impulsive. Good pick-up.

 

[UMike]

I view things a little differently. As a Bottom picker I have had a buy order and still maintain that order in both Super and Personal at under $2.5.
I will lower my sell target at around $3 regardless if I pick some up soon or not.

Expecting $2.4 to be its low.

 

[UMike]

Picked PNV For July Tipping Comp.

I got alerted to this stock through Clients of my restaurant. There seems to be a sense of excitement about what they are doing.

In the Over 1.5b market cap, in the health care sector, Massive effort to go global, Some major announcement coming soon, and as a skeptic of the general market value and low interest rates well worth taking an interest in atm.

 

[basiac]

@rnr I think your scenario is a higher probability than mine. The wave C completion will put the oscillator in the oversold zone. A good place for the 123 Low reversal is at the completion of wave C.

Price can go a little higher but shouldn't close above your #1. I'll have to use a tight TS on this one in either direction unless the move up looks impulsive. Good pick-up.

View attachment 125308

Hi Peter,where is the 1-5 wave? Trying to work out the bottom of wave C.....

 

[galumay]

1 year down in the 2 year challenge, still making a loss, the next 12 months will need to be amazing for this business to finally justify its share price!

18 months into the 2 year challenge. Miracle status if they can turn this business around in 6 months. I will refrain from further commentary until Jan 2022.

 

[Beaches]

18 months into the 2 year challenge. Miracle status if they can turn this business around in 6 months. I will refrain from further commentary until Jan 2022.

No comment on the price or profitability, but I will say the volatility of this over the last 18 months has been very good for trading in and out. Suspect there will be further trading opportunities in this before the music stops.
.

 

[peter2]

I don't think the music will ever stop for PNV as they have a valuable product. No doubt the Covid pandemic has interfered with their plans and I'd estimate that they're now two years behind schedule.

I have no idea if the current management have the ability to get this business moving in the right direction. If they don't then I can see a large multinational pharmaceutical company buying the IP.

International vultures are starting to pick over the pandemic carcasses (eg Offer for SYD) and they don't have to be dead to be considered.

Note to @rnr . Your interpretation of the PNV chart was spot on. Well done. I sold perhaps one day too late but I did sell knowing that price could move quickly lower (wave C is always impulsive) once it started down.

Are we at point C (today's doji)? Maybe, but I'll wait for my reversal setup to form.

 

[Knobby22]

Latest announcement - looking forward to the actual results.

They are concentrating on using their capital to get market share at the moment, rather than profit which is growth 101 tactics. Using cash for hiring of new sales staff, assisting surgeons with their first operation, marketing etc.

So they need to build up sales staff overseas. Covid has slowed them down (can't visit hospitals, lockdowns worldwide, less operations)

but 49% growth (USA) in the last financial year is excellent. 25% increase in Australia. 53% in Germany, Switzerland Austria region.
Once they are fully established, the marketing/sales costs can be reduced and the profits can flow in. First sales in other markets, Italy, Taiwan, Finland.
It is a superior product and cheaper to make than their competitors.
Awaiting release of the other ranges, hernia / breast reconstruction etc.

Record US Turnover in June’21 and 4Q21,
US Sales Team Increased to 36

Notwithstanding limited access to US hospitals and surgeons due to Covid, PolyNovo is experiencing increasing revenue momentum in the US and all other major markets. PolyNovo US reports more than 50 per cent of hospitals are now re-engaging for business. At the same time, the US sales team has been expanded to 36 with 6 new staff trained in the last month. This will expand our geographic footprint and our ability to service recently signed Group Purchasing Organisations. While FY21 BTM revenue growth of circa 34% is a good indicator of FY21 BTM financial performance, recent business fundamentals have significantly improved as follows: • US BTM revenue in $US has grown 49% in FY21 over FY20. • US 4Q21 BTM revenue is a record $US 4.9M compared with 4Q20 of $US 3.3M • Record monthly BTM revenue of $A 3.3M in June ’21 • FY21 Distributor revenue growth was 53% with strong increases in the DACH region (Germany, Switzerland, and Austria), further sales in South Africa and India, good first sales in Finland, Italy, and Taiwan. • FY21 Australia BTM revenue has grown 25 per cent despite challenging Covid lockdowns

 

[galumay]

I said I wasn't going to post until after Jan 22, but just humour me @Knobby22 and tell me how you reverse engineer a market cap of ~ $1600m and revenue of $22m to give any sort of ROI for an investor? Even if that revenue was FCF the yield for an investor would be under 1.5%. The maths just doesnt work.

 

[Knobby22]

I said I wasn't going to post until after Jan 22, but just humour me @Knobby22 and tell me how you reverse engineer a market cap of ~ $1600m and revenue of $22m to give any sort of ROI for an investor? Even if that revenue was FCF the yield for an investor would be under 1.5%. The maths just doesnt work.

You do it by having 30-40% growth rates for a number of years, like CSL, Apple, Amazon.
And don't forget this result was during a Covid year where hospitals were not operating properly and secondly where people were locked down less likely to have trauma injuries.

You can look at another company MPV who make the green whistle and they said in their most recent announcement that trauma injuries were well down this last financial year world wide. (don't own).

 

[galumay]

Just saying massive, endless growth is how you do it, is not really an answer. 30%-40% is not enough, like I said the maths doesnt work. Regardless, how many Australian businesses have grown their revenue at more than 40% for a decade or more?

Any modelling I have done just doesnt lead to a return for investors unless I assume the best growth we have ever seen from an Australian company, and very improbable net margins, combined with a payoff term that is longer than most of us have left for this world!

I suspect the price is a reflection of narrative speculation, "its a great product so it must be a good business", combined with the greater fool theory. If someone can show me their maths that shows how it is an investible business, then I may be persuaded otherwise!

 

[Knobby22]

Hi Galamy

I know you are not comfortable with high growth companies, this is company is just leaving start up territory on the graph I gave so there is a lot of growth to go, not only from the present product but from the other associated products being developed.

can point to other Aussie company examples, Resmed and Cochlear. All the examples I provided are now getting to the mature stage of the business.

I have respect for your method of investing in businesses such as NRW , Southern Cross Engineering which are contractors and basically low growth but can be excellent value if timed right. I find them difficult to invest in as fortune varies with each contract win and would rather invest in something with larger potential gains (and higher risk).

And we probably both like high yield businesses with less growth such as CCP and BFG.

 

[galumay]

This is no CSL, Resmed or Cochlear though, its in uncharted territory with regard to its financials. Have a look at something like CSL, maybe the best business ever in Australia, 2001-2011 (some of its best years) it grew revenue at about 20% CAGR, no where near what PNV needs to grow it at to be investible. 2011-2021 CSL grew revenue at not much over 10%.

I have no problem with high growth businesses, if the growth proposed is realistic and it has a mathematical path to a return for investors. I won a number of high growth businesses, but the maths makes sense, I can see how I will get a return as an investor if things play out well.

My point is that history tells us that PNV would have to be probably the best business ever in Australia to grow into its current price, you would need about 10 years of 50% growth in Revenue with very good margins to get any sort of decent IRR on your investment.

Anyway, I should just let it go! It makes no difference to me as an investor, I just get so frustrated when I see people beguiled by the narrative speculation and I have been round long enough to know what happens eventually. All I end up doing is pissing off the speculators and that doesnt really add any value to the discussion!

 

[Knobby22]

Viva la difference.

 

[peter2]

Seeing investors analyze a company with a completely different set of tools than what I use is always educational. It definitely adds value. Most speculators have short term trade horizons. How can they be upset by a long term investor's analysis.

Beguiled by the narrative. That would include every IPO ever. They all have great stories and unlimited prospects when they list. CSL, COH, RMD would be in the 1% that made it and have kept it. If a company doesn't have a great story it would never list. Macquarie generated a great narrative for NXL. Insto's lapped it up and many are paying for it now.

I've hated the BNPL companies from the start. IMO they're predatory, targeting the most vulnerable in society. I think they should be regulated up the kazoo. I consider them uninvestable but certainly tradable because of the price movement generated by the public interest which is created by the narrative.

@galumay Who doesn't like a good story? It's very difficult to discredit a story as they're all, part imagination. However the numbers as you see them, tell their own story. I hope you'll continue to post your opinions on all the stonks out there.

 

[peter2]

PNV is not looking too good at the moment. Sellers all over it trying to get out. The only interest now is whether 2.00 or 1.50 will provide any support. PNV has seen a quick change in investor sentiment. May be a few instos have seen @galumay's calculations. Of course they would be scanning ASF regularly.

My exit was a day late perhaps but I'm pleased it wasn't any later.

Capitulation volume! Much too early for a reversal opportunity.

 

[galumay]

LOL! Sorry, I will be more careful what I post!

 

[Knobby22]

Hernia product made up of NovaSorb film and foam ultrasonically welded together to be filed March 2023 with expected approval by August 2023.
This will be an important addition to the range opening up a complete new medical field of operation. Manufactured in Australia.