Forum Archive Index - May 2000

[Brett & Leeanne Phillips <bret-lil@ihug.co.nz>]

Hi Everyone,

Following is a few thoughts on Revesco, a  company I believe has great
potential, but as always I suggest you come to your own conclusions.

There has been several major managed funds steadily increasing their stake
in Revesco  of late, with the likes of Deutsche, Colonial, BT,  NAB and
others showing considerable interest. Its seems as if something is happening
within the company along with a growing confidence in it's future prospects.

Revesco could be considered a lower risk technology stock at present with
its expertise being in the medical field rather than the more speculative
internet  arena. The attraction of the medical service industry in Australia
is the continuity of pricing, with the Federal Government as the primary
payer of the services.

Revesco owns 49.9% of Gribbles Pathology, one of the largest pathology
providers in Australia along with Total Care Australia, the largest medical
centre business in Western Australia and Spectrum Medical Services Ltd. The
company operates in the service sector of the Australian medical market,
with minimal capital requirements, and high return on capital employed.

Over the last two years, there has been a  convergence between general
practice, pathology, and other paramedical sectors. The value of the patient
has increased as the medical market consolidates and RVS has recognised that
the general practitioner is the gate-keeper to the total Medicare budget.

NAB obviously agree with this scenario, as they have announced that they
have bought 35 million shares, or 5% of this company recently. They now join
Colonial and AMP as major shareholders. Colonial is just one investor that
has been quietly increasing their stakeholding in past months.

Aussie brokers have also been giving the  Œthumbs up¹ and Warburg, Dillon
Reed rate the stock a strong buy,  ³As Revesco  has built up a significant
business in the Australian medical service industry over the last twelve
months. They are positioned to take advantage of the convergence of general
practice and pathology in the market place over the next two to three
years.²

Rumours have also  been circulating regarding take-over and acquisition
possibilities. To date all parties implicated have denied any validity to
such rumours. However the ASX has been requesting information from both RVS
and Mayne Nickless related to the respective share price fluctuations  of
both companies over the past month or so.

The speculation and rumour centre around Mayne Nickless either making a bid
for Revesco  or that Mayne Nickless is negotiating to merge its pathology
into the company. Similar rumours have been circulating that Revesco is
looking at opportunities to purchase the pathology operations of Mayne
Nickless Limited. Mayne Nickless shares have risen considerably in recent
weeks, while Revesco representatives have indicated they are continually
examining ways to expand their interests in the medical arena.

Company representatives on both sides have advised that,  to date neither
Company has had contact or discussion with regards to such matters.  In
standard responses to the ASX,  both RVS and Mayne Nickless individually
confirmed that they were unaware of any unannounced information concerning
the company which could account for the recent share trading activity.

It is also worth mentioning that most of Revesco acquisitions and
transitional phases have taken place  during the September to December
period of 1999 and  had little effect on the improved earnings results
released in March. Historically the second half of the year  provides better
results and this will also see the earnings from the Gribbles Group,
Spectrum Medical Services and Total Care Australia having greater impact on
future results, as the benefits of these  developments are realised.

It seems that some Institutional investors have confidence in the future of
this stock, so it may be worth consideration while it remains in the 40-50
cent price range. The price generally tends to mimic  that of the Aussie
market, the draw back is that in the NZ. market it tends to trade in light
volumes.

Happy investing 

Cheers Brett




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