Forum Archive Index - April 2001

["G Stolwyk" <stolwyk@wave.co.nz>]

 

Kelvin,

 

I think that the word " medical " does not neccessarily deserve a premium. I have studied the business of deserving high quality medical companies in Australia.

 

MCD or Medical Care Services Limited, arose from Revesco which in turn arose from Kiwi Gold.

At the end of July, 2000, it had 547 mill shares and has since added on another 174 mill., a total of 721 mill shares.

 

About 95% of the mentioned 174 mill. are held in escrow till March 31? 2002. That lot is overhanging the market in the meantime!

 

Their latest half year report indicates a 2.4 mill profit from a subsidiary. Apart from that, costs were marginally higher - @ $ 16.8 mill. - than the revenue from operations.

 

Very small fry based on a large number of shares! Restructuring of mining shares typically produce a large number of shares. 

    

Q: Can you confirm the number of shares or have they reduced the number of shares by reconstruction since July 2000?

 

Let us assume that at best the annual profit to June 30, is some $ 7.0 mill. based on a weighted 591 mill. shares, that would be 1.185 cents per share!

 

Based on a current price of 106 cents / share, the P/E will be 89 ! 

 

The next year will see the benefits of having 100% of the subsidiary, but even on a " wild " $11 mill. annual profit projection to June 30, 2002, the P / E will still be 70 !

 

Bear in mind that the last profit number could be optimistic! Note also that the chart has been trending down for quite some time.

 

Diagnostics can be a somewhat risky investment if company controls are lax. It is a very competitive industry in Australia!

 

MCD would not be one of my investments!

 

Those are my opinions! 

 

Gerry