PPJE VALUATION ANALYSIS – why will it be more than a penny by end of 2010
Here’s why I believe PPJE will be more than a penny by end of 2010. PPJE is in the health care services industry, which is more than a $1.7 trillion industry. PPJE is in the Electronic Medical Records business which has been mandated by Obama for all hospitals/clinics. 67% of Physician Offices Do Not Use Electronic Medical Records (EMR) Software, Says SK&A | Reuters
If we look at the history of this company, it was a successful company back in 2005, 2006. Here’s news in Aug 2005 that has details on a contract that PPJE CEO ‘Chandana Basu’ signed with a large multi-specialty medical clinic and pain management center, that can double the company revenues to $4 MM.
– Healthcare Business Services Groups Secures Long-Term Medical Billing Contract With Multi-Specialty Medical Clinic and Pain Management Center
In 2005, 2006, PPJE(then was HBSV) had the experience of generating more than $20MM per year with the same CEO that we have today.
PPJE hit a snag in 2007 & 2008, needed to shutdown the operations, and reemerged in Aug 2009. Its a second chance for PPJE to make it big, and till now, based on the progress in the first 6 months, it has done exceedingly well. During the second half of 2009, PPJE started with taking money from shareholders to support day to day operations, was able to sign some contracts, and I believe it now has enough cash flow from the signed contracts to take care of its business, and to sign many more new contracts.
During the past 4 months, PPJE has already signed contracts that can yield in excess of $1.5MM. PPJE is signing contracts with former clients, and is also signing up new clients. PPJE is hiring its former employees
, who can bring many more contracts and revenue to PPJE.
PPJE is in the process of extracting $4.5MM assets from its former client/director.
PPJE is going to give a 20% dividend on Nov 30, 2010 for all shareholders as of record Dec 1, 2009. This means there won’t be a reverse split till Nov 30, 2010. Financially it doesn’t work out for the company to reverse split the stock, and give a 20% dividend based on the shares before the reverse split. It doesn’t work that way. So end of discussion on reverse split. Here’s the link.
PPJ Enterprise to Pay 20 Percent Stock Dividend
With respect to PPJE valuation estimate, tvmetguy has come up with a good estimation for the current fair price – PPJ Enterprise (PPJE): PPJE-Valuation Estimate 3/30/10
with respect to PPJE valuation estimate by end of 2010, here’s my reasoning for why PPJE would easily be more than a penny by end of 2010.
– PPJE signed contracts in the past 4 months and can generate a revenue of $1.5MM
– signing the initial contracts is the difficult job. Now with more former employees onboard, with more expertise, and with credibility based on the initial signed contracts, I am expecting PPJE to sign many more contracts during the next 9 months. Taking a conservative estimate, if they go with the same pace, and continue signing $1.5MM worth contracts every 4 months, by the end of 2010, PPJE might sign contracts that are a total worth of $5MM.
– Remember, these are recurring contracts, and there is a good chance they would be renewed every year, unless PPJE screws up something. So money from all these contracts is a recurring yearly revenue for PPJE.
– PPJE is in the process of collecting $4.5MM from its former client.
– By end of year, PPJE will approximately have $10MM.
– revenue($10MM)/OS(4700MM) = 10MM/4700MM = 0.0021
– Applying a P/E factor of 20, we get the PPS to be 20*0.0021 = 0.04 which is 4 cents. Remember, health care services market has a higher P/E factor. P/E factor of 20 is very conservative for healthcare services industry.
– Even if we go by a very very conservative estimate, and assume PPJE can make only 1/4th of the above revenue, we would still be higher than a penny by end of 2010.
– Also remember that PPJE is currently on the REG SHO list, and even though it’s temporary, it will increase the PPS in the short term to higher levels. Regulation SHO Threshold Security List
PPJE is both a short term play, as well as a long term play. As I said in one my earlier posts, PPJE is a gold mine. It’s a sleeper, and it’s only going to go up. Mark this post.
This is all my personal opinion based on my DD on PPJE. Please do your own DD before investing. I believe PPJE is going to be higher than a penny by end of 2010.