Member Info for Malik-

Can people try to understand how to value a company?
Technicals are interesting but AGAIN; you need to know what’s priced in the share first.
The ARB shares are NOT pricing spot Bitcoin. They are factoring in a price LOWER than spot.
How do I know this?
Because looking at the market cap of US peers; and has ZERO reason for why it should not be trading at similar mcaps to larger peers ie >=USD700m.
From there you can back out the Bitcoin price implied in the shares.

Well if the stock is not pricing in the spot Bitcoin... then the sensitivity or Beta to Bitcoin price cannot be the same than if it did. It should be nil in fact.
On my calculations; the stock should in fact be re-rating to a level where it discounts the higher spot price.
We are pricing $31k vs spot at 35k.
If you think Bitcoin will decline, then so long as it it doesn’t decline below 31k; the fundamental valuation of the company should NOT decline.
Yes you have momentum and fear short term; but fundamentals always end up winning.

Stock is discounting a below spot Bitcoin p ($31k) as I described last week; and so, little justification for such high sensitivity to Bitcoin p on way down.
Stock’s relative discount to US peers, has widened by c35% over the past few trading days; making the upside all the more attractive

Appreciate that :)

Very simple.
1) Have a look at North America listed peers market caps and compare 1) their asset bases/PH capacity and 2) margins Compare those two to ARB’s. You will find that from February ARB’s PH will be near 1000. Which is substantial. It’s has high margins - 70% in December. This is amongst the best out there.
So to me zero treason why this should not be in the USD700-900m mcap range looking at peers.

2) work out your P&L forecasts for 2021 as assume a PE multiple. To do that, the main inputs for revenue are a)Bitcoin price 2) Volumes of Bitcoin mined. Multiply the 2. Bitcoin ones was c100 per month on average over past 2 months. From Feb, you should have 70% increase in capacity.
Of course to that costs will rise too.
But this is a heavy fixed cost business, which means small change in Bit pin price has BIG change on operating margins, so net profit and valuation as result.

I have assumed a fair value of around USD700m. I don’t see why this company should not trade at market caps similar to larger peers given its capacity size from February and its superior margins.
Which I think is conservative and it could potentially be of almost usd900m, applying a similar mcap/PH of Riot.
From there I deduct 1) the tax assets and 2) the Bitcoin inventory value they hold.
I then assume a PE multiple, to then back out the implied net income that sustains the valuation. From there I move up the P&L and work the revenue and so Bitcoin price required. This is takes into account the PH increase in Feb.

This is KEY to the investment case.
Please read.

Bitcoin price currently discounted in the shares: $31k, I estimate.
=> in other words, plenty of protection were Bitcoin to correct down; while offering sizeable upside from here at spot Bitcoin; and huge leverage were it to rise from here.
Attractive risk/reward

Following the correction, stock got 25% cheaper relative to US peers compared to yesterday on no fundamental grounds. Expect the gap (up) to close fast.

Tiny mcap, with 5-10x valuation upside conservatively. Nickel assets+ energy storage in UK. The latter alone worth at least 1-2x mcap at current pjct stage, and a multiple of that further down the road. Undervalued play on upcoming explosive green/ESG theme

And this is at current Bitcoin price....

I can see the company achieving the market cap of some of its larger peers considering its high margins; and its upcoming large PH capacity.
Riot which has solid margins (47% at Q3) and trades $1.3bn mcp and so, valued at $0.89m/PH. Applying similar multiple to ARB points to $890m mcap.

At $1900 gold, its flagship gold project generates a massive c40% after tax IRR. And this is in Canada not Africa...
Equity story misunderstood. Stock hugely undervalued on gold, without even accounting for considerable potential from its battery metal prospects.

Broker gets to an NPV of phase 1 of project; equivalent to around 30% of my blue sky estimate.
Stock currently trading at c4% of that.
Rock bottom valuations here, particularly for assets for which offtakes could well be in the cards this year.

Ironveld has:

*30Mt/68.3% Fe
In contrast, Fenix Res. (advanced Fe pjct) has 10.5Mt/64% and trades at $80m mcap

*80Mt/1.12% V2O5
In contrast, Bushveld (producer) has $330m mcap for 550Mt/1.6-2% V2O5

IRON trades below 5% of blue-sky; yet offtakes were at touching distance

IG only allows on spread bet/leverage account.

If it were bad news you wouldn’t sell 1.4m out of >6m of your shareholding.
You’d sell a lot more.

He still has 4.6m options+shares; after the sale today.
Given meteoric rise we be had; what’s the problem of paying himself with some.
Also remember you may want to save some big tax liabilities if shares to go ballistic next year.

I expect monthly revenues from February 2021 onwards at $29k Bitcoin of $5.9m. >3x more than November 2020.
Operating leverage means net profit could be >6x more.
Shares should already be at close to 60p

Significant leverage to Bitcoin price. Valuation sensitivity to change in Bitcoin price: +2% Bitcoin price = +5% to ARB fair value => Beta: 2.5x
That’s illustrative as it obviously assumes accurate discounting of spot Bitcoin in the shares. That’s not the case so far. For me, fair value for Bitcoin at $27k is c£200m mcap,
But gives you an indication of the leverage we have.