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Trinity Biotech plc (TRIB) Message Board

  • randy_the_dude randy_the_dude May 12, 2001 7:00 PM Flag

    Back of the Envelope TRIB Analysis

    All,
    Just got my TRIB annual report and am going through the Ratio Ritual
    Check my math on this but this is what I see:

    Current Ratio 2.686872316
    This is very good. BUT it looks higher than it really is because TRIB seems to have a lot of inventory on hand

    Debt/Eq 0.033497425
    Unreal: These guys have practally NO debt

    Inverntory Turns 1.287594492
    Ok, here is where it gets ugly. They are NOT moving out inventory as far as I can see. 1.3 is a VERY low turn rate. Should be in the 6-8 range. Does anyone know why these guys have so much inventory on hand. Did I get this one wrong?

    Profit Margin 0.482173451
    Unreal: HUGE Margins

    ROE 0.73652876
    Again: HUGE.

    This company is a paradox to me. Everything EXCEPT the inventory numbers look great. They look to have a great product line and they are in a great area which big upside. Either this stock is VERY Undervalued or I am missing something

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    • so who was the drunken sop that couldn't even catch such a blatant error ?

      serve his/her head up on a platter !

    • Randy:

      I enjoyed your post--unlike many of others on this board, it is rooted in some reality other than pure hype or negativism.

      I am not an expert on ratio analysis, particularly with no peers at hand, but I welcome your comments on the annual report, which I received yesterday.

      On the plus side:

      A very professional presentation for so small a company. Collectively, the management team has interesting experience, though one American has experience with Epitope--which was rather checkered.

      They clearly want to grow the company, "both organically and through acquisition," as stated on page 5.

      Their cash position is a plus, and yes, they have retired debt and have instead used their stock as currency.

      This leads to the downside:

      Revenue growth is only about 14 percent. This is none too shabby, but it is far from spectacular, and raises questions about sustained earnings growth over the long-term, particularly if there is further dilution. Given their stated desire to grow, and their agreement with HiberGen--that seems inevitable, unless,of course, their takeovers are immediately accretive.

      Note 23 on page 37 appears to confirm your suspicion regarding inventories. My question is whether this build-up is attributable to general business conditions, the acquisition of Bartels, or a negative reaction to their product?

      Another negative--and I welcome feedback on this point--is on page40, Note 28, "Related Party Transactions." This note begins as follows: "The company has entered into various arrangements with JRJ Investments (JRJ), a partnership owned by Mr. O'Caoimh and Dr. Walsh, directors of the company, and Mr. O'Connell, a former director. . . .The note details the fact that JRJ rents the office space in Ireland to TRIB. While the note states that the rental is market set and favorable to the company--I think this is problematic. Like it or not, this gives the appearance of conflict of interest. I don't like this one bit.

      In general, this report confirms my earlier postings. The company is probably solid, but it may be a "commodity" business with unspectacular earnings growth and margins. That is why the market may not care about the FDA approval.

      Another take on this report--the Board is trying to juice up the company for a takeover by a McKesson or someone along those lines. The Board members' backgrounds lend themselves to this possibility.

      Best luck to all,

      Howie

      • 2 Replies to Howie58
      • Randy, Also enjoyed your post. I didn't quite know what to make of your post when I read it, because: (1) I have used more than one formula for inventory turnover, and (2) I wasn't sure if you were doing Q4/Q3, Q4 over last years Q4, or year/year. When I got home, I saw my annual report had arrived, so I assume it was Y/Y? Anyway, I ran my own calculations using 2 methods and saw evidence of slowing inventory turnover. I thought, as Howie did, that this may be related to the Bartels acquisition, but I'm not sure.

        Howie, I also noticed the JRJ business (note 28) and also had a negative reaction for the same reason (conflict of interest). I am curious about your reference to McKesson. I hqave no idea who they are, but the JRJ thingie certainly hints at a takeover sutuation.

        OK, HIV thing. FDA (which I recently learned means Food and Drink Administration--a Freudian Slip?) wants more data. I am guessing FDA specifically wants more tests of HIV+ blood than was included in the PDA. Larger sample sizes reduce confidence intervals. I don't think it has anything to do with a poor product, but it might have something to do with a marginal specificity performance on a small sample size.

        As always, just my almost worthless ($0.02) opinion.

      • Howie,
        Thanks for the feedback!!!
        V/R
        FRC

 
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