Constellation Healthcare Share Discussion Threads

[battlebus2] 23/9/2016 12:31

Very strange,,seems to be a new co if it's only registered in February 2016.

[adamb1978] 23/9/2016 12:31

WJCCJCHGCHC - fair point! Just googled the company as well and nothing comes up!

[battlebus2] 23/9/2016 12:29

WJC I've been trying to find more about VEGA with a blank only for this...VEGA MEDICAL PROFESSIONALS, LLC
Delaware Limited-Liability Company · Updated 4/14/2016
Vega Medical Professionals, LLC is a Delaware Limited-Liability Company filed on February 2, 2016 . The company's File Number is listed as 5953261.

The Registered Agent on file for this company is National Registered Agents, Inc. and is located at 160 Greentree Dr Ste 101, Dover, DE 19904.

[eezymunny] 23/9/2016 12:28

Dave. Expressing a bit of caution when there are related party transactions is not unreasonable. Maybe all is OK but the whole thing just smelled slightly odd to me. Google search for VEGA doesn't find anything much. Maybe it's new and something has been reversed into it? No website etc?

[battlebus2] 23/9/2016 12:08

Dave each to their own strategy, I think because of the managements previous track record some investors are a little uneasy and PJ knows this more than most.

[dave2608] 23/9/2016 11:54

Bit of a belt and braces job Rivaldo. Fast growing company and also in a defensive sector.

PJ
No offence but I'm struggling to understand you.
1. You say you're moving into a defensive portfolio then sell a defensive stock.
2. You suggest a reason for selling is that you have an unknown psychological bias against anything Indian yet it's an American company.
3. You say you have no confidence in the BoD, yet they don't appear to be putting a foot wrong. All we've seen so far is organic growth, accretive acquisitions with revenues and profits surging.

[wjccghcc] 23/9/2016 11:18

FT Alphaville saying a google search of the acquisition comes back with nothing?

[rivaldo] 23/9/2016 10:41

Exactly dave2608.

Amongst the other defensive factors is the extremely high recurring income, which I highlighted in the extract I posted recently from the Annual Report.

[pj 1] 23/9/2016 10:01

dave, I'd say it comes down to the basic fact you have confidence in the BoD, I currently do not and am therefore sitting on the fence. I am slowly moving to more cash portfolio wise. I am not trying to de-ramp the company and respect that successful PI's are invested here.

Like many other investors I try to follow the courtesy of 'publishing' my entries and exits from Investments. I genuinely hope the Co flourishes.

[dave2608] 23/9/2016 09:46

PJ

You must be looking at macro if you're moving to a defensive portfolio. But isn't Constellation a defensive stock as well as being a fast growing one? Surely the health sector is one of the most defensive sectors around? Another thing a lot of investors are worrying about is the pound falling against the dollar. As all Constellations revenues are in dollars, is this not another defensive factor?

[pj 1] 23/9/2016 09:31

Correct Dave

[dave2608] 23/9/2016 09:30

It's not an Indian company though is it PJ? It's an American company that outsources some of its work to India.

[pj 1] 23/9/2016 09:26

Well I certainly hope no-one is following my investments this year bb2!!

Just for clarity my sell is due to a distrust of Parmar and also a defensive Portfolio move.Maybe Im being unfair and unduly biased on Parmar but Ive made my decision. I was hit by Terry at QPP and maybe the experience lingers.......?

Also as most are probably aware, and apologies for the repetition, but I have also had an awful H1 2016. My portfolio in general has recovered somewhat to a tolerable size so the sell was a defensive move to protect that.

I'd also like to state since last year I have not uncovered anything within the Co. that causes concern in the Company itself. I am no ruling out buying back in in the future.

Luckily I had taken profits in SPL before its recent demise, and bombshell RNS so there could be an unknown psychological bias against anything Indian.

Hope this helps. PJ

[dave2608] 23/9/2016 09:23

deltrotter, if the debt facility of almost $15 million has been paid down then it is already generating large amounts of cash. You can't pay down a debt without anything else other than real money.

Let's look at this logically. Yesterday there was optimism. Today some people have negative sentiments. What's changed? An acquisition. So by logic those who now have negative sentiments see the acquisition as bad news. Is it bad news? Well there seems to be divided opinion over whether the EBITDA figure is $7 million over one year or $7 million over 2 years. Let's take the worse case scenario and say its $7 million over two years. $24 million paid for a company that's going to increase EBITA by $3.5 million. Is that really such a bad deal? It looks pretty good to me. And if the EBITDA figure is $7 million a year then its a super duper deal. Constellation will have done the number crunching. I can't see them paying for something that's not going to be earnings enhancing.

[battlebus2] 23/9/2016 08:53

There was a small dividend which they cut to keep cash for acquisitions. It's no surprise the selling occurs with negativity on here because the same folks like PJ have sold again. I'm going to give this a long look before deciding what to do. The related party loan at 7% is a tad high but then again they had trouble raising funds in the past.

[deltrotter] 23/9/2016 08:48

Yes, there was a dividend a year or so ago. They stopped it - fair enough IMO.

I expect this to be a cash generating mega machine in a few years and thus they will start to pay again then IMO.

[dave2608] 23/9/2016 08:46

Strange how the small sell off coincided perfectly timewise with the negative talk on here.

[dave2608] 23/9/2016 08:40

I don't think there's ever been a dividend battlebus. I'd rather all the money be re-invested rather than a dividend being paid out.

[rivaldo] 23/9/2016 08:40

Given the outsourcing and sizeable transfer of activities to India I can easily understand that the savings are as advertised. Apologies if I'm wrong in my interpretation, but I don't think I am.

Hopefully others will see this as a buying opportunity given the overdone markdown after a few sales.

[battlebus2] 23/9/2016 08:36

Well I'm guessing no chance of the dividend being reinstated anytime soon.

[dave2608] 23/9/2016 08:27

Thanks for the de-ramp chaps. Lovely.

[loobrush] 23/9/2016 08:12

Makes sense to me to borrow the money instead of raising money with a share issue.
This keeps the number of shares available to a limited number and will enhance their value in due course.This company is growing fast and in my view is one to hold tight to.

[eezymunny] 23/9/2016 08:01

What it says Riv is "The directors anticipate that the synergies between the two businesses will result in at least $7.0 million of additional EBITDA on a proforma basis being achieved in the first 24 months of ownership". Which could mean anything I guess. It certainly doesn't say "per annum". Is it really credible that a company with last year EBITDA of $0.8m on turnover of $15.6m can produce $7.8m EBITDA pa? So going from a 5% EBITDA margin to 50% margin simply through synergies? Possible I guess but sounds highly unlikely?

[deltrotter] 23/9/2016 07:57

And no-one should forget "over time".

The whole point of these companies is to build scale and benefit from the economies of that scale. That means they have to be given time.

[rivaldo] 23/9/2016 07:48

The additional $7m EBITDA is certainly per annum, and would have been verified by lawyers and the NOMAD. No-one would ever quote an EBITDA saving spread over 2 years without specifically saying so. It just means that after 2 years the full savings will have been achieved.

CHT had $10m net cash, so to fund this deal an additional facility was necessary. Presumably the CEO's loan facility was speediest to facilitate this acquisition. The terms aren't ideal as I said, but I do see this as another indication of his commitment to CHT being a success over time.