Tst shareholder read this before you sell out at .14This is from a PLI long FD
PPS growth
As a Buffett-minded value investor, what I'm mainly looking for is a sustained high earning growth for a long period of time.
In that regard, this PPPS asset is literally a money printing machine. On top of a life saving one, I mean. :-)
After more than 10 years and 450M$ invested in developing the process, each new protein can be rolled to the market spending only 10-15M$ and 3-4 years. And once you get one Ml of plasma fract capacity, be worth more than 350M$ in sales each, with ridiculously low risk. That's a stunning long term RoI (Return on Investment) of > 1000%.
Protein RoInvestment $400.00 /l x 1 Ml Sales ramp: 25% 50% 75% 100%
Money cost 2014 2015 2016 2017 2018 2019 2020
5.0% IVIG CapEx(M$) $2.0 $4.0 $4.0 $0.0 $0.0 $0.0 $0.0
Net Margins IVIG Sales (M$) $0.0 $0.0 $0.0 $100.0 $200.0 $300.0 $400.0
40.0% IVIG NetEarning $0.0 $0.0 $0.0 $40.0 $80.0 $120.0 $160.0
Actualised Earning -$0.1 -$0.4 $39.1 $78.5 $118.0 $157.4
Actualised CapEx $6.1 $10.4 $10.9 $11.5 $12.0 $12.6
Return on Investment -1.6% -3.9% 357.7% 684.6% 979.3% 1244.2%
Once there's enough proteins engineered in a PPPS cascade, (say 6000$/l and above) it also makes a PPPS plant a very lucrative investment. A brand new green field facility cost about 60M$/100kl of plasma fract capacity and 3 years to be operational. This boasts a very impressive RoI of > 400%.
Plasma Fract Plant Ro Investment
Cost(M)/100kl: $60.0 Proteins: 6 9 12 14
2016 2017 2018 2019 2020 2021 2022
Money cost CapEx (M$) $15.0 $20.0 $25.0 $1.0 $1.0 $1.0 $1.0
5.0% Sales($)/l $6,000.00 $7,000.00 $8,000.00 $9,000.00
Net Margins Sales (M$) $600.0 $700.0 $800.0 $900.0
40.0% NetEarning $240.0 $280.0 $320.0 $360.0
Actualised Earning -$0.8 -$2.5 $234.3 $271.0 $307.5 $343.7
Actualised CapEx $35.8 $62.5 $66.7 $71.0 $75.5 $80.3
Return on Investment -2.1% -4.1% 351.5% 381.7%407.0%427.9%
The out-of-this-world part about PPPS is that the sales resulting from these reinvestments is the PRODUCT of the cascade $/l capacity and plasma fract capacity. In other words the sales and earnings are going to grow at half the SQUARE of the free cash flow you're going to reinvest back into it. I've never seen anything even close to that in 15 years of financial research. Totally unheard of as far as I'm concerned.
And the depth of the pipeline may allow you to apply that growth for little more than 2 cycles of 4 years. Pierre already said in the past there's more than 25 such proteins in the work at PLI, and more than 250 protein-indication waiting their turn. As of now.
The results are given in the following table. They are based on the hypothesis that a cascade is made of at most 14 proteins filter. And that the first 5 proteins are going to be needed in enough volume so that they're going to be used in all the cascade, regardless of the rest of the protein mix in the cascade from plant to plant. (I expect some proteins will be low volume and extracted in only a few plants). I also expect the 2000$/l C1-INH to be used in at least one cascade, and I used a somewhat conservative revenue of 350$/l for all other new proteins (which is the average Pierre has given repeatedly in the past).
PPPS organic growth
Protein average cost: 4 years 10 M$
Protein min sales: 350 M$ 50% Cash flow
100kl plasma fract. plant 3 years 60 M$
Operations 2019 2023 2027
Proteins sold 5 25 90
Distinct protein cascades 1 2 7
Avg sales/litre of plasma $5,600 $9,925 $10,000
Plasma fract. vol. (kl) 10 50 170
Sales (M$) $5,600 $49,625 $170,000
Net cash flow (M$) $2,800 $24,813 $85,000
x4 years (M$) $11,200 $99,250 $340,000
Reinvestment
New proteins 20 65
Proteins cost (M$) $200 $650
Plasma fract. vol.(kl) 40 120
Plasma fract. cost (M$) $2,400 $7,200
Total $2,600 $7,850
% of Net Cash Flow 23.2% 7.9%
EPS $3.75 $39.90 $155.32
The first 2019 column of result is pretty certain based on the info divulged as of now.
The 2023 column is giving a look at the results if the free cash flow is reinvested to develop all of the 25 proteins Pierre already mentioned, plus 4 more Ml of brand new green field plasma fract capacity. That is still quite plausible with what have been already divulged (and necessary just to cover all of the Pg-Wound market). Note that this would result in earnings above 20B$ and put us in the top WW Pharma. No need for 4050.
The last 2027 column err a little further on the speculative side of things just to show what could be possible. It uses the astounding free cash flow to add 65 more proteins (of the > 250 reportedly known ones) and an extra 12 Ml of plasma fract capacity. It would result in earnings of about 80B$ (a yearly earning growth rate of 40% over 4 years) and probably makes of Prometic the largest pharma on earth. :-)
And it's not *that* far fetched... ;-)
Oh and by the way it only uses respectively 23% and 8% of the free cash flow so there's ton left to pay dividend, buyback shares, or competitors... :-D
As a side note, I expect at least the next few M litres of plasma fract capacity to be built with partnership akin to the Hematech and Generium one. But passed 2018, when Prometic will just be flooded with cash flow, it would probably make financial sense that it builds the next 10 M litres of plasma fract capacity by itself