RE:Back of the Envelope ValuationYou this this BCdude.
Its not going to take 6 months though. This is FINALLY go time. Bears have become bulls.
BCdude wrote: For those who are new here, you've no doubt missed earlier efforts of several to calculate biocloud revenue and/or share price targets. With that in mind, here is my response to one newcomer who was astonished at my prediction for $25.00/share in six months.
Let's start with an assumption, which may or may not turn out to be true. But is is based on the scenario mentioned by Paul during a recent webinar that he expects demand to outstrip supply for at least the first while.
20,000 units x $8,000 CDN (instead of $15,000 as announced, since we'll assume big discounts for volume orders), and multiply this by 6 months. This equals $960 million in revenue for half a year.
Compare that to KNR's 35 million outstanding shares @ $25.00/share = $875 million market cap.
Keep in mind that KNR is in both the ESG and tech sectors, plus will be front and centre as a covid play. What multiple would you recommend in such a scenario?
My multiple would be 1.5x to be conservative, but you could justify 2x or perhaps even 3x revenue. Other players in the smart buildings space trade as high as 4-5x revenue.
So, let's calculate shall we?
1.5 x $960 million = $1.44 billion market cap
That actually puts the stock price at $41.00/share for fair value, based on half a year's biocloud revenue. Keep in mind this doesn't include their existing smart buildings business, Toyota contract, or any biocloud replacement cartridges or servicing revenue.
Which is why I feel comfortable predicting $25.00/share in six months time. :)
This is likely a conservative estimate if initial demand exceeds supply, as Paul has alluded to.
GLTA