International Medical Devices Share Discussion Threads

[tornadodown] 28/5/2008 15:45

Very bullish now having had the early morning sellers depart people have started to appreciate the real potential of this company which is in growth mode.

[tornadodown] 28/5/2008 14:40

Cyber that strategy is one which I have also used to great success. It is not often that one can find an undervalued company where the price has been slashed due to a distressed seller.

The results today show that the company is making progress and the Broker Note backs this up giving fair value today at over 6p. Many investors will look for undervalued companies which could produce a multiple of their investment going forward.

The potential that could open up if FDA approval is received is also tremendous and the market will need to wake up to this companies potential shortly.

[cyberpost] 28/5/2008 14:18

PC

It's a strategy i have used and still use to great success. If the company is sound but the share has been battered simply because of a distressed seller hence causing an overhang I buy and keep buying. The stock overhang doesnt last forever (although it can seem never ending). When the stock is cleared the share can regain all its losses in quite short swift.

INT operates a perfectly sound business and is as good as recession proof outfit example you'll ever get. I hold 2.5m of these and very happy to hold on going forward. I will buy more on any more weakness.

Shore arent a poxy broker. I remember buying MNS at 3p some years back when exactly the same thing happened - it was battered down by a seller. Shore wrote up a note extolling the company. I bought on the back of that note and the seller eventually was cleared the market makers walk it up again.. I later on sold the stock at 25p . Obviously if I held on I would have made a bigger killing.

[pomp circumstance] 28/5/2008 14:10

cyber , thats what i did last couple of weeks, buying below mid.

[ged5] 28/5/2008 14:06

That's what I was thinking TornadoDown. That was a good piece of news.

Good volume now with nearly all buys. Or was the 350000 at 1.15 an earlier buy?

[cyberpost] 28/5/2008 13:47

That's when you buy the stock, when there is stock to be had.

[pomp circumstance] 28/5/2008 13:42

Still alot of stock slushing around easy to get well inside the spread!

[tornadodown] 28/5/2008 13:31

This could be a major milestone to achieve

Management is now looking at the prospects for international sales of safety needles, in particular applying for FDA approval in the USA with a third party local distributor based in Canada.


Thank you for the post cyber

[martincoops] 28/5/2008 13:24

Many thanks cyberpost for that.

So I suppose we just sit back and wait for the price to correct itself to at least 50% of nav up to results in October then.

[cyberpost] 28/5/2008 13:22

that's my 500k

[ljsquash] 28/5/2008 13:07

Thanks cyberpost.

[ged5] 28/5/2008 12:51

Now there's a dream - 6.1p.
Thanks cyberpost that makes good reading

[pomp circumstance] 28/5/2008 12:50

Thanks for that Cyber.

Massively undervalued is what that is screaming, albeit from the house broker!!!

[cyberpost] 28/5/2008 12:33

broker note from Shore :

International Medical Devices+ (INT.L) – Interim results – NR*, 1.2p

Yr-end Sales Mkt Cap/ Adj PBT RptdPBT EPS PER FCF Yield EV/EBITDA
Aug (£m) Sales (x) (£m) (£m) (p) (x) (%) (x)

2007A 11.2 0.3 0.5 0.5 0.17 6.9 -14.1% 7.1
2008F 12.5 0.3 0.6 (0.7) 0.23 5.3 12.7% 6.1
2009F 14.5 0.3 1.5 1.5 0.33 3.6 27.1% 3.0
2010F 15.8 0.2 2.0 1.5 0.43 2.8 38.1% 1.8
Source: IMD, Shore Capital Stockbrokers

IMD has reported a solid set of interim results, above our expectations at the revenue, operating profit, adjusted PBT and EPS levels. The period saw further restructuring costs and an aborted acquisition which revealed an exceptional cost of c£1.3m – the outlook remains robust in the defensive healthcare sector (we expect growth of between 7% and 11% in the medical equipment and onsumables markets). We expect the current half through to August 2008 to show a clean period of profitable trading and this pulls through an upgrade to our expectations (for the current year and thereafter). The long-term outlook remains positive for organic growth, building upon the acquisitions made to date. IMD's strategy remains to build operations by buying businesses and to grow these by consolidation of these into the group sales and distribution infrastructure.

The company reported H1 2007 revenues of c£5.1m; we had pencilled in IMD generating sales of c£5.8m for H1 2008. The out-turn of c£6.2m is thus pleasing – the company had the full benefit of recent acquisitions, though restructuring was still being completed with businesses being relocated and
management systems implemented. Holding our revenue forecast for the full year to August at current levels indicates a comfortable revenue target (in light of management's robust comments on the outlook) for the current half of £6.3m. At the adjusted PBT level, we were expecting a H1 figure of around £160k with operations still building from consolidation of the acquisitions into the group. Tight operational cost control and synergies beginning to emerge revealed adjusted PBT for the period of c£300k – this is an encouraging number to us given the prospects for positive operational gearing from emerging economies of scale. Our EPS expectation was 0.04p compared to the result of 0.09p.

An exceptional charge pushed IMD into a loss position for the period at the reported level. This consisted of a mix of restructuring costs relating to management efficiencies, relocation costs and an aborted acquisition cost. IMD is now operating from just two sites: in Selby, Yorkshire and in Gloucester. We believe that the Selby operations in particular offer the prospect for additional scale economies. The opportunity to build the business with further acquisitions remains.

IMD is now operating through three divisions in Acute Care (focused upon hospital equipment and consumables), Devices (needles and specialist treatment equipment) and in Aged Care (covering specialist products for the wider market). Aged Care has seen some frustrating operational issues that
have held back sales and operating margins – in particular concerned with the product range. These appear well on the way to being resolved with additional product supply agreements being targeted. Sales of safety needles (Surety) have now commenced with the first orders being received from the NHS. Management is now looking at the prospects for international sales of safety needles, in particular applying for FDA approval in the USA with a third party local distributor based in Canada.

Holding our revenue forecast steady for the full year (holding out for the prospect of a further upgrade), our profit expectation increases with the restructuring benefits coming through; we therefore lower our cost base expectations. The benefits of the restructuring costs incurred in H1 appear be self-funding over the next 12 months. Our FY2008 adjusted PBT forecast rises from £0.5m to £0.6m and for FY2009 from £0.7m to £1.5m – with an additional c£1.0m of revenue now expected for the next financial year. Our FY2008 EPS expectation rises from 0.20p to 0.23p, but for FY2009F this rises from 0.22p to 0.33p.

IMD has seen considerable management change in the period with a new executive team taking over group operations under the experienced Bill McGrath. We believe that this change heralds the emergence of revenue and profit momentum for the company. IMD's operations are growing and profitable and we now expect the company to begin to generate free cash flows. The valuation is inexpensive on a FY2009F PER of c3.6x (EV/EBITDA 3.0x) and a free cash flow yield of over 27%. We also note that the company trades well below its prospective NAV per share of c6.1p.

[tornadodown] 28/5/2008 11:36

At the end of the day they would have been quite profitable should they not have to had booked the exceptional charges. This may now mean they have cash flow on a month by month basis so subsequently the cash position may not be as bad as some envisage.

[pomp circumstance] 28/5/2008 09:15

no chart GS?

[giant steps] 28/5/2008 09:10

Prices bid 1p offer 1.15p

[pomp circumstance] 28/5/2008 08:36

from Achesons email comment of the timing of the results , im suprised having seen the results that they didnt slip them out quietly on a bank holiday friday!!

[ged5] 28/5/2008 08:32

"Firstly we have a new broker (Shore Capital) and they are finalising their research note (including broker forecasts), which we want to have issued at the same time as the Interims."

Dell314,

1)No

2) I think that's everyone's concern here. The above quote was from an e-mail from Michael Acheson to cyberpost. I'm hoping there'll be some answers later today.

[ladyfarmer] 28/5/2008 08:13

I do think we are at a turning point and that, unpalatable as it was, the right action has been taken. Let's get the bad news out in the open. There is still a good underlying portfolio of products and their business model is good - consolidating in a fragmented market. In fact the more I think about them the more positive I feel and have just had a little top up. At these prices the upside is so much more than the downside and would be a big mistake to sell now.

[dell314] 28/5/2008 08:13

Not really familiar with this company but a couple of points from today's results?

1) Was there any prior warning of the size of these "exceptionals"?

2) Working capital situation doesn't look good:

Current assets of £4654
Current liabilities £6611

Net working capital = (£1957)

i.e. practically £2mln net liabilities.

Rgds
dell

All IMHO, DYOR etc.

[pomp circumstance] 28/5/2008 08:11

Ladyfarmer - If you look at the CEOs CV, a sale might be possible!

---------------
Bill was formerly with the following major groups:
* Lease 360, Non-Executive Chairman, 2006 - present
* Gainsborough Building Society, Non-Executive Director, 1999-2001
* Centrica Plc - Group Executive Board, 1998-1999
* Pentos Plc - CEO, turnaround and sell off of businesses 1994-1995
* Spring Ram - turnaround 1994
* Wickes Group Plc, Deputy Chairman and CEO, 1986-1993
* Builders Mate, Founder and CEO, 1983-1986, sold to Wickes.
* Comet Plc, CEO, 1981-1983
* Asda Plc, Non-food Buying and Marketing Director, 1975-1981

Bill, aged 67, has over 30 years of industry experience and joined IMD in August
2007 as a consultant to oversee the integration of the operating divisions.
Immediately prior to this, Bill ran a consultancy business, Greenfield Services
Limited. Bill has many years experience in building and developing business,
both on sales and supply chain sides. He also has many years experience as a
turnaround specialist, in the UK, USA, Canada, and South Africa.

Bill was also executive Chairman of British Home Doors Limited between 1995 and
2001 which went into administration in 2002, 11 months following his resignation
due to his wife's ill health. Bill was brought in as a turnaround specialist
and appointed director of Pentos Plc between 1994 and 1995. The holding company
was placed into administration, following the successful sales of the operating
subsidiaries, which resulted in all the banks receiving all amounts owed in
full. Archer McGrath plc, where Bill was a Non-Executive Director, was
liquidated in 2004, with all creditors with the exception of the Directors,
having been paid in full.