RoX's Investment Forum

[cleverrox]

AYSI in a nutshell.

AYSI sells wear plate for heavy mining equipment in Australia. The iron ore mining business in particular is their customer. Iron ore prices and mining are skyrocketing due to demand from China.

Alloy Steel has a patented product that is reportedly the best wear plate out there. They have problems keeping up with demand for their product in most quarters. A year ago they started construction of a 2nd mill that will more than double their production capacity. It should be running test runs this month and should be fully operational in August or earlier.

Right now they can potentially get $4.6M revenue out of the 1st mill. The 2nd mill should outproduce the first because it has better equipment. On top of this they are bringing in a crane to speed production.

Management owns 70%+ of outstanding shares and has not issued a share in years. They have $1M cash stockpiled and should start rapidly increasing that unless they start construction on a 3rd mill.

With both mills going full blast they should range $0.10 to $0.20 a quarter with the 43% - 58% gross margins. If SuperArcoPlate increases margins then that profit could go up.

I would conservatively give AYSI a 1 year target of $6 or 10x expected EPS of $0.15 a quarter.