Medical Developments International Limited

ASX:MVP

Medical Developments International Limited

ASX:MVP
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$0.385 (-6.1%)
Last close price
#104
Rank
9
Held by
35
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Reports (8) My Report Forum Investors
Forum Topics MVP MVP Investment case in one graph

Pinned straw:
Goldfish
Added a month ago

97ca073b7aed1b279aa4177141fd325cde0d8b.png

[Courtesy of Claude]

Short story: this got massively over hyped, now it is written off. But sales continue to quietly increase.

The market cap, as low as it is ($46 million), actually understates how low the valuation is. MVP holds around 40% of it's market cap ($18.7 million) in cash.

The big question is when they start showing real profitability? My take: they were free cashflow positive for the most recent 9 months. This is only likely to improve as revenue continues to increase going forward

3 things give me confidence:

1. The consistent revenue growth over time

2. The very cheap share price. Almost no success is "baked in"

3. The quality and uniqueness of the product, plus the lack of competition


[Sorry for the spam posts re this company. Can't help myself. I promise to shut up now. For a while. Maybe]
JohnnyM
Added 4 weeks ago

Thanks @Goldfish. I bought a speculative position 6 months ago at 50c a share and second position today at 42c.

My read on is that for years MVP was the definition of a company that thought building an empire was the same as building a business. The $41m FY24 reported loss, padded with $16.4m in US registration write-downs, was the bill for that particular party.

My thesis is that management has learned.. FY25 underlying EBIT improved $11.6m, free cash flow improved $12.9m, and Q3 FY26 delivered positive operating cash flow with $18.7m in the bank. Hospital Penthrox volumes are up 26% in Australia and 19% in Europe. The capital-light partner model is working.

The valuation case is blunt. Enterprise value at current prices is roughly $30m against $42m in trailing revenue. My scenarios:

07d53c6ab83501b4deb72c7528fc7441641d93.png

The asymmetry is meaningful. Downside is ~40–50% from current price; upside is 100–400%. This is a turnaround with genuine option value. My price target is 88 cents, a deliberately auspicious number in Asia.

The UK paediatric approval, expected August 2026, is the next real catalyst and widens the European market to children over six years. Management warned FY26 EBIT will be softer than FY25 on the same day they reported their best numbers in years. It's that kind of candour which I see as a positive signal, even if it hurts short-term.

I'm watching Australian hospital volume growth staying above 20%, Q4 FY26 free cash flow, and UK paediatric approval timing.

Held in RL and now on SM.

Cheers

JM

17
Goldfish
Added 4 weeks ago

Thanks @JohnnyM. I agree entirely

I'm expecting ongoing revenue growth going forward in the 10-15% range (higher for penthrox, lower for respiratory), basically consistent with your base case projection. All that has to happen is continuation of the multiyear trend. No great leap of faith required

What I am concerned about, and will be watching closely, is profitability. MVP has never really made a profit. Penthrox sales are now edging up towards one million devices per year. It is time for the revenue growth to start flowing through to positive free cashflow and NPAT. The FY result may be a bit "soft", as management have guided, but costs need to continue to be contained. FY27 needs to show genuine profitability. There are positive signs: they have moved to basically breakeven and seem to have managed to push through price increases without impacting sales growth.

Maybe not right now, with healthcare being heavily out of favour, but at some stage I would love to see them sell off the respiratory division. It seems a low-quality, low growth and low margin business. Better for management to focus entirely on the pain management division.

The other thing I would love to see is a Strawman meeting. There is very little coverage of this company, I think a meeting could really add value

14
thunderhead
Added 4 weeks ago

Good thoughts @Goldfish, and you have nit the hail on the head with regard to THE key issue with this company - an improving profitability trajectory that's sustainable.

I have been a jaded holder for years and have written off the investment (except for calling upon the tax loss when needed), but you have given me cause to renew my interest and explore atleast holding on.

Does management commentary indicate that they are focused on profitability, and have they indicated a pathway for achieving sustainable FCF and NPAT growth?

10
Goldfish
Added 4 weeks ago

@thunderhead they identified 3 "Strategic Priorities" in the latest quarterly. The first 2 relate to growing sales/penetration in Australia and Europe.

This is the third:

18b30482fe5d46655bd973c2572f62474faaf0.png

They seem to be on track to deliver profitability. It just requires revenue to continue growing on trend, with management containing costs and not doing anything stupid.

What could possibly go wrong?

12