stervc's projected PPS formula: HMPQ .87 to $2.17+ Potential Valuation on Closing…
for reference this is a post by a fellow shareholder that I found particularly fascinating & intriguing dating back to Monday, 08/21/17 10:24:36
Post #2067 of 5572 Please understand, the fundamental valuation that you are about to read is predicated upon HMPQ closing the deal within the PR below:
Quote:
http://hempamericana.net/ https://www.otcmarkets.com/stock/HMPQ/news/CORRECTION--HempAmericana--Inc--Announces-Strategic-Partnerships?id=167477&b=y CORRECTION: HempAmericana, Inc. Announces Strategic Partnerships
Also, the valuation is going to be predicated upon the deals being closed to where such operations indicated in the above PR are placed under/within HMPQ as a wholly-owned or majority owned subsidiary or structured to where the operational growth of such cannabis/hemp operations can be captured within the HMPQ financials.
Now let’s derive the fundamental valuation for HMPQ.
If the deals above close, there will be two huge revenue streams of growth that must be considered in my opinion of which I will derive below based on the what’s in final negotiations to close in the PR above; the Hemp Cultivation operations and the CBD Oil operations.
Revenues Per Hemp Cultivation Operations
The HMPQ PR below stated… ”The New York partnership will consist of 650 acres of land for growing hemp, with two acres already planted. The property also includes a 50,000 square foot facility in which HempAmericana will operate an onsite extraction lab.
https://www.otcmarkets.com/stock/HMPQ/news/CORRECTION--HempAmericana--Inc--Announces-Strategic-Partnerships?id=167477&b=y I will based the initial valuation for HMPQ upon the two acres of hemp that is already planted. I will show how such logic should be considered if they maximize the entire 650 acres of hemp cultivation. This means that upon closing of this deal, the valuation of HMPQ should be considered a few levels above just being speculation.
The unit of measurement that I will use will be in grams. I will use confirmed data for the… Estimating Adequate Licensed Square Footage for Production that a series of professionals have created as a guide to use (Jonathan Caulkins, BOTEC Analysis, Carnegie Mellon University; Matthew Cohen, TriQ Inc.; Luigi Zamarra):
http://botecanalysis.com/ Estimating Adequate Licensed Square Footage for Production
http://liq.wa.gov/publications/Marijuana/BOTEC%20reports/5a_Cannabis_Yields-Final.pdf ** The data is drawn from a review of the relevant literature and from research and interviews conducted with 16 growers.
** This report finds that indoor and outdoor yields average about 40 grams per square foot per harvest, but with a considerable range.
** Yields per square foot per year can be much higher of course, because there can be multiple harvests per year, particularly for indoor production.
** Indoor production allows 4-6 harvests per year (5 being typical), whereas outdoor production allows only 1-3 harvests per year.
** Thus, production per square foot per year is much higher with indoor growing.
1 Acre = 43560 Square Feet
https://www.google.com/#q=1+acre+%3D+square+feet Marijuana Industry experts estimate that the average price of a gram of medical cannabis is $12 to $15 per gram. We will be conservative and use the $12 per gram figure for this exercise. Remember, I will based this initial valuation for HMPQ upon the 2 acres of hemp that is already planted.
2 Acres x 43,560 Square Foot Per Acre = 87,120 Square Feet
87,120 Square Feet x 40 Grams Per Square Foot = 3,484,800 Grams
3,484,800 Grams x $12.00 Per Gram = $41,817,600 Revenues
BOTEC speculated production cost ranges from $2 to $3 per gram:
http://liq.wa.gov/publications/Marijuana/BOTEC%20reports/8a_Impact_of_tax_scheme_on_price_of_regulated_cannabis-Final.pdf ** The average price of a gram of medical cannabis is $12 per gram.
** That’s roughly around $10 per gram for Net Profit.
3,484,800 Grams x $10.00 Net Per Gram = $34,848,000 Net Income
Outdoor production allows 1-3 harvests per year.
$34,848,000 in Net Production x 1 Harvest Per Year = $34,848,000 Net Income
$34,848,000 in Net Production x 2 Harvest Per Year = $69,696,000 Net Income
$34,848,000 in Net Production x 3 Harvest Per Year = $104,544,000 Net Income
Revenues Per CBD Oil Operations
The HMPQ two PRs below stated… ”The Maine partnership will develop a unique CO2, supercritical, low temperature, super fluid oxygen extraction machine. The partnership will invest hundreds of thousands in the new one-of-a-kind extraction machine that will have a 200+ liter capacity. …and … These partnerships can potentially bring an excess of $400,000.00 a week in revenue into HempAmericana, Inc.”
https://www.otcmarkets.com/stock/HMPQ/news/CORRECTION--HempAmericana--Inc--Announces-Strategic-Partnerships?id=167477&b=y https://www.otcmarkets.com/stock/HMPQ/news/HempAmericana--Inc--Interview-on-Multi-Million-Dollar-CBD-Oil-Partnerships?id=167310&b=y $400,000 x 4 weeks per month = $1,600,000 CBD Oil Revenues Per Month
$1,600,000 Revenues x 12 Months = $19,200,000 CBD Oil Revenues Per Year
I have research previous CBD Oil companies and have seen where the Net Income margins were somewhere far greater than 50% on average. So, I will consider a 60% Net Profit Margin to derive the Net Income from the CBD Oil operations on an annual basis.
$19,200,000 Revenues x .60 = $11,520,000 CBD Oil Net Income
Combined HMPQ Fundamental Valuation Per Hemp Cultivation & CBD Oil
If HMPQ is only able to do one harvest per year, then consider below for Net Income to consider along with CBD Oil production per year:
$34,848,000 = HMPQ Cultivation Net Income
$11,520,000 = HMPQ CBD Oil Net Income
$46,368,000 = HMPQ Total Net Income
To derive a fundamental valuation for HMPQ, we must derive an Earnings Per Share (EPS). To do this, we must use the market wide fundamental formula below:
(I will use the last known/updated OS of 1,065,340,840 Shares for HMPQ as of Aug 2017.)
https://www.otcmarkets.com/stock/HMPQ/profile Net Income ÷ Outstanding Shares (OS) = EPS
$46,368,000 = HMPQ Net Income for 1 Harvest
1,065,340,840 Shares = Outstanding Shares (OS)
$46,368,000 Net Income ÷ 1,065,340,840 Shares (OS) = .0435 EPS
Now we must multiply the EPS by a P/E Ratio to get a Fundamental Valuation for HMPQ. The P/E Ratio is the variable that is multiplied by the EPS to get where a stock should fundamentally trade compared to the other stocks within its Industry or Sector. The links below should help to better understand the P/E Ratio logic as being the growth rate to help assess the fundamental valuation of a stock:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=57154170 http://www.investopedia.com/terms/p/price-earningsratio.asp Within the Marijuana/Cannabis/Hemp Industry, I think it has been fair to consider 20 as conservative P/E Ratio. Please understand, if one chooses to consider a lower number or a higher number, simply use the Substitution Property to replace such variable or any other variable to what you might choose to believe is a more fair variable to consider.
EPS x P/E Ratio = HMPQ Share Price Valuation
.0435 = EPS
20 = P/E Ratio
.0435 EPS x 20 P/E Ratio = .87 HMPQ Share Price Valuation for 1 Harvest
Please, keep in mind, this .87 per share fundamental valuation for HMPQ is only taking into account the only two acres of cultivation and ”not” the 650 acres available for cultivation. I think I’ll let each derive a valuation if they cultivate all the 650 acres… or even half… or even a fourth… or even a tenth… of the 650 acres. I think one gets my point. If not, divide 650 by 2 and then multiply by the .87 per share to get an idea of what a valuation for HMPQ could be if they cultivate the entire 650 acres. HMPQ is tremendously undervalued here at these levels if they close the deals that are in final negotiations.
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Now let’s take into consideration if HMPQ was able to do two harvests per year. Then consider below for Net Income to consider along with CBD Oil production per year:
$34,848,000 in Net Production x 2 Harvests Per Year = $69,696,000 Net Income
$69,696,000 = HMPQ Cultivation Net Income
$11,520,000 = HMPQ CBD Oil Net Income
$81,216,000 = HMPQ Total Net Income
Net Income ÷ Outstanding Shares (OS) = EPS
$81,216,000 = HMPQ Net Income for 2 Harvests
1,065,340,840 Shares = Outstanding Shares (OS)
$81,216,000 Net Income ÷ 1,065,340,840 Shares (OS) = .076 EPS
EPS x P/E Ratio = HMPQ Share Price Valuation
.076 = EPS
20 = P/E Ratio
.076 EPS x 20 P/E Ratio = $1.52 HMPQ Share Price Valuation for 2 Harvests
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Now let’s take into consideration if HMPQ was able to do three harvests per year. Then consider below for Net Income to consider along with CBD Oil production per year:
$34,848,000 in Net Production x 3 Harvests Per Year = $104,544,000 Net Income
$104,544,000 = HMPQ Cultivation Net Income
$11,520,000 = HMPQ CBD Oil Net Income
$116,064,000 = HMPQ Total Net Income
Net Income ÷ Outstanding Shares (OS) = EPS
$116,064,000 = HMPQ Net Income for 3 Harvests
1,065,340,840 Shares = Outstanding Shares (OS)
$116,064,000 Net Income ÷ 1,065,340,840 Shares (OS) = .1089 EPS
EPS x P/E Ratio = HMPQ Share Price Valuation
.1089 = EPS
20 = P/E Ratio
.1089 EPS x 20 P/E Ratio = $2.17 HMPQ Share Price Valuation for 3 Harvests
Please, keep in mind, all of the above fundamental valuations for HMPQ only takes into account only the 2 acres of cultivation and ”not” the 650 acres available for cultivation. I challenge all to do the math for a valuation if they cultivate all the 650 acres… or even half… or even a fourth… or even a tenth… of the 650 acres. Again, I think one gets my point. HMPQ is tremendously undervalued here at these levels if they close the deals that are in final negotiations.
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To all… please understand, this valuation is not the gospel and is not finite. There are many variables that could alter the consideration for better or worse. If anyone has any info that is contrary to the data that I used to derive this valuation, then please simply post such data and links to justify such and use the Substitution Property to derive another valuation to consider. Also use such to replace any variable to one that makes more sense to your likings. Regardless to any differences of data or variables to use, I think it will be very clear that if HMPQ closes these deals that that are in final negotiations, then the newly considered fundamental valuation for HMPQ will be significantly higher than where it currently resides.
To listen to the interview with Salvador Rosillo, HMPQ CEO, please click below:
https://www.youtube.com/watch?v=LxWm1wCj9Bc&feature=youtu.be.
Quote:
http://hempamericana.net/ http://hempamericana.net/stores/ v/r
Sterling