Member Info for rob295

What we know: http://www.fouryearsgo.org/2011/03/04/feature/smith-electric-vehicles-4-year-goal/ "Hansel tells of how the FOUR YEARS. GO. timeline has stretched his company’s thinking about how to accelerate a shift from diesel to electric-powered vehicles. Inspired by the 4-year timeline, Smith Electric intends to put 100,000 electric trucks on the road in 4 years. This is 10% of the national objective recently announced by President Obama – to produce 1 million electric vehicles over the next 4 years." We can do 1,200 trucks per shift per plant per year I believe (king of green radio interview). So by the 4th year we need 42 plants on two shifts. Now factory set up costs we debated before and the consensus was that you could probably set up factories on lease terms at about £5m a pot plus enough working capital to see you through to profitability. I'd say we're setting up at least 10 plants or so in 2011, attempting to profit in 2012 and early 2013, launching an IPO in 2013 and setting up the rest of the factories by the end of 2014. It's the only strategy that fits the numbers. What should be realised is that the company is thinking big. 42 plants suggests that they are going to set up a base in Europe as well using SEVUK.

You need a fair bit of bottle to ride out the slumps, but to be fair the interview with Brian Hansel was what matter for me buying in here even though I left out before. We both know the sort of response you get when you post something positive in times of very low SP.

A quick trip might not be on the cards. There will be waves of buyers and sellers depending on whether those clued in have money and hand and whether those not clued in sell out. Might take a series and rise of falls over a reasonable time period to see us hit where we should be. We both know well enough by now that the market doesn't always get it right.

If I can quote myself from page 6 (currently so 6 back) "This values our 32.2% stake at $54.5m or £36.3m". Given other companies it wouldn't seem unfair to place a speculative £10-20m value on Tanfields core business. This should put us at £46.3-56.3m, which give a share price of 49.3p to 59.9p. So value wise we should be in the 50s, no doubt about that. What will be interesting is if the value of SEV via us goes up given that we are now likely to be the only route into the company before a potentially lucrative IPO. If the first round of expansion goes well, perhaps we'll see some progress in the SP here based on the value of our stake being lucrative if an IPO does happen.

Good bit of information there. Looks good: Range of operation ≥ 200 km Hydrogen refuelling in 5 minutes The good thing about this idea would be that it could be offered alongside. If you want a general run around truck, most will do, but people will pay a bit extra for distance. This could do well. Would be interesting to know how many times you have to refuel with hydrogen each 200km as presumably then the battery goes. I don't think it can make or break the company, but it might add another useful line so you never have to say "oh, we don't actually go that far in one trip".

Good few links there. I imagine we might be able to see a bit more coming from all of the Table of Twenty customers. These should cover the first expansion. They seem to have checked the demand before listing. Now we just have to hope these customers go through with it, but they all seem to fully understand the benefits and the company has talked them through all they key points. Will be great to find out exactly what expansion will happen and to see the time-scales. Given all the data out there I imagine we'll see an IPO in 2013 after this first expansion has settled, but I guess it depends on demand. It's all about keeping good margins and seeing how far we can push that IPO valuation. The hopes are even for as high as $1bn for this. It's not unrealistic as this is an exciting industry and we have the lead company as far as I can tell.

Don't forget that both companies serve different markets. One has been on the up for a while, but the other is starting to recover. I believe no dividend will be paid out bar a token one.

"the company now holds 32.2% of the outstanding issued shares in SEVUS on a fully diluted basis" This implies we now own fully 100% of this with no further dilution from terms of this raising. As for the exact maths. They raised $58m for what appears to be 34.3% (we now own 32.2% and SEVUS retains 33.5%). From the new listing we can value the company at: 58*100/34.3 = 169.2m This values our 32.2% stake at $54.5m or £36.3m. Which values our core business including all that cash ($5m of which we were just paid) at £2m. The big moment is the IPO. By this point we'll have say about 10 factories working profitably looking for a second round of expansion. I can't do much number work due to time, but a ball park value at this point is $500m (we can update this when we get more figures) listing for $100m. If this were to happen then we would lose 20% of our 32.3% stake cutting us back to 25.76% ownership, which is a value of $128.8m for our stake. Then we get long term benefits of holding a great company.

If there is dilution we can build a fairly good picture of what is going on. We can put bounds on this of 30-50% on the basis that they are going to value the business currently at at least $50m so at most this is raising of $50m for 50% making our stake worth $25m and making Tanfield's core business worth $35m. At the other end of the scale the business is valued at about $100m and our stake becomes worth about $55-60m. In the middle they sell 40% of the company for $50m leaving us with a stake worth $37.5m. None of these would be disastrous and given that SEVUS has to be worth at least $50m we own a stake currently valued at $25m or more which will increase for the eventual IPO. Now if this does not affect our stake our stake must be worth in the region of $100m and the company would update us in due course. It does seem strange that we have not been given more on of a listing that would diminish our stake in another company. Taking the worst case scenario (valuing our stake at $25m) we will own 25% of SEVUS. If they were to use this money to make 100,000 trucks a year we're looking at a valuation of about $500m. In this case to launch round two of expansion they would be likely to have an IPO selling 20% of the company for $100m. This would reduce our stake to 20%, but value our stake at $100m. In the best case scenario, we retain 50% and become worth about $200m after the IPO worth $500m to fund the second round of expansion. There's almost no data to work off, but that covers the best and worst case scenarios bar the one where the company is not successful, but note that the raising was launched on the day of the Table of Twenty meeting. Read into that last item what you will.

We can speculate till the second announcement. Then we'll know for sure. My suspicion is that it will be a favourable announcement. All we can be sure of is that post this raising SEVUS will be an exciting company to have a stake in.

Given the current success SEV is having, I'd question it being high risk. I'd say it's very low risk in that our stake in SEV even post dilution should be worth more than this company is currently valued at. For me that's an ideal risk-reward scenario.

http://www.genewscenter.com/Press-Releases/GE-ANNOUNCES-NATIONAL-ELECTRIC-VEHICLE-EXPERIENCE-TOUR-TO-ENGAGE-KEY-STAKEHOLDERS-ON-EV-DEPLOYMENT-STRATEGIES-2f14.aspx Courtesy of a poster on iii - "jbj2009". Just a reminded that interest in EVs is growing.

I think it might also be the case that Smith's customers understand the value of the new Smith group more than general PIs. If you were dealing with a company you could get a stake in cheaply, you'd be tempted to take a chunk if you could. By buying 3% of Tanfield you'd own 1.5% of Smith pre any dilution. Given the potential value of the business the dilution could be less than might be feared leaving a 1% stake, which isn't too scrappy. I don't, however, see an expansion into AWPs. Just doesn't fit. Seems more like a shrewd business move. Hiring EVs has to be exceptionally logical given the money it saves. From the numbers in the interview they seemed to suggest that an owner be saving money after 3 years. Well if you hire you save straight away. In all ways it is fundamentally cheaper to hire an EV rather than a diesel. From this logic, understanding the strategic position of Smith isn't much of a logical step.

Surely we're not expecting much other than damage limitations from results? If the recovery works out in 2011, then it's 2012 when positivity will return since you won't get a full year of positivity for 2011. Nice to see a rise. Always makes you feel better when the numbers are going up.

I may be wrong, but I think this rise is more due to an increased unwillingness to sell than an increased willingness to buy.

The risks aren't substantial when you're owed just over $13m, own 49% on one of the best green technology manufacturers at the moment and have a core business roughly valued at the price of the whole group. If an IPO does happen, it seems unlikely that there won't be an upside. SEVUS is almost certainly going to expand and anyone can do their own calculations on what it should list for if they decide to do a raising. I'm surprised we've heard no expansion news, as they could afford another plant at least and they seem to have sufficient demand. The core business is looking like it will recover especially with the $15m cash boost. However, the main focus of an investment here has to be a way into SEVUS on the cheap. Could be a strong company in the future, mostly because it's at the fore front of it's field. The potential pitfalls can't a long list, so it is a strong proposition. Could be a longer time scale than most expect though.

Seems like an IPO sort of chit chat promotion. Perhaps a summer IPO? Not enough volume of PR to expect much more yet though.

Of course I mean trucks... quite a change that would have meant. Just making it clear that my numbers were for just one shift. A second shift would improve things greatly.

I thought it was 100 buses per month per shift? 100*12*20=24,000. I was trying to do the first shift at a cost of $4m, second shift taking it up to $6m.

$80m total running costs for plants plus say $10m global = $90m. If they could make $5k per truck per year that's $120m revenue a year or $30m in profits. $30m*15=$450m. So on a conservative basis I see an IPO happening valuing the company at $500m. Then even if it costs $200m we we own 49% of $300m or $150m = £100m. So add all the parts: £13.6m cash £15m core business £100m SEVUS and you get £130m ish. Share price = £1.30. And that's with conservative listings. If it were the case that people got carried away on IPOs or if the margins are as good as suggested we might expect as much as $1bn. Dilute this with my more conservative $200m and we have 49% of $800m or $400m=£266m giving us in total about £3 per share. Looks good for now. Still agree with me there?