Sulja Bros. Building Supplies, Ltd (SLJB)

[jerseyboy]

MY ATTEMPT AT AN ANALYTICAL SHARE PRICE VALUATION:

Good question. Let's see where the numbers say we will go. With a big caveat that there are many unknowns here, let's begin.

Price based on FY 2006 results: Petar says the audited net income of consolidated Sulja will come out to be $15,879,839. With an outstanding share base of 500,000,000, that yields earnings per share of $.0317. The pro forma revenue growth rate for 2007 over 2006 is 372% (pre SAM acquisition). With this kind of growth rate, I feel a P/E of at least 20 is warranted, which would give this equity a valuation of at least $.64 per share.

Price based on FY 2007 pro forma results (pre SAM acquisition): The pre-tax income as stated on the 2007 pro formas is $93,951,965. Using the 39% tax rate they experienced in 2006, the net income comes out to $.1146 per share, and assigning the same P/E of 20 used in 2006's analysis yields a valuation of $2.29 per share.

Thus, on a conservative basis, the appropriate range of prices for this equity would be anywhere from a low range of $.64 to a high range of $2.29, admittedly not factoring in the growth from the SAM acquisition or other projects which may prove accretive to the 2007 results. In any event, this stock appears to be severely undervalued at this time.