DLCR PR Interpretation & $118+ Million Revenues Potential...
To add clarity with how the numbers within the previous DLCR
PR should be interpreted, I called Australia to speak with the DLCR CEO
, Warren Sheppard
courtesy of the phone number provided by EmptyBones
within the post below: https://investorshub.advfn.com/boards/read_msg.aspx?message_id=156237355
Before reading any further, I think all should make sure to read the recent DLCR
PR below to know what I am referring to: https://www.otcmarkets.com/stock/DLCR/news/story?e&id=1621817
After talking to the CEO, I learned that the PR had four different revenue sources
that should be considered.
First, from the second paragraph within the PR, pay attention to the words that I have in bold
regarding the first two revenue sources... Second Paragraph Explanation:
Quote: Revenues Conversion #1 per Second Paragraph:
The first set of agreements is comprised of two rolling purchases orders to plywood factories in PNG (Papua New Guinea) at a max rate of 1000 cubic meters per month each. ...
...The next agreement is with an exporter who will take as much as 4 containers per month (30 cubic meters per container) for export into India, at a rate of $650.00 USD per cubic meter.
2 rolling purchases orders x 1000 cubic meters per month each = 2000 cubic meters per month
2000 cubic meters per month x 12 months = 24000 cubic meters per year
24000 cubic meters per year x $650.00 USD per cubic meter = $15,600,000 Revenues per year Revenues Conversion #2 per Second Paragraph:
4 containers per month x 30 cubic meters per container = 120 cubic meters per month
120 cubic meters per month x 12 months = 1440 cubic meters per year
1440 cubic meters per year x $650.00 USD per cubic meter = $936,000 Revenues from 4 containers per year
Now from the third paragraph within the PR, pay attention to the words that I have in bold
regarding the third revenue source... Third Paragraph Explanation:
Quote: Revenues Conversion #3 per Third Paragraph:
...Additionally, the 5-year agreement with the landowner covers 50,000 hectares and allows DLCR to sign another 7 landowner groups each with a minimum of 50,000 hectares each. This is a huge development for the company moving forward as there will no longer be a review period after each year, allowing for continuous operations and continuous revenue generation.
This paragraph is where it gets most interesting. Per the CEO, there is a total of 65000 cubic meters per year that can come from a minimum of 2 or a maximum of 3 landowner groups. So let's remain conservative and consider 3 to show the magnitude of this deal. That means that...
65000 cubic meters per year ÷ 3 landowner groups = 21667 per landowner group
Now let's consider if they were to get all 7 landowner groups as they believe they will. Then consider below...
21667 cubic meters per landowner group x 7 landowner groups = 151669 total cubic meters
151669 total cubic meters x $650.00 USD per cubic meter = $98,584,850 Revenues from the 7 landowners
Now from the fourth paragraph within the PR, pay attention to the words that I have in bold
regarding the fourth revenue source... Fourth Paragraph Explanation:
The company has also entered into an agreement with the Senunu Clan - the principle landowners of Senunu Timber area - to file a application to the Forestry Department for a Timber Authority permit, allowing for 5000 cubic meters of round logs to be harvested per year.
5000 cubic meters per year x $650.00 USD per cubic meter = $3,250,000 Revenues
I asked the CEO about the email with the two $200 Million deals that were posted within the forum a long while back and he stated that he was not aware of such emails being generated from him. However, he did confirm the calculations that I have indicated above. He made it clear that their operations is not going to mature in one day and it will take months to mature, but he also confirmed that they now have significant pieces in place to be seriously moving forward with the company's growth. This is why we are now seeing the filings and PRs and tweets from the company.
From the four revenue sources above, we can now deduce the following below for where the company is heading for its growth... Revenue Source #1 = $15,600,000
Revenue Source #2 = $936,000
Revenue Source #3 = $98,584,850
Revenue Source #4 = $3,250,000
That's a total of $118,370,850 in Total Revenues
To add, I asked him what did he believe to be the Net Profit Margin
for their operations. He told me anywhere from 25% to 40%
for their Net Profit Margin
. Even at a 25% Net Profit Margin
, that warrants $29,592,712 of Net Income
could potentially exist once things mature to such levels of completion. Now let's derive an Earnings Per Share (EPS)
to help derive a potential
valuation for DLCR
The Outstanding Shares (OS)
is still 443,354,541 shares
and has been the same since early 2018: https://www.otcmarkets.com/stock/DLCR/security
If anything changes with the number for the OS
or any other variable that I used above or below, then simply use the Substitution Property
to substitute out or replace that variable with the changed variable.
$29,592,712 Net Income ÷ 443,354,541 shares (OS) = .067 EPS
I'm going to presume a conservative PE Ratio
for the Paper/Forest Products Industry
which can be confirmed to be such from the link below: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/pedata.html
For those new for understanding what a P/E Ratio
is and key dynamics as it is referred to being the growth rate for a stock as it exists within its particular industry, read the links below that hopefully will help one to see how it's used to 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
.067 EPS x 20.07 PE Ratio = $1.34 per share valuation
When I spoke to the CEO about the S-1 and the shares being offered at .0003 per share, he said that there is absolutely no way he is selling shares down in that area. His intentions are to come up with financing to either keep any dilution from entering or sell shares somewhere into the pennies after more have mature to minimize any kind of potential future dilution.
Example, to raise the $500,000 indicated from the S-1, to selling 10,000,000 shares at .05 would equate to the $500,000 and would very much minimize the dilution to only an added 10,000,000 shares to the OS.
Please understand, this post is not to get people to think that DLCR
is going to hit this price soon, but if they execute on their business objectives, and if they can keep the OS in this area, then I think it has a chance to getting somewhere close at worst.