I am not going to waste my time posting here anymore but I will be back early in february when they post the updated share structure and it shows more then 4 billion O/S which will show they are still diluting like crazy.
From the PR released on 9 Oct 07: http://biz.yahoo.com/prnews/071009/latu054.html?.v=101 ** The Company expects to receive a 5% origination fee at the closing and funding of each commercial project. ** Plan includes using 35% of its income following each project funding to buy back stock.
The above information is key to help us derive a “potential” valuation as to where HCPC should fundamentally be trading given the closing/funding of key projects.
Key Variables Revenues From Project = $740,000,000 Income = 5% of $740,000,000 Outstanding Shares (OS) = 2,500,000,000 Shares
EPS = Earnings Per Share PE Ratio = Price to Earnings Ratio
$740,000,000 x .05 = Profit/Income $37,000,000 = Profit/Income
$37,000,000 ÷ 2,500,000,000 = EPS 0.0148 = EPS
.0148 EPS x 12 Conservative PE Ratio = Current Potential HCPC Valuation 0.178 = Current Potential HCPC Valuation
Given the potential valuation above, HCPC could logically be trading in the .178 per share price range. The key reason as to why the HCPC valuation gets better is because of the 35% of Income that will be used to buy back shares to reduce the OS and the Float as from what was previously released in the PR above.
35% of $37,000,000 = Amount to use for Buyback .35 x $37,000,000 = Amount to use for Buyback $12,950,000 = Amount to use for Buyback
Today HCPC closed at .0004 per share. That’s a Market Capital for HCPC of:
.0004 Per Share x 2,500,000,000 (OS) = $1,000,000
From the $12,950,000 amount of profits that could be available for completing the buyback, that is 12.95 times the amount of a greater worth from today’s share price of .0004 per share derived by:
$12,950,000 ÷ $1,000,000 = 12.95 times
So actually, based on the potential reflected above HCPC should be sitting at .0052 Per Share derived by:
.0004 x 12.95 = .0052 Current Potential HCPC Valuation
Here’s where it gets even better. Remember, the $12,950,000 will be used to buyback shares. With that amount, they could more than buyback 2 Billion Shares, but let’s just stick with saying that the company buys back 2 Billion Shares to leave remaining an OS of 500 Million Shares. Now consider below from what will be considered the new valuation considering that the amount to be reported as Income on the Income Statement would be the $37 Million that I mentioned above:
$37,000,000 ÷ 500,000,000 (OS) = EPS 0.074 = EPS
.074 EPS x 12 Conservative PE Ratio = New Current Potential HCPC Valuation 0.89 = New Current Potential HCPC Valuation
The thoughts above could be considered very conservative in nature by some while on the contrary to other. One of the individuals within the forum had actually gone to the HCPC Shareholder’s Meeting a little while ago. He mentioned that the company’s Underwriter believed that HCPC should be trading in the $42.00 to $45.00 per share price range. See the post below: http://investorshub.advfn.com/boards/read_msg.asp?message_id=25261604
That’s very powerful to come from the company’s Underwriter at the company’s Shareholder Meeting. Heck, even if he is only a fraction of a percent to be correct, that would land HCPC to be somewhere in the pennies.
The above thoughts should be considered by all as “potential” Fundamental Valuation and not “actual” Fundamental Valuation. It will be up to HCPC to confirm the “actual” valuation that many of us believe. Please note though that we all buy stocks because of the potential valuation that is revealed to give us a sense of feeling that we have gotten in early. I am thinking that HCPC will be gaining new investors everyday that will share that same feeling daily.
From the variety of different ways to consider the potential for HCPC, no matter how you view it, we should be trading somewhere in the pennies. IMHO
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