Interesting proposition right now. You would be absolutely filthy with management if you invested back when they acquired the Medivet business, but for anyone looking to invest now there could be some serious upside. Based on what was paid for 60% of Medivet ($10m, more than the current SP...) I would hope management could salvage $2-3m cash, and possibly some on-going minor interest in the company.
But looking past that, human healthcare revenues up 15% and NPAT of $1.3m. Conservatively throw $2m back into the balance sheet and those are good figures for what is right now an $8m market cap stock. Of course, this is all predicated on management actually delivering with diluting their Medivet holdings. The risk is that they can't sell and are forced to hold onto a loss-making business into the future.
Another positive factor is that the cost of manufacturing for the human healthcare business was higher last year as the company built inventory for this coming year.
Sentiment remains a hold for now, but could quickly switch to a buy if management can get a good price quickly for the Medivet business.
MLA Price at posting:
6.5¢ Sentiment: Hold Disclosure: Not Held
