2012 half year result, page-12

Roboshan!

1) Personally, I don't like to invest in extremely low margin and high debt company of any business.

2) According to API's presentation, their net debt level has gone up... may be due to flood, but only QLD warehouse got flooded. I wouldn't pay any dividend, but focus on cash reserve and, if possible, pay down debt. Paying 7.5% franked dividend while debt level remains high???

Why not hold cash instead of dividends? Well, holding cash doesn't boost sp compare to paying 7.5% dividend.

If you look at their profit vs. debt interest, essentially they are paying interest-only payments AND not retaining cash. If they are NOT allow to pay down debt, at least retain cash just in case one day banks decided to pull their plug.

3) High turnover, but their revenue is down... may be due to flood or DHL or both. Once PBS reform flows in, their revenue will continue to decline.

4) Lipitor generics, yes wholesalers will benefit, but many generics are offering big discounts (eg 90%) so not that much profit for neither generic company nor wholesalers.

5) DHL has recruit several other generic companies offer bigger discount to pharmacies (eg 70% discount if use API, 80% discount if use DHL).

6) What about the capital raisings in 2009 @ $0.65. $150m from inst. investors and $150m from retail investors.

$300m pumped into the company, now market cap $180m, debt $150m interest only payments. Looking back $0.65 was extremely expensive. Without your capital raised money it would have collapsed. Now API is making a small profit out of $300m capital raised.

What amazing about HC people is, almost every holder always say their company is massively undervalued. If true All Ordinaries index should be 30,000 not 4300.