Friday, May 24, 2019

HLS Therapeutics Inc

Sound bite for Twitter and StockTwits is: Dividend Paying Health Care. The stock price is testing as expensive, but I would suspect that it might be more reasonable because of the recent bought deal at $16.00. I moved the coverage of this stock up from November because it is a stock I now own. I do not own much, but it is a interesting stock. See my spreadsheet on HLS Therapeutics Inc.

I own this stock of HLS Therapeutics Inc (TSX-HLS, OTC-HLTRF). I got this stock because it did a reverse takeover of Automodular Corp (TSX-AM, OTC-AMZKF) on March 12, 2018. There was a plan of arrangement whereby Automodular shareholders got 0.165834 HLS common shares and one HLS preferred share. The HLS preferred shares were a form of contingent value right allowing AMD shareholders to have an equity stake linked to the outcome of litigation that had been ongoing for several years between AMD and General Motors.

When I was updating my spreadsheet, I noticed that so far, they have only earnings losses, but they are expected to made a profit this year. Revenue is going up very well with Revenue up 46% per year over the past 3 years and Revenue per Share up $38% per year over the past 3 years. This company reports in US$.

Dividends have just been started at the end of 2018 and 2019 will be the first year of dividends. There has yet been no increase in dividends, but I am hopeful. The current yield is low at just 1.24%.

The Dividend Payout Ratios are too high for EPS. The DPR for EPS for 2018 is not calculable as there was an earnings loss in 2018. The DPR for 2019 is expected to be 400% and dropping to 59% in 2020. The DPR for CFPS is fine with DPR for CFPS for 2018 at 3% and then rising to 15% in 2019

Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2018 is 0.33 in US$. The Liquidity Ratio is very low at 0.83 for 2018, but add in cash flow after dividends and it is 1.66 in US$. The Debt Ratio is very good at 2.07 for 2018. The Leverage and Debt/Equity Ratios for 2018 are good at 1.93 and 0.93, respectively in US$.

The Total Return per year is shown below for years of 3 to the end of 2018. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.

My actual total return is 13.03% per year with 6.93% from capital gains and 6.10% from dividends. I had Automodular Corp stock and this caused the difference between what HLS has done and how well I did. I followed Automodular in to HLS stock and then bought some more HLS shares.

From Years Div. Gth Tot Ret Cap Gain Div.
2015 3 -2.54% -2.65% 0.11%

The 5 year low, median, and high median Price/Earnings per Share Ratios are all negative because this company has not yet had a profit. You cannot do any testing with P/E Ratios. The current P/E Ratio is 321.40 in CDN$. This is very high. It is expected to moderate to 47.26 next year.

The best I can do is get a current Graham Price of $2.95. The 2 year low, median, and high median Price/Graham Price Ratios are 2.86, 3.78 and 4.70. The current P/GP Ratio is 5.44 based on a stock price of $16.07. This stock price testing suggests that the stock price is relatively expensive. This is in CDN$.

I get a 3 year median Price/Book Value per Share Ratio of 1.25. The current P/B Ratio is 2.24 based on Book Value of $157M, Book Value per Share of $5.75 and a stock price of $12.88. The current ratio is some 79% above the 3 year median. This stock price testing suggests that the stock price is relatively expensive. This is in US$. (Note that a P/B Ratio of 1.25 is low, but a ratio of 2.24 is a little high.)

I cannot do an historical median dividend yield test because they just started to pay dividends.

The 3 year median Price/Sales (Revenue) Ratio is 4.12. The current P/S Ratio is 5.82 based on 2019 Revenue estimate of $61M, Revenue per Share of $2.21 and a stock price of $12.88. The current ratio is 41% higher than the 3 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This is in US$.

Results of stock price testing is that the stock is relatively expensive. However, since there has just been a bought deal at $16.00, its current price of $16.07 is probably reasonable. It is interesting that analysts expect the company to start to make a profit in 2019, but they also expect Revenue to decline this year and next.

When I look at analysts’ recommendations, I find Buy (2) recommendations. I found it surprising to have any analysts following this stock. The 12 month stock price is $21.50. This implies a total return of 68.17% with 66.93% from capital gains and 1.24% from dividends.

A writer on Simply Wall Street reviews this stock and its dividend on Yahoo Finance. Ambrose O'Callaghan onMotley Fool likes this stock. He says it has gone up 550% in last year, but I cannot see that in any share price. A write on Simply Wall Street via Yahoo Finance says that Hedge Funds have a substantial investment in this company. A news report on Newswire talks about a bought deal with shares at $16.00. There is an announcement of an Bloom Burton Award for the CEO of this company on Business Wire.

HLS Therapeutics Inc is a specialty pharmaceutical company. It is focused on the acquisition and commercialization of branded pharmaceutical products in the North American markets. The company earns most of its revenue from the United States. Its web site is here HLS Therapeutics Inc.

The last stock I wrote about was about was Reitmans (Canada) Ltd (TSX-RET.A, OTC-RTMAF) ... learn more. The next stock I will write about will be Ritchie Bros Auctioneers Inc (TSX-RBA, NYSE-RBA) ... learn more on Monday, May 27, 2019 around 5 pm.

This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

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