ASX:PGC
Paragon Care Ltd
Investment Summary
The fund managers believe that Paragon Care Ltd (PGC) represents a compelling investment opportunity at its current share price of approximately $0.44. In their opinion, the recent merger with CH2 Holdings significantly enhances PGC's position in the healthcare distribution sector, as CH2 is noted as the fastest growing of the four national pharmaceutical wholesalers. With a combined revenue of $2.1b for FY23, the fund managers highlight that this merger transforms the pro forma PGC business and positions it to gain market share effectively. They note that the operating model is disruptive, leveraging an efficient cost base that can drive pricing power and earnings growth. Paragon currently trades at a 10x FY25e EV/EBITDA, which is viewed as a 17% discount to listed peers. The fund managers observed a 7% increase in shares post-entry, reflecting positive market sentiment.
Commentary From The Managers
Endeavor Asset Management
30 June 2024
$0.44
- Endeavor Asset Management initiated a position in healthcare distributor Paragon Care (PGC).
- Paragon Care has generated $308m in sales in FY23, focusing on providing medical equipment to hospitals.
- The recent merger with CH2 Holdings enhances the company's growth potential, as CH2 is the fastest-growing among national pharmaceutical wholesalers.
- The combined entity has an impressive $2.1b revenue for FY23, significantly transforming pro forma PGC.
- Endeavor Asset Management believes the merged business is well-positioned to gain market share further.
- The operating model is disruptive, leveraging an efficient cost base to drive pricing power and earnings growth.
- Paragon Care trades at a 10x FY25e EV/EBITDA, which is a 17% discount compared to listed peers.
- The stock closed the month 7% higher compared to the fund manager’s entry point.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.