3Power Energy Group Inc (PSPW)

[rookiecrd1]

PSPW's Post Merger Valuation - Must Read

Ok, I thought I'd update the Possible Revenues this company could see in the not too distant future, as well as help us all understand how this company could be valued. There are 2 simple ways to look at this. #1 is the value of the actual power plants this company has in the pipeline right now, or #2, the value of the Power they will sell from the power plants on a annual recurring basis. First I'll look at the Value of the projects, and then the value of the power they will control. Both could be used in different ways to give PSPW a solid valuation:

#1 Value of PSPW's Pipeline of Projects from Past PRs

Total shares outstanding: 109,722,743 Outstanding Shares (Confirmed Yesterday)

Now, what we do know:

* $5.35-billion-dollar Contract Owned by Rudana: with the Nation of Albania to build Hydro Powered Plants. The Last 8k issued said that PSPW had hydro projects in Albania. Rudana owns a large portion of PSPW currently, and are the ones that put this entire merger and company together. It is my belief that they will be contributing the entire $5.35 billion project to PSPW, as it only makes sense. Officials in Albania would want one company working on this project, not multiple companies, Rudana owns the entire contract. Why in the world would they give the projects to any other company other then PSPW which they currently own a gigantic stake in? The wouldn't!

* Seawind Projects worth $ Billions: Gigawatts of projects. They have major projects set to go up in Italy, France, Turkey, Nicaragua, and Chile, as well as other ares of Europe. In order for this merger to have been worth Rudana's while Seawind must be contributing at least $5 billion in projects to the new 3Power as well. In fact if you look at the 3Power website you can confirmed that a total of 2.5 GW of projects are in the total pipeline which spans three continents. To confirm the valuation, to build a 2.5 GW Wind power plant would cost anywhere from $4-$10 billion) depending on the area and technology used.

* Offers to other companies for shares: http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20100603005053&newsLang=en

Prime Sun Power Inc. (OTCBB/New York: PSPW, Berlin Xetra/Frankfurt: PSD), announced today that it has entered into a Strategic Investment Agreement with Bangkok Solar Power Co., Ltd. (“BSP”), a leading manufacturer of PV solar modules and engineering, procurement, construction, and installation (“EPCI”) contractor to acquire up to 6,639,063 shares of PSP Common Stock at price of €7.73 per share. All shares issued to BSP will be subject to a lock-up period until December 31, 2013.

They are offering them shares for $10.73 USD. Usually such a deal would be given to a company at a share price under where they expect this thing to go.

Just read the names involved in these companies, and try and come up with one point to bash on. Any possible negative aspects of this deal have been disspelled by longs here.

Valuation:
Post merger OS is about 109 million shares

Let's say that these contracts that both Rudana and Seawind are contributing are worth approximately $11 billion (Likely more), and will be carried out over the next 5 years. That equates to revenues of $2.2 billion per year. Let's use no multiplier here just for the sake of us not knowing the full details of everything, or the profit margins. Keep in mind most Renewable energy growth companies will have multipliers in the double digits, and soem even the triple digits:

$2.2 billion / 109 million shares = $20.18 Revenue Per share

This would easily warrant a share price of $20.18 per share. Keep in mind this is with absolutely no Revenue multiplier.


#2 - A Valuation of PSPW based on Power Output:

Although most of the talk here has been about the huge projects that 3 Power will have amounting to 3500 megawatts (with Rudana's Hydro Projects in Albania), I think we are all not totally understanding what this means.

3 Power will be a Power company. They will own and operate all of these projects profiting from selling the power via power purchase agreements with various governments, and power companies.

Let's look at a quick estimate of how much $ in Revenue a 3500 MegaWatt power company can make in a year:

Estimated Average World price for electricity per Megawatt hour: $200
Total Megawatts: 3500
Hours in a Day 24
Days in a year 365

$200 X 3500 X24 X365 = $6.1 billion in yearly recurring Revenues from electricity sales. Of course their power purchase agreements will be less than the going rate but even if they are earning half of that on a yearly recurring basis, this is easily a $50 stock.

$6.1 billion in recurring revenue would equate to $55.96 in revenue per year, per share (6.1 billion / 109 million OS). This would be without any multiplier at all, and based on 0 additional growth. Once these projects are built, they will use future revenue to expand in a market which is growing at an incredibly rapid pace.

The numbers on the sizes of these projects can all be confirmed at the new 3Power Energy Website located at http://www.3powerenergy.com