MVP (ASX) - Penthrox “green whistle”

2 Nov 2017

 

 

 

 

 

 

 

TRADING PLAN

  • ​Position Size Portfolio Equity = 100k

  • Risk = 0.5%

  • ATR Multiple = 1

  • Recommended Quantity = 1,700 shares

  • Initial Buy = 500 shares @ $6.29 - Brokerage: $19.95 - Stop: $5.99

    • 1st Pyramid = 500 shares @ $7.19 - Brokerage: $19.95 - Stop: $6.48

  • SOLD 1,000 shares @ 6.97

  • RE-BUY = 1,000 shares @ $6.03 (500 @ 6.41 + 500 @ 5.80)

  • Target: $10

  • With the target of at least $10 in 3-6 months, I'm willing to accumulate until average purchase price reach max $7.00

 

 

WHY I DECIDED TO BUY​

 

STRENGTHS/ OPPORTUNITIES


- Re-visit Watch List and saw a nice chart (weekly SP > Bands with rising Volume)

- Penthrox “green whistle”: Aussie invention offers fast-acting pain relief while also being non-addictive. The company aims to sell Penthrox into 40 countries by 2019, including the similarly painridden Iraq, Iran and Jordan.

- Pain management is a multi billion dollar business, which Medical Developments International (ASX:MVP) is hoping to win a slice of as it rolls out its green whistle globally.

- Apart from geographic expansion, there’s also wider scope for the use of Penthrox in minor surgical procedures, military use, the home first-aid kit and developing world aid programs.

- Based on the latest analyst prediction, Medical Developments International Limited (ASX:MVP) is estimated to optimistically grow its earnings by over 300% in the upcoming three years.

- The big kicker, however, will be getting in the door to the US. Medical Developments reckons Penthrox is a $2bn global opportunity, half of which is the US.

- The new platform technology is being installed at its new plant in Melbourne, which is expected to start-up in the coming months. The new process has cut costs while lifting production consistency which is critical as the Penthrox device wins access to more markets globally, which involves a step-change in volumes produced.

- The breakthrough could have application to producing drugs in the non-steroid anti-inflammatory drug market which, by itself, could open the door to a market with annual sales of more than $5 billion, for example, it reckons

- High Quality ranking i.e. 95 (Stockopedia)

- ROE in 3 years: 55.1% (SimplyWall)

- EPS estimated to surge from current levels of A$0.031 to more than double over the next couple of years. In the same period we should see the revenue grow rapidly from A$18M to A$60M and profit is predicted to shoot up from A$2M to A$19M in the next couple of years, more than doubling from the most recent level. At this level of revenue and profit, margins are predicted to be extremely healthy as well.

 

WEAKNESS/ THREATS

 

- Low Value point (Stockopedia) i.e. 8 (this is actually not really a Risk as 'cheap' stocks are often distressed, junk or low quality stocks)

- The stock has run hard, up from the $2 level of two years ago and peaking at $6.85 last May. The current valuation puts the company on an earnings multiple of well over 100 times.

- Very high P/E i.e 73.4

- Low ROC i.e. 6.76%

 

 

 

 

 

Penthrox is recommended for use in all UK ambulances

 

 

Will Americans respond to Australia’s famous green whistle?

Aug 2017 | Brian Robins

 

 

Medical Developments - the big money is still to come

Nov 2016 | STUART ROBERTSNDF Research

 

 

 

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