PHM Gains on Report On Business Story

Out top spec pick ( picked at $1.11  ) gained Monday closing at $1.46 on a feature in the Globe and Mail Report On Business :

Being a top performer on the TSX Venture Exchange doesn’t exactly set the investing community abuzz these days.

One of the elite listings on the lowly Venture of late is Patient Home Monitoring Corp., which has unleashed a wave of acquisitions to bring about a quintupling in share price over the last year.

Now big enough to have overcome most of the startup risks associated with Venture names, but not so big that investor hype has priced in a growth premium on the stock, Patient Home Monitoring still has plenty of room to grow.

“Normally one hears of stocks that the ‘easy’ money has been made,” Beacon Securities analyst Doug Cooper said in a recent note. “However, we believe with PHM, the opposite is the reality.”

Underlying the company’s business model are some powerful trends in U.S. health care. An aging population, combined with capacity strains on health-care facilities, have ensured a high growth rate in the home-based health-care services market.

“In a period of uncertainty in the economy, we believe the U.S. health-care service industry, especially one catering to the aging baby boom generation, offers a relatively safe haven,” Mr. Cooper said.

Patient Home Monitoring focuses on three major categories of illness – diabetes, pulmonary and cardiac – to offer multiple services to the chronically ill.

While listed in Canada, the company targets the highly fragmented U.S. home monitoring market, acquiring smaller regional businesses that need capital to expand.

Investors tend to look upon roll-up strategies with some skepticism, in part because they end up relying exclusively on acquisitions for growth. Patient Home Monitoring, on the other hand, is able to combine acquisition-based growth with considerable organic growth.

It does so through its expanding patient database. While takeover targets ideally have strong revenues and earnings, and are available at favourable prices, an extensive client list is a top priority in hunting for new deals.

“Through mining the aggregate patient database, PHM will cross-sell its various services thus driving revenue-per-patient growth,” Mr. Cooper said. “For example, those with pulmonary issues have a high probability of a cardiac condition … [and] a high probability of being overweight/obese that could require a power mobility solution.”

In the fiscal first quarter, the company generated organic annualized revenue growth of 34 per cent year over year, Mr. Cooper calculated.

And the company’s growing acquisition pipeline should mean much more growth of both kinds. Having already closed two deals this year, Patient Home Monitoring has three pending acquisitions which will just about double the size of the company, generating annual sales of about $125-million by the summer. By the end of this year, the company is targeting $175-million in annual revenue. Sales in 2014 amounted to $21.2-million.

And previous company guidance has consistently proven conservative, said Bruce Campbell, president and portfolio manager at StoneCastle Investment Management Inc., which owns shares of the company. “They’ve been fairly cognizant of not trying to over promise.”

Michael Dalsin, the company’s CEO, has said he thinks $1-billion in revenue is a realistic mark for Patient Home Monitoring, eventually. That 10-figure top line mark might come into view much sooner than many expected, considering the company’s pace of acquisitions.

In the first two months of this year alone, Patient Home Monitoring issued letters of intent or term sheets to 12 companies with combined annual revenues of more than $141-million. Non-disclosure agreements – which are the first step in identifying targets – were signed with another 40.

That kind of growth makes the company’s valuation a moving target. “The real difficulty is trying to figure out what multiple you should put on these things,” Mr. Campbell said. He estimates the stock is trading at an enterprise value to EBITDA (earnings before interest, taxes, depreciation and amortization) ratio of a little less than 10 times, based on future earnings the company has publicly declared.

Mr. Cooper said the company’s growth already realized and yet to come should warrant a multiple in the upper end of the range of 10- to 12-times forward EBITDA, which results in a target price of $1.75. Mr. Cooper is currently the only sell-side analyst covering the stock, according to Bloomberg.

While the stock has risen by more than 60 per cent this year so far, Patient Home Monitoring is now a safer play than it was a year ago, when investors had little proof that the company could execute its roll-out strategy and cross-sell its services, Mr. Cooper said. Plus, the company’s clean balance sheet increases flexibility and lowers risk.

“All of those fears should be dispelled now,” Mr. Cooper said.

Patient Home Monitoring (PHM)

Friday close: $1.39, up 4¢

Our Spec Pick March 2015 : Make Money with Old Sick People

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Patient Home Monitoring Corp. (PHM.V)

KEY: Highly focused management, expanding merger and acquisition strategy

Growth story unfolding – still little known

Please check out the website and latest news releases

TSXV 

1.22 Up 0.01(0.83%) 9:53AM EDT
Prev Close: 1.21
Open: 1.21
Bid: 1.22
Ask: 1.23
1y Target Est: N/A
Beta: N/A
Next Earnings Date: N/A
Day’s Range: 1.211.22
52wk Range: 0.22 – 1.27
Volume: 221,662
Avg Vol (3m): 3,312,280
Market Cap: 239.21M
P/E (ttm): N/A
EPS (ttm): -0.03
Div & Yield: N/A (N/A)
Profile Get Profile for:
Patient Home Monitoring Corp.
14724 Ventura Boulevard
Suite 1250
Sherman Oaks, CA 91403
United States – Map
Website: http://www.phmhometesting.com

Details
Index Membership: N/A
Sector: Healthcare
Industry: Medical Appliances & Equipment
Full Time Employees: N/A
Business Summary

Patient Home Monitoring Corp. provides and rents in-home monitoring equipment, supplies, and services for patients in the United States. It offers diabetic testing supplies and other medications, power mobility equipment, home durable medical equipment, and respiratory services. The company is headquartered in Sherman Oaks, California.

 

Asanko Gold Inc. Spec BUY

AKG : TSX : C$2.50
AKG : NYSE MKT
SPECULATIVE BUY 
Target: C$3.25

COMPANY DESCRIPTION:
The combination of AKG and PMI created a significant gold
development company with 2P reserves of 4.8 Moz with a
permitted, financed (US$231M in cash, Q2/14) mine plan on half
the reserve (Obotan project) with the permit in hand with a permit
pending on the other half (Esaase project). All the assets are
within the Ghana, one of the premier jurisdictions in the entire
African continent.
All amounts in C$ unless otherwise noted.

Metals and Mining — Exploration and Development
GOLD ROYALTY ON PHASE 1 REDUCED FROM 7% TO 5% NSR
Investment recommendation
The company announced an agreement to buyback a 2% NSR reducing
the overall NSR from 7% to 5% for Phase 1 (Obotan) of the Asanko Gold
Mine in Ghana, West Africa. We view the acquisition of the NSR as a
strong positive and highly accretive given that the Phase 1 project is
breaking ground and close to production (H1/16E). We raised our target
(+C$0.10) accordingly to C$3.25, a 30% premium to current price levels,
and maintained our SPECULATIVE BUY recommendation. We anticipate
more construction updates leading to a resource update for Phase 1
followed by an updated mine plan (Q4/14E

Investment highlights
 Our revised target price is based on an increase in our NPV8% (+4%
to US$733 M) of the combined Obotan (Phase 1) and Esaase (Phase
2) gold projects, now known as the Asanko Gold Mine, related to the
reduction of the NSR at Phase 1 (Obotan) from 7% to 5%. On an
NPV8% basis, we valued the 2% NSR on Phase 1 at C$25-30 M (LT
US$1422) The drop in our NSR assumption from 7% to 5% for Phase 1 is
related to the recently announced purchase of the 2% Goknet
(privately held company) NSR for 1 M shares of AKG and cash (we
estimate US$1 M as the details were not disclosed). In addition, AKG
will transfer the rights to two exploration projects, Kubi and Diaso,
which the company deems as non-material.
 In November 2012, Asante Gold Corp. (ASE : TSX-V
offered to purchase half (1%) of the 2% NSR on the Obotan project
from Goknet for C$22.5 M via shares (45 Msh, C$0.50), which
would now be worth about C$4 M (for 1% NSR). The sale was never
completed

Donnycreek Energy Inc. SPECULATIVE BUY

DCK : TSX-V : C$2.18 SPECULATIVE BUY 
Target: C$4.00
COMPANY DESCRIPTION:

Donnycreek is a junior pure play Montney exploration and
development company with assets in Alberta’s Deep
Basin. Donnycreek trades under the symbol “DCK” on the
TSX venture exchange.
All amounts in C$ unless otherwise noted.

Investment recommendation
Donnycreek released a brief operational update this morning on its
operations at Kakwa. The wells on the company’s three well Montney
pad (the company’s first 1.5 mile horizontals) have been successfully
completed and tested, however no test rates were provided with the
release. The company also announced a plant turn-around at Kakwa,
which will shut in production from the block for ~16 days in September,
and plans to expand the plant on the block from 15mmcf/d to 30
mmcf/d in the spring of 2015.
In our view, a fairly neutral release from the company; however, given
the delays in bringing on production at Kakwa, we have lowered our
production estimates for 2014 . Trading at just 3.1x 2015E
EV/DACF and 0.5x Base NAV (lowest NAV multiple in our coverage
universe), we continue to believe DCK is extremely undervalued relative
to its peers.
We continue to rate the stock a Speculative Buy, and look to November
for IP30 rates on the 3 recently completed 1.5 mile Hz’s (in addition to
the large production bump)as significant potential catalysts for the stock.
Highlights from the release
 Kakwa 3 well pad. DCK announced that all three 50% working
interest wells from the company’s first three well pads have been
completed and flow tested . These wells were drilled with
horizontal lengths of 1,900m, which is longer than wells previously
drilled on this acreage. The wells are expected to come on
production in October.
 Facility expansion. Donnycreek and its partners are currently
designing an expansion for its 16-7 facility to double the throughput
capacity to 30 mmcf/d of natural gas and associated liquids. DCK
and its partners plan to start-up the expansion by spring 2015.

Trading Alert – NEWL Charges Back

NEWLEAD HOLDINGS LTD(NEWL:NASDAQ, US)

3.20USDIncrease0.3699(13.07%)Volume: 
Average
As of 27 May 2014 at 10:38 AM EDT.


QUOTE DETAILS

Open 2.80 P/E Ratio (TTM)
Last Bid/Size 3.18 / 96 EPS (TTM) -56,034.36
Last Ask/Size 3.20 / 150 Next Earnings
Previous Close 2.83 Beta 2.30
Volume 3,996,183 Last Dividend
Average Volume 21,085,591 Dividend Yield 0.00%
Day High 3.38 Ex-Dividend Date
Day Low 2.66 Shares Outstanding 10.1M
52 Week High 8,235.00 # of Floating Shares 10.02893M
52 Week Low 0.3788 Short Interest as % of Float 0.53%

Questerre Energy – OIL Potential

Questerre Energy Corporation

Questerre Energy Corporation (Photo credit: Wikipedia)

QEC :

TSX : $0.88

Great potential – but they used to say the same  thing about me.
Shares of Questerre jumped after the company announced the results of the resource assessment of its Montney acreage in the Kakwa-Resthaven area.

The best estimate by the company’s independent reserve engineers of Prospective Resources (PR) is 100 million barrels of oil equivalent and of Economic Contingent Resources (ECR) is 32 million barrels of oil equivalent.

Commenting on the results, QEC’s President and CEO, Michael Binnion, stated, “We are very  pleased that the report puts a significant value on the dense resource we have captured in the Kakwa-Resthaven area over the last year. ECR were assigned to just over 15% of our total acreage based on proximity to tested or producing Montney wells.”
He added, “We expect that as additional wells are drilled and tested on and adjacent to our lands, the majority of the prospective
resources will be reclassified as economically contingent resources and ultimately reserves.”

BlackPearl Resources Inc.

Black Pearl

Black Pearl (Photo credit: Wikipedia)

PXX : TSX : C$2.07
BUY 
Target: C$4.00

COMPANY DESCRIPTION:
BlackPearl (PXX : TSX) is a mid capitalization exploration and production company focused on large scale resource plays: primarily conventional and thermal heavy oil and bitumen opportunities in Canada.

Investment recommendation


BlackPearl announced its long awaited roadmap for growth that includes advancing its 12,000 bbl/d thermal development project at Onion Lake concurrent with its plans to issue US$350 million in senior second lien secured notes. The announcement from our perspective was positive as it clearly addressed its near term development plans and proposed method of financing, which was in line with our previously published view.

Valuation remains extremely attractive in our view, with currently no value in the stock for Blackrod. We reiterate our BUY recommendation and C$4.00 target price based on an unchanged 0.9x multiple to NAV.
Investment highlights
Proposed US$350 million note facility fully funds capital cost at Onion.
With an anticipated capital cost of $300 to $350 million ($25,000 to $29,000/boepd) at Onion, the proposed financing would fully fund
construction of the project through 2014. Additionally, indications from its existing lenders would provide an unchanged $115 million revolving
facility (only $12 million drawn at Q1/13), providing additional financial flexibility. A successfully completed note issuance will remove near term
financing concerns, in our opinion the least dilutive path to growth and retaining optionality at Blackrod. The decision to advance Onion Lake thermal is in line with our prior view; it provides cost and size advantages relative to Blackrod, thus limiting dilution, and additionally preserves option value at Blackrod for a potential joint venture, sale, or future development.
Valuation
BlackPearl trades at 0.5x CNAV, 12.4x EV/DACF, and $77,400/BOEPD on our 2013 estimates

Amaya Gaming Group Inc. Spec Bet

Hong Kong Confidential

Hong Kong Confidential (Photo credit: Wikipedia)

AYA : TSX-V : C$5.32
SPECULATIVE BUY 
Target: C$8.50

COMPANY DESCRIPTION:
Amaya Gaming Group Inc. designs, develops and distributes a host of technology-based solutions targeted at the regulated gaming industry. Amaya’s solutions cater to a wide range of industry participants, including land based and online casino operators, hotel and hospitality operators and government regulators.

Investment recommendation


We are initiating coverage of Amaya Gaming with a SPECULATIVE BUY rating and a C$8.50 target price. We believe that Amaya is well positioned to benefit from strength in the gaming technology market and more specifically, the physical/online convergence. Attitudes towards gambling are liberalizing as debt-laden governments are looking for new sources of tax revenue. With the US becoming more open to regulated online gambling, a large new market may open. While this is an attractive source of upside, we believe that Amaya is on the cusp of a transformation after a flurry of acquisitions supporting strong growth in 2013 and 2014 whether the US opens or not.
Investment highlights
 Amaya Gaming is a developer of innovative technology and content for the regulated online, interactive and land-based gaming industry.
Recent acquisitions transform Amaya into a global player with a platform to offer content across multiple gaming mediums including land-based, online and mobile. Amaya’s position in the market is protected from new entrants by onerous government regulation.
 The market for gaming services is very large with gaming gross yield expected to grow to over $400 billion in 2013 with online growing to over $37 billion. We believe that the gaming vendor space is over $27 billion with annual growth closer to 5%. For a firm the size of Amaya, we believe there is ample room for growth. In 2014, after the model has  stabilized, we expect 25% revenue growth and 43% EBITDA growth.
 Amaya’s technology products attract a share of gambling revenue which is scalable, high margin and recurring in nature. We believe that
EBITDA margins of ~35% are within reach as the model matures.

Valuation


Given strong product positioning with an end-to-end product suite more common to companies much larger than Amaya and our strong growth
expectations, we believe Amaya shares warrant a premium valuation. At current levels, Amaya trades at 6.6x EV/C2014E EBITDA versus gaming
technology vendors at 8.4x (range is 6.0x to12.3x). Our C$8.50 share price is based upon 10x C2014E EV/EBITDA and 18x C2014E cash adjusted P/E supported by comparables, recent transaction pricing and our DCF analysis.

New Zealand Energy – Misses Targets

NZ Red Admiral Butterfly in Wellington, New Ze...

NZ Red Admiral Butterfly in Wellington, New Zealand Māori: Kahukura (Photo credit: Wikipedia)

New Zealand was the greatest AMP miss in 2012 . Here is the latest chapter  of that mistake:

New Zealand Energy

NZ : TSX-V : $0.39

, Net Change: -0.25, % Change: -39.06%, Volume: 2,213,150
Financing Uncertainty.

New Zealand Energy tumbled after announcing it does not expect to achieve its 3,000 boe/d target by
the end of Q1/13.

Given its current production rate of 335 bbls/d and limited funds, the company has decided not to pursue higher-risk, higher-reward opportunities, opting instead to focus on its pending Origin asset blocks. While the Origin assets have numerous uphole completion opportunities, which will cost significantly less than regular exploration locations, Canaccord Oil & Gas Analyst Christopher Brown has concerns surrounding the company’s ability to fund the Origin acquisition, which is now projected to close in Q2/13.

The company’s working capital position, including a $5 million deposit relating to the transaction, is currently only $16.8 million. The Origin transaction will cost an additional $37 million and the company has stated it will seek alternatives for financing in 2013. On its pending Origin (TAWN) assets, the company has six wells it can move onto in Q2/Q3 which have recompletion opportunities in the upper sections of the wells. Brown estimates that recompletions would cost roughly $500,000-600,000/well, for a total capital cost of $3.0-3.6 million. Brown notes these
recompletions could potentially impact production immediately as there is infrastructure in place.

Next catalysts: i) Arakamu – NZ perforated and flow tested two zones in the Arakamu-1A well in the Moki formation, but was unable to demonstrate
recoverable hydrocarbons and has suspended the well, and ii) Wairere – NZ has cased the Wairere-1A well and will complete the well once completion activities are finished at the Arakamu-2 well.

Guyana Goldfields – Revised Study

Guyana Goldfields

(GUY : TSX : $4.13)
Shares of Guyana Goldfields jumped after the company announced a revised feasibility study on its 100%-owned
Aurora Gold project.

The estimated initial capital required to achieve commercial production is $205 million and reflects numerous positive changes, in particular, the phased mining and milling approach, reduced footprint of the mine site and facilities, and utilization of an optimized mobile equipment fleet. Based on the key findings of the study, the company will continue to move forward with mine construction and development of the project.

The improved mine plan will produce 3.29 million ounces of gold over an initial 17 year mine life at an operating cash cost of US$527 per ounce (including royalty). Average annual gold production over the life of mine is 194,000 ounces, and averages 231,000 ounces per year over the first ten years. Gold production peaks in 2020 at 349,000 ounces.

Commercial production is expected to commence in Q1 2015. Gold production will be staged, with initial open pit production of 5,000 tonnes per day from the Rory’s Knoll deposit and expanding to 10,000 tonnes per day in early 2018 when underground mining commences. A Bay Street analyst was positive on the study and noted that he believes this is the report that will convince investors that Aurora, re-optimized and re-designed, presents an attractive project with robust economics.

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