Yovich & Co. Weekly Update - 11 August 2014
Aug 11, 2014 | Commentary
This Week’s Themes
This week’s global theme is dominated by multiple war conflicts, and the New Zealand market was not immune to the sell off as investors paused to consider what the wider effects of these conflicts might be.
Russia announced trade sanctions against the U.S. and increased their presence on the Ukraine border.
The Gaza Strip remains under intense scrutiny from the Israelis, and the cease fires have not been overly successful at reducing the conflict.
U.S. Investors shrugged off these concerns and pushed both the Dow and NASDAQ higher for the week.
The New Zealand Dollar continues its slide from the recent record highs.
Pacific Edge Limited (PEB.nz) – High Growth Prospect in Healthcare Sector
Pacific Edge Limited (PEB) was formed in August 2001 following the acquisition of intellectual property from the University of Otago. The company is involved in the development of tools for early detection, diagnosis and characterisation of diseases, particularly cancer. Specifically, the product that they have developed and are at the early stages of commercialising, is called Cxbladder and it is a non-invasive laboratory test for the detection of bladder cancer. PEB’s current focus is to get traction in the U.S. market and they are making progress for getting Cxbladder approved by the public insurance companies for the costs to be reimbursed. If it is approved, they already have support from clinicians and the tests are highly scalable.
Although PEB is at the more speculative end of the market, we like PEB as they are making significant progress into the U.S. market, they have intellectual property protection and currently have a strong cash position. In October 2013 they raised capital to fund the commercialisation of Cxbladder at $0.55 and since then the share price has hit a high of $1.68. The current share price is 68 cents and presents a good opportunity for investors to get exposure to an exciting local Bio Tech company.
Healthcare Sector Overview
EBOS Group Limited – (EBO.nz)
EBOS started life as a Dental Supplies company but after a restructure in the 1990s, the major focus shifted to the marketing of medical consumable products. Growth has been generated by both organic growth in the sector and by acquisitions on both sides of the Tasman. 80% of earnings are earned in Australia so EBOS will benefit significantly from a fall in the NZD.
Green Cross Health Limited - (GXH.nz)
Formerly Pharmacy Brands, in April this year the name was changed to better reflect their business as a provider of Primary Health services. Green Cross Health supports a network of around 300 pharmacies, 34 medical centres and providers of community nursing services and their consumer brands include Unichem, Life Pharmacy, The Doctors, Radius Medical and Total Care Health Services.
Abano Healthcare Group Limited - (ABA.nz)
Abano Healthcare Group is an active investor in and operator of healthcare and medical services businesses located in New Zealand, Australia and South East Asia. The business was established in its current form in 1999 and, since that time, has progressively evolved to be a multi-disciplinary group with services in audiology, dental, diagnostics and rehabilitation. Abano has a long term and successful Co-Invest and Build business model. Its major investment areas are Dental in New Zealand and Australia, Radiology in New Zealand and Audiology in Australia and South East Asia.
Weekly Update Investment Shares Bonds Market Commentary Pacific Edge Limited PEB.nz EBOS Group Limited Green Cross Health Limited Abano Healthcare Group Limited EBO.nz GXH.nz ABA.nz