CTE 0.00% 40.0¢ cryosite limited

Buy-Back reversal may boost profits

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    Cryosite's decision to pull its Buy-Back plan before purchasing a single share may preface a boost to profits.

    At the time of the original Buy-Back announcement on March 11, directors didn't indicate a buy-back price.  Let's assume an average of 25c a share.

    Given the maximum number of shares to be bought was 4.7m, directors would need to set aside ~$1.2m from cash reserves.

    At December 31 cash stood at $4.3m.  Come June 30 cash may be near $5m.

    It seems now - with the cancellation of the buy-back program - the buy-back funds will be released to advance the CTE Business Plan.

    CTE has not publicly disclosed the contents of this Plan.

    It may involve:

    1. Further expansion of the cold logistics facility at leased premises in South Granville, NSW;

    2. Estabishment of a new facility, possibly in Melbourne where the clinical trials industry is booming;

    3. Resumption of dividends.

    While I believed the buy-back operation would have been bullish for the CTE share price, it may be that the alternative is even more bullish if John Hogg can use the spare cash to crank earnings.

    Hogg has been CEO for six months. He's been tasked by controlling shareholder Andrew Kroger to propel growth.

    Meanwhile, it's an on-going pity that Cryosite is not obliged to report quarterly results.

    The group shuns the four-letter word NEWS, meaning holders - and prospective investors - can only speculate on performance.

    Full years results are not due to be released for four months.

    Can we gain clues from the original Buy-Back announcement?

    Chairman Bryan Dulhunty said this:

    While Cryosite’s current operations remain focused on its clinical trials logistics business, the Company’s strategy is to expand into products listed on the Register of Therapeutic Goods.

    To this end, the Company continues to negotiate and sign commercial agreements with international pharmaceutical companies.

    These opportunities have the potential to contribute to the growth of the Cryosite group in FY2022 and beyond.

    Cryosite’s focus will continue to be on attracting low volume, high value, temperature controlled, highly regulated drugs.

    Given the high barriers to entry and the finalisation of these most recent agreements, the Company is excited by its prospects in this area.
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