Good Morning from Budapest!
What a great quarterly report!
I have crunched some numbers with the current and historical revs, gross profit, costs, O/S and projected them into end of 2015. From what I see, this company can turn a net profit by Q1 of 2015 at the latest. Debt has been providing them a HEFTY return, given 67% gross profit margin, and has absolutely catalyzed their success. Fixed costs seem to be hovering around $900k per quarter at this point. As such, using the debt to scale up their operations will allow them to eclipse those fixed costs much sooner than just growing organically. I would say they will be profitable 2-3 years EARLIER by operating with debt, and they will be much larger, able to combat and possibly absorb the competition in this sector. With revenue growth in line with what the CEO has stated, as well as what my analysis is projecting, in 2015 we can expect to see annual net profit of roughly $4 million and revenues of at least $9.98m. These numbers are only based on past quarters, and do not really account for new developments/setbacks. See my 2015 revenue projections below, and Uma if I am right I expect four quad coils! ;)
Q1-2015 $1,947,590.05
Q2-2015 $2,274,962.53
Q3-2015 $2,657,363.38
Q4-2015 $3,104,042.40
What does this mean for share price? Long term share price, that is. Flippers and dreamers want this to go to $1 Monday, but that wont happen. Someday it will be there, though. What this report has told me is that we are not only surviving, we are thriving! Assigning a 6x Price to Sales ratio, over the long term one should expect the market cap to approach $59.88m. At roughly 430m shares outstanding that gives PPS of $0.14. Let's assume the shares increase to 600m over the next year. PPS is still $0.10. Looking at it another way, if they indeed achieve the aforementioned net profit by end of next year, they are looking at an EPS of between $0.006 and $0.009 depending on O/S. Assigning a P/E ratio of 20, this gives a target range of $0.13 to $0.18.
As stock prices should reflect market expectations in the long run, in my opinion this stock is worth $0.10 to $0.18 today.I expect to be trading around that price by end of January if we can turn around starting Monday. I know several buying groups who are on the sidelines, eagerly waiting for confirmation of a bottom. It is nice to see some old stalwarts giving their nod of approval again, and last time I checked Wolf's group is also a potential buyer as of Monday. Once bottom is confirmed, the new money will come. Weaker hands who got flushed this week will be paying a premium to buy their old shares back. I've heard some ppl say they will buy when it gets above $0.10 again. This tells me the biggest catalysts we have right now are actually PPS-related. Smart ppl are loading down here, but most people aren't smart first, they're emotional first. Each mental resistance that is broken will bring in new buyers. I think they are .01, .02, .03, .05, .08, .10, .12, .15, and .18. Hoping to take out the first two next week, and then work on the rest into spring. Good luck!
AI
