The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
So I make it:
Sales/revenue: $[90,268,200 ]
Costs including tax, interest, Dep & Amor.: $54.2mm
Net Profit: $35,983,200
Based on stated break even of $35 bbl (which I`m assuming includes all cash outflows)
$35 * [4,700 (bopd) * 330 (days)= 1,551,000) = $54.2mm
That means Paul used a spot of $58 to arrive at those sales assuming 90% efficiency.
Everything not in [ ] is stated in the presentation.
If the FCF/net profit of $36m is based on av. spot price of $58, then even that FCF number looks on the low side?
GLA
I thought it might be fun to try to put an income statement together. (NB: Paul is estimating FCF of $36m but for simplicity I will assume that number as net profit (I know profit and FCF are not the same of course).
So, assuming an average spot price of $75 and annual production of 1,551,000 (derived from 4700 BOPD * 90% efficiency ie 330 days) gives sales of $116,325,000. If net profit is $36m then that leaves all in costs of $80.3m.
I`m interested to break that down into (a) cost of sale; (b) operating costs including depreciation/amortisation; (c) interest; (d) tax.
Hi Rift - I agree! My name is not Mr Market though!!
AET is a gift is my view. I have made it my number 1 holding. SLP now number 2.
In this for the long term.
Feels to me Paul is on a mission and has a point to prove. He and the team are out of the blocks and up and running.
Momentum will build, but it might need a catalyst to do it.
Either Mr Market is wrong or we are all wrong. We cannot both be right. Markets are both inefficient and efficient but not at the same time.
Lots of conditions precedent to the contracts closing.
Perhaps completion will be a catalyst. The Directors buy -ins don`t appear to have been.
GLA
what is your exit target price if you don`t mind me asking OR leave as is and let the grandkids inherit lol??!
Okay, thanks for that. It clarifies. The point made is "EXPECTED supply vs demand" (forgive the caps - only way to emphasise). One cannot just look at the graph and see the bar increasing, one has to ask was the rate of change higher or lower than "expected".
However, that conjures up a whole new dimension of uncertainty: what is the expected increase? (assuming an increase) and whose expectations?
And where to find that data? Be interesting to look at the monthly chart and map it onto the monthly sales. Have you done this and is there a correlation? I know that is not proof. There is no such thing. But it would be significant.
Maybe I`m just being dumb as f here. ...(would not be the 1st time)
If car sales are UP in China well that means more cars are being produced /sold
= more materials needed (obvs)
= one of the key materials is ...PGMs.
If it were the reverse, I`d be worried. ...
If I`m selling bananas and nobody is coming to my stall to buy them, I aint gonna be placing orders at the banana factory, who in turn ain`t gonna be placing orders at the banana plantation.
What am I missing ???!!!
Nothing wrong with crude! (no pun intended)
KISS. The simpler the better.
All the fancy DCF or NPV in the world mean diddly if one of the assumptions is wrong.
I will go with your logic cada dia y dobles los Dominges :)
GLA
Investor is right.... fair play
Good afternoon
Thank you for your email
We can confirm that as disclosed in the first paragraph, Paul McDade purchased the ordinary shares stated.
Kind regards
Afentra
An error - that they didn`t correct....
Bit doubtful that
but if you say so.
ACN - He is right.
Read the "nature of the transaction"
Today: Gavin Wilson
b. Nature of the transaction Acquisition of Ordinary Shares
Yesterday: Paul McDade
b. Nature of the transaction Conditional award of right to be granted nil cost options
to get some gains - real... not jam tomorrow.
Yesterday 70% up
https://www.youtube.com/watch?v=X_L8VmP8JBw
There are a lot of "conditions precedent" in the contracts. (the CPs). Perhaps this is why there is the hesitancy.
I`m not complaining. More power to load up.
GLA
Rift is right - see page 92 of the Admission Document:
Conversion of Founders Plan awards into Nil Cost Options
6.1.4.1 On each of 16 March 2024, 16 March 2025 and 16 March 2026 (the “First”, “Second” and “Third Measurement Dates” respectively, and each a “Measurement Date”), Founders Plan Awards will convert into Nil Cost Options over Ordinary Shares. The number of Ordinary Shares under any Nil Cost Option into which a Founders Plan Awards will convert will be determined by the Remuneration Committee on the following basis:
70% return in less than 1 year.
FFS, there is no please some people lol!!
why 40p?
Rh makes up about 9% of the basket and 50% of the revenue.
I note that although KIST have FCF of 66.4m the operating cash flows of 34.8m were not sufficient to avoid a loss for y/e 2021, the bulk of the FCF coming through financing activities (debt and equity in other words)
On today`s call, Paul M talked pointedly about FCF and using that as the yardstick for valuation.
I agree. Revenue is vanity, profit is sanity, but cash is reality.
If you ONLY run the FCF of 36m over the next 5 years alone assuming no growth at all and discount back at 15% = 85p.
Even that is conservative.
It is so typical how crappy start-ups with zero hope are doing down rounds at massive projected valuations (cue bankers fees) and this little beauty is valued at a quarter of a quid lol.
GLA
Final word from me. Promise.
Fitch, July 2022, assume Rhodium at :
$13,500/oz in 2022
$7,500/oz in 2023
$6,000/oz in 2024 and
$4,500/oz thereafter
Therein lies the reasoning for negative growth it seems.
Let`s hope they are wrong in their assumptions!
GLA