Goldshield Share Discussion Threads

[simon gordon] 03/9/2005 15:44

DPH is a Small Cap. stock in the FTSE Pharma sector and is valued:

FORECAST 06/05
T/O - 186m
PBT - 9.3m
EPS - 12.5
DPS - 5
P/E @ £2.43 = 19.4

FORECAST 06/06
T/O - 210m
PBT - 10.6m
EPS - 14
DPS - 5.42
P/E @ £2.43 = 17.3

Market Cap. = 126m
Net Debt 12/04 = 13.2m

DPH has growth potential but this comparision highlights the value available in GSD.

[simon gordon] 02/9/2005 19:25

Excellent article in the IC - 26/8/05 - on being a Contrarian.

Here are some snippets which are apt to GSD:

Most contrarian investors combine their distrust of the crowd with a trenchant analysis of the intrinsic value of an asset.

Look for shares that are unpopular.

David Dreman found that shares with low PE ratios reacted more strongly to positive earnings suprises than did high PE stocks. Positive earnings surprises for out-of-favour stocks are viewed by the market as significant events. Dreman terms them "event triggers" because they intiate a perceptual change among investors.

[simon gordon] 02/9/2005 12:03

The following MBY chart pattern reminds me of the potential upside in GSD.

MBY moved manufacturing to China causing operational gearing to feed straight to the bottom line.

GSD have moved to Mumbai and if they get the top line motoring it will flow straight to the bottom line - Yummy!

MBY long term chart:

[simon gordon] 02/9/2005 11:21

Digging deeper into GSD a main area of group weakness is the Direct To Consumer (DTC) for Health Care Products which are mainly nutritional supplements.

As can be seen a continuous drop in turnover is ongoing:

EU TURNOVER
2005 - 16m
2004 - 18m
2003 - 22.1m
2002 - 29.6m

USA TURNOVER
2005 - 6.8m
2004 - 10.9m
2003 - 26.8m
2002 - 26.3m
2001 - 7.5m

GSD bought companies in the States when it was apparent UK competition was heating up but the Ephedra ban badly hurt them. Analyst notes say they over paid for the American nutrition companies.

GSD have recently changed the top management teams at the EU division in the hope of recharging top line growth.

The USA division on the top line looks knackered - alas GSD do not show the bottom line for each division.

[simon gordon] 27/8/2005 14:51

From the Clifford Chance, Anti-Trust, June/July news update:

Ranbaxy has been the first company to settle the claims for alleged price fixing with the DoH, agreeing to pay £4.5m without accepting liability. The DoH has welcomed Ranbaxy's decision and hopes that the remaining pharmaceutical companies will follow suit.

[simon gordon] 26/8/2005 19:38

Juicy headline in the IC today:

"Directors at troubled Goldshield offload shares."

The word 'troubled' is music to my ears - hence the shares are as cheap as chips.

Private Equity are always on the prowl for cash flow positive, lowly geared companies on the LSE. GSD sticks out like a sore thumb!

[simon gordon] 24/8/2005 17:00

Food for thought:

[simon gordon] 20/8/2005 14:32

From yesterday's Indy:

Goldshield added 3.5p to 303.5p as gossips talked of strong trading at the generic medicines producer.

[olivepeel] 19/8/2005 18:43

re-rating now on. been quite a wait, but about time too.

[simon gordon] 18/8/2005 15:32

Excerpt from GSD accounts 31/03/02:

So far as concerns that aspect of the SFO investigation which relates to
warfarin, the Group believes that this has only very limited application to the Group. The Group had total sales of £6.9 million derived from warfarin during the period under investigation. This equates to 3.7% of the Group's turnover during this period. However, of this £6.9 million, £4.8 million was generated from sales of Marevan, Goldshield's branded version of warfarin. Throughout the period to which the investigation relates, Marevan was sold at prices determined with the Department of Health ('DOH') under the Prescription Pricing Regulation Scheme ('PPRS'). The effect of the PPRS is to prevent the NHS from buying at prices above the PPRS specified levels. Whilst suppliers are free to discount PPRS prices, the Group cannot see that selling at PPRS prices can be considered fraudulent behaviour.

[olivepeel] 16/8/2005 18:40

clever boys this lot - not exactly pucker, but clever

[simon gordon] 16/8/2005 18:38

William Ransom - RNSM

Similar'ish to GSD; it is valued:

03/06
T/O - 32m
PBT - 3.9m
EPS - 4.2
DPS - zilch
P/E - 12.6

03/07
T/O - 38m
PBT - 5m
EPS - 4.5
DPS - zilch
P/E - 11.8

Net debt - 1.9m

Net cash inflow for 03/05 = 1.89m

Market Cap. - 44.7m

GSD - standing PBT of 16.4m.
GSD - had net cash inflow for 03/05 = 19.36m
GSD - has net cash 6m.
GSD - market cap. 110m.

Cheap as chips!!!

[old giggleswickian] 27/3/2005 15:18

Erm, not quite what I had hoped for but it is not the end of the World. Article below from Sunday telegraph.
Goldshield chiefs arrested in NHS price-fixing inquiry
By Guy Dennis and Sylvia Pfeifer (Filed: 27/03/2005)


Two senior executives of Goldshield Group, the listed drugs supplier, have been arrested and released on police bail after being interviewed by the Metropolitan Police

Ajit Patel, the chief executive, and Kirti Patel, the chief operating officer, were arrested and interviewed under the Police and Criminal Evidence Act in London last week. The two men were called in as part of an investigation by the Serious Fraud Office (SFO) into suspected price fixing of generic medicines by drugs companies supplying the National Health Service.

"The two Patels have been interviewed in connection with this investigation and are on police bail for further interviews," a spokesman for the SFO confirmed. The interviews come three years after the Department of Health called in the SFO, alleging that six companies had colluded to limit the supply and inflate the prices of two popular drugs: warfarin, the blood-thinning medicine, and penicillin-based antibiotics. Generic drugs are those whose patents have expired; they should therefore be subject to competitive market forces.

In April 2002 more than 200 officers raided 11 homes and 16 business addresses, including Ajit Patel's house and Goldshield's Croydon offices, seizing files and computer equipment. The other firms raided were Regent-GM Laboratories; Norton Healthcare, a subsidiary of the US-based Ivax Corporation; Generics UK, part of the German drugs group Merck; and a UK subsidiary of Ranbaxy Laboratories of India.

Shares in Goldshield fell by over a third when the investigation became public. So far, its shares have not recovered the bulk of that loss. They closed at 278.5p on Friday, valuing the company at £103m and Ajit Patel's stake at about £10m. All the companies deny any illegal activity.

Goldshield and four other drug makers are also facing a separate, civil action by the secretary of state for health.

A spokesman for Goldshield said: "As part of the SFO's investigation, the two Patels have been interviewed. It is believed that this involves a formal process of arrest and bail. The company is cooperating fully and is confident of a successful resolution."

[gelp] 14/1/2005 09:20

Ouch!
New investigation! One may be bad luck, a second? What effect on SP?

[mastercfdtrader] 06/12/2004 21:25

Agree Lossman, don't normally trade non-SETs stocks (due to wide spreads) but have a long position on GSD as I also think it is ridiculously undervalued, the 10p spread is unimportant, and will certainly go to 300p by 2005yr end but could easily reach 400p, don't forget they reached 800 at one point. Worth holding onto. Lat point I like a company where the management has a meaningful stake -they are committed to the company long term.

[lossman] 06/12/2004 07:52

Full year results could be higher than predicted c.£17 - £20m at this pace.

Reduced t/o in isolation is concerning, but the fact that the t/o reduction was matched by an increase in profit is wuite an achievement.

The only thing that can keep this price back is the litigation which is hardly mentioned.

The 50% divi increase is good with debt on target to be eliminated by year end meaning cash flow is excellent.

Still sticking with my prediction of a significant re-rating on this company.

GHA
KD

[nobbygnome] 06/12/2004 07:34

Turnover slightly down but dividend increased by 50%. Bank debt reduced by £3.4 million to £2.2 million showing good cash flow. Looks like a company firmly on the way back to me..

Nobby

[old giggleswickian] 04/12/2004 23:45

Lossman,
Thank you for your imput, my mind is now made up.


Ian.

[nobbygnome] 04/12/2004 10:41

>> Lossman

Precisely why we could get a big rerating starting on Monday. If there is positive news about the SFO enquiry that would remove any doubt. Even a negative but not disastrous outcome should lead to a rise due to removal of uncertainty. The fact that the enquiry has gone on so long suggests strongly to me that this alleged fraud was very difficult to prove and the most likely outcome is a dropping of the case.

So this company is fundamentally undervalued and has good management which is driving the company in the right direction. A no brainer IMHO....

Nobby

P.S. Half my ISA is made up of GSD

[lossman] 03/12/2004 14:47

I notice that the website has a consensus profit before tax of £13-14m for this year and £16-17m for next FY.

If these are correct and all debt is repaid and paying a dividend, then £90m only values the company at 6 times earnings and 1 times t/o.

Hope this helps your earlier question Ian.

Combine this with charges dropped from the SFO and you would be looking at a doubling from here to vaule the company fairly IMHO.

GHA
KD

[lossman] 03/12/2004 14:05

Nice trades activity today, and they all look like buys.

Some people like it anyway.

GHA
KD

[lossman] 03/12/2004 12:02

Cheers Ian.

Let's hope.

GHA
KD

[old giggleswickian] 02/12/2004 21:18

Lossman,
You will often find people on bulletin board who "know" something when they don't so I shall make no claim, however, I see the investigation as a positive point from the standpoint of a new investor because it has at least contributed in some way to the present low price relative to the past. I believe that the matter will be resolved and that the effect on the share price will be positive.
It is only on rare occasions that I try to make short term gains (as short as a month) in the way that I am presently atempting with ISYS, I would rather take my chances on a company that has had its problems but is fundamentally sound and will grow over the long term. I think that GSD falls in to this catagory.

Ian.

[lossman] 02/12/2004 17:30

Fair comments Old, I had posted slightly prematurely without having investigated further, and your observation is correct of course. However, the comment "legal entities" is an interesting one.

I assume you have been here for a while, and I would be interested to see what you know about this investigation. It looks as though investors would have got stung during the decline and are keeping away.

The price rises are positive, but with an investigation hanging over it, it may not move very much from here.

With the cost cutting that has occurred, the profitability (pre-tax) will continue, but they need to show a strong net profit to set them alight short-term.

GHA
KD