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Trinity Biotech plc (TRIB) Message Board

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  • Howie58 Howie58 May 13, 2001 12:32 AM Flag

    Back of the Envelope TRIB Analysis


    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,


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    • 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.

      • 2 Replies to trillium_tom
      • Did Y over Y. Used the Irish Numbers. Not the ones adjusted for US GAAP.

      • Hello Trillium:

        Thank you for the response. McKesson-HBOC is one of the world's largest medical goods suppliers--both propietary and non-propietary. They trade on the NYSE--MCK is the symbol.

        Reiterating what I said in the earlier post--these folks have a background that includes investment banking (Hickey in particular)., I would have to think that this is a business in which economies of scale are critical. In the back of their minds--they may be fashioning themselves as a little nut to be consumed by a bigger squirrel. That is just an opinion. But in a world of third party reimbursement with HMO's playing hardball on drug pricing (look at the recent move on Claritin, Zyrtec, and Allegra), economies of scale and distribution must be absolutely critical.

        As for the JRJ issue--this is a classic example of how the letter of the law and the appearance of impropiety are so radically different. The fact that the JRJ principals recuse themselves from passing judgment on the rental deal doesn't reduce the smell factor. From a takeover standpoint--the principals have sizable chunks of shares--so a favorable takeover would certainly be in their best interest. In the meantime, this JRJ thing makes me wonder about ethics and/or board integrity and independence.

        Thanks for your response. As noted earlier, I am not "dumping" my small holding, but I doubt if I will be adding shares in the nearterm.

        Peace and good luck in all endeavors. Your input is not worthless.


    • Howie,
      Thanks for the feedback!!!

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