SIG - Sigma Healthcare

[nomore4s]

Updated chart.

Have had a new wave down marking a new low.

Some mixed signals atm.

While I think there is accumulation going on, the downward slide is proving difficult to stop.
The break through $1.30 led to a bit of a quick probe lower, leading to a larger thrust down (red levels on the side).

I've circled the volume bubble as this interests me.
To me it looks like strength, demand soaking up supply. Maybe if the buyers didn't come in here the low could have been lower?

As the volume subsided the price has started to inch higher - supply currently exhausted?

This stock needs to do a few things before I will be truly interested in taking a position but there are signs there.

If there is accumulation going on they are in no hurry thats for sure. A test of patience.

Good learning expirence at any rate.

 

[quarky]

While I think there is accumulation going on, the downward slide is proving difficult to stop.
The break through $1.30 led to a bit of a quick probe lower, leading to a larger thrust down (red levels on the side).

i hold a substantial amount in Sigma Pharma.
bought it at $2.50 over a year ago, but it closed at 0.985 yesterday.
this is fresh lows and i hope it's not like a One.Tel collapse...because i stand to lose a lot of money.

does anyone know why the share price is this low?
i've been checking some sites but can't find anything on this.

signed,
Concerned...

 

[oldblue]

Apart from the obvious weakness of a lot of stocks in the current bear market, possible reasons include:

Lack of favourable news.
Competitive/regulated nature of pharma market.
Govt proposals to reduce/restrain margins.
Sigma missing out on acquisitions recently and opportunity for consolidation.
Entry of Indian firm ( name escapes me) to Aust market.

In short, there seem to be plenty of reasons not to buy SIP at present and no compelling reason to buy. That said, I don't see it as a company in imminent danger of going out of business, rather as just a steady performer.

 

[ROE]

Apart from the obvious weakness of a lot of stocks in the current bear market, possible reasons include:

Lack of favourable news.
Competitive/regulated nature of pharma market.
Govt proposals to reduce/restrain margins.
Sigma missing out on acquisitions recently and opportunity for consolidation.
Entry of Indian firm ( name escapes me) to Aust market.

In short, there seem to be plenty of reasons not to buy SIP at present and no compelling reason to buy. That said, I don't see it as a company in imminent danger of going out of business, rather as just a steady performer.

Agree I dont think it will go under, with distribution network like SIP someone will buy it out before something happen to it in a worse case scenario.

but generic drugs is a tough game, anyone can make them and the cheaper you make the better you are at taking on your arch rival and there are pressure for SIP as oversea generic makers are coming in to Australia.

I dont think it can go much lower than where it is at a moment I reckon 80 cents is a low as it go... I buy it at 80 cents actually if it hits that low.

 

[oldblue]

Agree I dont think it will go under, with distribution network like SIP someone will buy it out before something happen to it in a worse case scenario.

but generic drugs is a tough game, anyone can make them and the cheaper you make the better you are at taking on your arch rival and there are pressure for SIP as oversea generic makers are coming in to Australia.

I dont think it can go much lower than where it is at a moment I reckon 80 cents is a low as it go... I buy it at 80 cents actually if it hits that low.

I won't be putting a target Buy price on SIP but rather will be watching to see the downtrend stopped and reversed.
Even then, I'm not too sure I would buy it when there are a lot of other similarly beaten down stocks available.

 

[Spork]

I'm holding this one, and have just noted that the ASX has issued a "please explain" to Sigma regarding its share price spike over the last few days, to which Sigma has replied with the Schulz defense, "I know nothing". Can anyone shed a light on what implications the issue of this notice can have on the spike, based on previous examples / experiences?

BTW, if it makes any difference I'm in this long-term based on value.

 

[2BAD4U]

I've just had SIP come up on my radar. Looks like a flag forming so will be looking for a breakout above $1.40 following a 50% retracement of the run up. Haven't looked at the fundamentals yet, but I may start paying attention to this one.

 

[UMike]

Existing Eligible Retail Shareholders took up approximately 32% of their
Entitlements. New Shares not taken up under the Retail Entitlement Offer were sold
through a bookbuild process conducted on 8 October 2009. The Retail Entitlement
Bookbuild priced at the Issue Price of $1.02.

You would think that the existing holders are not very confident, not to take up thier entitlements!

What exactly does this "bookbuild" mean?????

 

[So_Cynical]

Traded under the issue price today...they prob should of discounted the issue further than they did, the 32% take up by holders is pretty weak and a sure sign that the issue was over priced.

 

[oldblue]

You would think that the existing holders are not very confident, not to take up thier entitlements!

What exactly does this "bookbuild" mean?????

It means that certain instos etc were asked to tender for all or some of the shares. A price was set at a level that would allow all the "surplus" shares to be placed.

It is essentially the same process used in placing bulk lots of shares or in setting a price (sometimes) for IPO's. The Myer IPO is a case in point.

 

[UMike]

Thanks SC and Oldblue

Traded under the issue price today...they prob should of discounted the issue further than they did, the 32% take up by holders is pretty weak and a sure sign that the issue was over priced.

I 'spose it didn't matter as the underwriters took up the remaining shares therefore this bookbuild play. I can understand SIP not reoffering the SPP (like AIO and BLY did) with so a poor take up.

Very little activity today so I 'spose most of the manovering was done on Friday.


Swapped WES for this so I'll see how it goes long term.

 

[snabbu]

SIP

I wonder if anyone had an opinion as to why SIP is taking such a hammering.
The analysis on comsec shows an issue with short term liabilities due to retirement of some debt in the short term, yet the half yearly report from the company says they have renegotiated all their debt with west pac through 2011 so both can't be correct or am I missing something.

The average projected dividends for the next two years is at 7.2 cents FF grossed up to 10.286 Cents. At todays price 91.5 cents that is 11.2 odd percent return.

Comsec analysts have it as 2 strong buy and 1 hold .
The only thing I can see that might be wrong is the amount of debt they have but having said that wespac's just redone their loans and they would have been through them with a fine tooth comb.

So my question is before I average down yet again is there something I am missing here. The market seems to hate the stock and the volumes in market depth look crook.

Cheers

Gary

 

[skyQuake]

Re: SIP

I wonder if anyone had an opinion as to why SIP is taking such a hammering.
The analysis on comsec shows an issue with short term liabilities due to retirement of some debt in the short term, yet the half yearly report from the company says they have renegotiated all their debt with west pac through 2011 so both can't be correct or am I missing something.

The average projected dividends for the next two years is at 7.2 cents FF grossed up to 10.286 Cents. At todays price 91.5 cents that is 11.2 odd percent return.

Comsec analysts have it as 2 strong buy and 1 hold .
The only thing I can see that might be wrong is the amount of debt they have but having said that wespac's just redone their loans and they would have been through them with a fine tooth comb.

So my question is before I average down yet again is there something I am missing here. The market seems to hate the stock and the volumes in market depth look crook.

Cheers

Gary

Where did you get that figure for the divvies? I have Divvies as 6c in 2010 and same for 2011. Does your figure account for the cap raising dilution?
Nothing exciting in the pipeline and a bit of disappointment on the generic drugs business may be keeping people away.

 

[snabbu]

"Where did you get that figure for the divvies? I have Divvies as 6c in 2010 and same for 2011. Does your figure account for the cap raising dilution?
Nothing exciting in the pipeline and a bit of disappointment on the generic drugs business may be keeping people away."

Comsec has them in their research at 7 for 2010 and 7.4 for 2011
so My 7.2 is an average of that I assume comsec has taken note of the dilution.

The generic drug business represent 19%-20% of their action the balance comes from retail Pharmacies, the PPS which is a big player in this will not be mucked about with again before the next election. it's too much of a political football. All their pharmacies offer you their own drugs it's like "would you like frys with that" That seems to me to be a good vertical business. Who would not buy Valpam and save money it's the same drug as valium it's still diazapam.

Yes they have pushed the boat out with borrowing but it has been to buy some good earners like Methadone now there is a loyal customer that Mc Donalds would kill for.

Cheers

Gary

 

[ROE]

Re: SIP

I wonder if anyone had an opinion as to why SIP is taking such a hammering.
The analysis on comsec shows an issue with short term liabilities due to retirement of some debt in the short term, yet the half yearly report from the company says they have renegotiated all their debt with west pac through 2011 so both can't be correct or am I missing something.

The average projected dividends for the next two years is at 7.2 cents FF grossed up to 10.286 Cents. At todays price 91.5 cents that is 11.2 odd percent return.

Comsec analysts have it as 2 strong buy and 1 hold .
The only thing I can see that might be wrong is the amount of debt they have but having said that wespac's just redone their loans and they would have been through them with a fine tooth comb.

So my question is before I average down yet again is there something I am missing here. The market seems to hate the stock and the volumes in market depth look crook.

Cheers

Gary

to me this business is pretty ordinary at best, they don't do anything special and the oversea generic drug maker probably can do it a lot cheaper.

They have no competitive advantage, they are in the business of cheapest price win the game.... and are they the cheapest?

and with this sort of business you need volume because they cant command price, you need to command volume and if volume is not there
so is the bottom line.

I don't own the stock and would never own it either, failed my test

 

[snabbu]

Re: SIP

to me this business is pretty ordinary at best, they don't do anything special and the oversea generic drug maker probably can do it a lot cheaper.

They have no competitive advantage, they are in the business of cheapest price win the game.... and are they the cheapest?

and with this sort of business you need volume because they cant command price, you need to command volume and if volume is not there
so is the bottom line.

I don't own the stock and would never own it either, failed my test

Yes it probably is a pretty ordinary business. Yes overseas drug companies could probably make generics a lot cheaper. But what the overseas companies do not have is distribution. When you walk into an Amcal pharmacy they don't ask you if you'd like the chinese version of this drug. They do ask you if you would like the Australian version of this drug, and they tell you it's cheaper. End off.

I disagree that they have no competitive advantage, they have retail distribution.

I disagree they are in the business of the cheapest, they are in the business of the cheaper. Which they are.

In regard to volume I agree if the volume is not there then there is an issue.

Having said all this all your comments are directed to less than 20% of the companies business. This business is several retail chemist chains who makes a few drugs on the side. You don't seem to be across the business.

What is this test you have that precludes a stock from your portfolio forever. I am constantly evaluating and re evaluating if I had a test that banished a stock to the remainder bin forever it would sure save me a lot of time.

Cheers

Gary

 

[ROE]

Re: SIP

Yes it probably is a pretty ordinary business. Yes overseas drug companies could probably make generics a lot cheaper. But what the overseas companies do not have is distribution. When you walk into an Amcal pharmacy they don't ask you if you'd like the chinese version of this drug. They do ask you if you would like the Australian version of this drug, and they tell you it's cheaper. End off.

I disagree that they have no competitive advantage, they have retail distribution.

I disagree they are in the business of the cheapest, they are in the business of the cheaper. Which they are.

In regard to volume I agree if the volume is not there then there is an issue.

Having said all this all your comments are directed to less than 20% of the companies business. This business is several retail chemist chains who makes a few drugs on the side. You don't seem to be across the business.

What is this test you have that precludes a stock from your portfolio forever. I am constantly evaluating and re evaluating if I had a test that banished a stock to the remainder bin forever it would sure save me a lot of time.

Cheers

Gary

You are probably right because you may know more about this company than I am because you own stock in it...

But this company failed for me for lot of reasons ... I have 10-15 rules it didn't pass many... let just say SIP has an advantage like you said in distribution or retail or better cheaper drugs, the number tell me it doesn't

now you can argue till the cow come home about how good their distribution network are but they have to show me the key figures in their reports to prove it..... Like someone tell me they can buy a new BMW 3 for $30K I said bull**** unless you show me the invoice with a 30K sticker on it....

Since you like Retail business have a look at JBH and TRS I like them when they are $2 and I still like them when they are $6 and still like them even at today price ..with the exception of JBH .. I start to dislike it a little....

somebody tell me TRS sell junks no one want to buy...the number tell me they are in the commodity market where price is everything and they seem to be the kings of kings when it comes to deal maker...and they have the keys number to prove it to me so I don't have to listen to other people I just look at key figures...

I like DMP and NVT when they are $2 too and still like them at $4 and still today.... People said Dominos is crab no one eat them, XYZ make better pizzas, again the number blow away crazy analyst and comments, I admit dominos isn't the greatest pizza on earth but the strange thing is people keep eating more and more of it each year and it doesn't stop, not for nicer pizza, not for the financial crisis... go figure

There are 3500 listed companies I own at most 15-20
Company unless you are top of the top dog, you wont make into the
list....so I excluded thousand of stocks from my buy list FOREVER not
just one or two...SIP is one of thousands... I wouldn't say these companies wont make money, they are just not my in thing

I wont post any more time to go and get a coffee and read today AFR

 

[UMike]

First a trading halt with the information relaesed in quotes

the trading halt is necessary as Sigma expects to make an announcement to the
market in relation to revised earnings guidance arising from year end adjustments

Now a suspension.

Any clues????

Can't be good.

 

[ROE]

They probably didn't lodge their report by the deadline and hence suspension from trading...bad bad management

From experience this sort of thing is never good as the auditor and the company are disagree on key figures and auditor isn't signing it off.

Good luck hope you come out clean and buy better stocks

 

[oldblue]

It doesn't look too good but I wouldn't be completely negative on this.

Although the odds are that SIP is going to announce a downgrade to its earnings, their financial year is to 31 January, not 31 December, so the announcement isn't overdue at this stage.