PPX share price forecast from 5 cents. DOWN.

Posted July 15, 2012                                                              Twitter: @PaperlinXsuX


This is the personal opinion of the author and must not be construed as advice of any form.

PPX is  now captive to the Cockroach Theory of Investment. For years the pessimists have been correct. There was and remains unacknowledged bad news everywhere at PaperlinX; and what may constitute good news for a good business is promptly discounted by the market.

$5.37 ... $3.01 ... $0.32 ... $0.05 ... ?

Whether you're: 

1. a fundamentalist - discounting future income streams to a present value;
      
2. a value investor - buying NTA at a discount;
      
3. an insider - with some knowledge of the industry, management or product; or
      
4. a chartist; 

not one of the four valuation techniques indicates a "buy" signal in the near future. 

Prepare for lower share prices.

On Friday, July 13, 2012, the share price had another new weekly close price of 5 cents. It should be noted this is now two weeks after release of the Strategic Review so any positives in it have now been fully discounted.

Please consider PPX Share Price Chart from Sep 2011 to Friday, July 13, 2012. If you've never previously looked at any of my charts, this one is simple and interesting.

I believe in share price support and resistance. Share price ranges that are support in a falling market become resistance in a rising market. There are four clear support and resistance areas between 6.5 and 12.0 cents which I've used here previously with success. Also, support/resistance ranges remain intact until decisively broken.

The red/ochre colour band is strong support/resistance, while the yellow is weak.

It's no accident that the share prices in the expected week of release of the Strategic Review were in the R1 region. Disappointed with the Strategic Review, and even sale of the US operations, share prices fell away sharply.

5 cents is a nice round number and labels PPX "junk" stock. Below 6.5 cents, PPX is in hospice care territory. I cannot see 5 cents being "the" bottom.

I expect PPX to stay below 7.1 cents, then 12 cents, until a major change in top management. Major means prompt removal of Boon and Marchant, at a minimum, and slashing the workforce much faster than contemplated in the Strategic Review.

Day traders will have their fun "range trading" below 7 cents. Serious "outsider" investors will need to wait until the share price consolidates above 12 cents to know that a base share price has formed. 

This will now never happen because of "strategic initiatives" by Messrs Boon and Marchant. 

If you persist in foolishly believing old dogs can learn new tricks, kindly review page 7 of a Company presentation on Feb 16, 2009. The Company slide is titled:
  
"Development of World's largest Paper Merchant".

$5.37 ... $3.01 ... $0.32 ... $0.05 ... ? 

Harry Boon was then a director and Toby Marchant the Chief Executive Officer, PaperlinX Europe which until June 30, 2012, compromised 70% of the Company's revenue and 100% of its problems.

He'd held the position of CEO PaperlinX Europe for July 2008 - October 2010 when his abysmal results were rewarded with being appointed Global CEO and Managing Director.

Nothing changes if nothing changes.

If you think the cash raised from sale of the US and Italian operations will be the Company's salvation, you first must convince yourself that "this time is different" which it never is.

$5.37 ... $3.01 ... $0.32 ... $0.05 ... ?


PPX has been so damaged there is no guarantee that anyone can now save it. If there is another Price attack, he should demand and receive more consideration.

The directors have a lot to answer for.


This is the personal opinion of the author and must not be construed as advice of any form.