August 2019


Stock I'm watching this month:-

SIG - Sigma Healthcare Limited

Sector: Healthcare
Market Cap:  656.8 Million
Price/Earnings: 17.22
Price/Book: 1.17
Return On Equity: 7.2%
Return On Assets: 2.88%
Debt/Equity: 61.4%

Reasons to watch: Sigma Healthcare engages in the wholesale and distribution of pharmaceutical products in Australia (Amcal+, Chemist King, Discount Drug Stores, Guardian, PharmaSave). I originally bought SIG as a M&A potential when API wanted to acquire it. The deal did not go through and thus the thesis did not work out. As the investment thesis did not work out, I should have sold the stock. However, I continue to hold as the share price has increased since I purchased it but have put a stop loss, since I have no conviction of holding it for the long term (I do hold API who owns about 10% of SIG's equity).

Risk: The pharmaceutical industry is very competitive and has no moat. Australia's economy is expected to remain soft with wage growth being an issue. Therefore, it will take time before retailers such as SIG  (although health products is considered defensive and will not fare too badly) pick up again.

Sentiment: Hold
Disclosure: Held
Current Price: $0.62
My Strike Price: N/A




Disclaimer: This does not constitute any financial advice or stock recommendations. As always, Do Your Own Research.

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