Analysis - PLT - Polartechnic

Quick Analysis: This check is done to see if further detailed analysis is ready.
Shares at 9 May 2008: 240,314,531
Cash Left at Dec 2007: 10,401,529
Cash / Share = 4.33 cents
Price at 13 June 2008: 0.125
Price / Cash = 2.88x

The Price / Cash look reasonable enough for further analysis.

Price($) 0.13
NTA ($) 0.05
P/NTA 2.32
Team 3.3
BurnPeriod 2.64
ProductPipe 17
ForeignMarket 6.9
Cash:Debt Debt Free


It has now been 2 full years since the corporate distractions caused by temporary chairman Dr Opara in 2005. The company has restructured and the current management, chaired by Robert Hunter, managed by Ben Dillon (CEO) and Prof Neville Hacker as been in place for almost 3 years since the turbulent 2005. This is an indication of stability of management. Their skills are evident in turning around the company from negative equity (likely due to the 2005 saga) and recapitalised to $9.7m in equity in H1 FY08. Despite just a 3-person director team, their team score is 3.3 which is considered good although 5.0 is the good score.

PLT has moved from R&D into commercialization and is currently focussed on Sales and Marketing. Within the last year it had obtained distribution or registration in the following countries: Russia, China, Taiwan, India, Malaysia, South Korea. This diverse foreign market penetration leads to an above average Foreign Market score of 6.9. A note from experience is that even for biotechs with commercialised products and diverse foreign market, does not translate to profitable sales (see Clinical Cell Culture CCE)

Its main products include:
- TruScreen, a real time cervical cancer screening device. This has penetrates SE Asia as well as China and India. PLT is also developing a primary screening for cervical cancer to be marketed as CerviScreen.
- Mediscan, clinical record system include video imaging, patient records, reporting tools and configurable dataset.
- Screening device for detection of melanoma.
All 3 products are in market in various international markets. The 2007 Annual Report noted that PLT has shifted resources from these developed products to Cerviscreen and preparing to enter new markets. Based on current products, the Product score is 17.0, which is much higher than the excellent level.

Quarterly analysis is not available, since reports are only on a half-yearly basis (reflection of size of the company?). Receipts in the latest half H108 was down significantly ($241k compared to over several millions for previous half years). PLT attributes this to the cessation of the Cosmetic and Beauty products line but SolarScan and TruScreen revenue were also decreased. Operating expense in H1 08 has increased to $4m. Despite the recent re-capitalisation, this cash burn rate mean PLT has about five quarters left. PLT is debt free and also has no intangible assets. Comparing the current price to NTA, the ratio is about 2.3 times. A number of 3 or less is considered cheap to buy. PLT did a capital raising in late 2007 for $0.40/share. Its price now is 12.5cents.

In summary, the in-market products, management team, the foreign market penetration and he recent re-capitalisation makes many numbers look quite attractive but bear in mind that continued operation expense without increase in profit will deplete the financial resources. This could be a speculative buy with strong upside but needs careful attention over the next 12 months.