RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:anaylst Agreed they will need to service and pay their debt.
My $200M per year is based on 40,000kg being sold at an average of $5 per gram. Profit is based on 70% margin on revenues (they did 64% cash margin on Q4 after you remove the "one time" adjustments) and will only get leaner as they produce more. Then I factored in $60M operating cost per year (Q4 was $12M operating cost, again after removing one time expenses). I gave them $15M per quarter operating cost. Obviously operating costs will increase but further efficiencies will also be found. That gives you $100M per year profit that can be utilized towards paying down their long term liabilities.
Again, the $70M market cap has lots of room to grow consideirng the revenue they can make out of a fully funded facility, as well as their valuation multiplier is among the lowest of the sector.
watchmeplz wrote: In my opinion, So your forecasting a 50% net profit? A normal company is lucky to have a 10% net profit and that's with no royalties (aka. Provincial,federal,municipal tax) do you think there is a reason canopy leveraged themselves out of facilities, same reason they don't use all the rooms here? How do you say they need no capex? What if they need to divert to the only somewhat profitable market in the USA, you think the bank will let them do any kind of financing? Hellllllll no, so you think this is all magically going to come from net profit while still servicing that huge debt? Are you serious?
theTransporter wrote: Current valuation isn't pricing in the fully funded facility pumping out and selling 100% of what it can produce. They presently ARE NOT pumping out and selling 100% of what they can produce. There is quite some growth in revenue to be had out of the existing fully funded facility without having to spend any more cap-X into achieving that desired result.
$9M quarter is still a fraction of what they can produce and sell, and the market is valuating them as a company that has demonstrated a shrinking QoQ over the last few quarters. Valuation will only increase when they prove a reversal with QoQ growth that is sustainable for several quarters. The market knows what this facility can produce, it just wants the company to prove it is able to SELL what it can produce. It's a "show me and then we'll reward you" situation.
If they can sell $50M per quarter (which is what I predict as a maximum revenue out of the current facility), which is $200M per year, and can clear $100M profit on that, you're talling me a $70M valuation has no room to grow?
watchmeplz wrote: In my opinion, so what your telling me is there's NO growth opportunities and furthermore have a debt that secures the entire facility but still sitting at 70 million market cap valuation? is that what your saying? You need growth to justify market cap my man, or a net that proves valuation, hoop dreams that you got involved with, was last years news, nows the 'prove it' phase and not one canadian based LP can, telling you something no?
theTransporter wrote: No cap-x spending required until they can sell 100% of what they can physically produce out of their Kincardin facility without any increases in inventory.
If they can do the above, they can easily afford any cap-x expenditures for another facility as required.