RE:Exclusive cielo waste solutions interview with McWhirter $8.00 in 1 year is not realistic. And his assumptions are flawed. His Aldersyde ebitda is too high. The 7% construction mgmt fees will not produce much ebitda as there will be expenses associated with the revenues. Cost + 10% is the norm for construction mgmt. The JV plants are 4000 lph not 10,000 lph. These plants will take 18 months to build.
| | Aldersyde | Aldersyde exp. |
| Litre/hr | 1,000 | 2,000 |
| Litres/yr | 8,184,000 | 16,368,000 |
| $/litre | 1.6 | 1.6 |
| Revenue | 13,094,400 | 26,188,800 |
| 50% ebitda | 6,547,200 | 13,094,400 |
| | | |
ESG: Could you explain to my readers how you came to the conclusion on the $8 CAD target price and on what time span is that target price made ?
Robert: My insight, it’s NOT a recommendation, is that Cielo could reach $8 CAD within the next 12 months.
ESG comment: This interview was done before Cielo announced the 10 million CAD loan for the new Edmonton facility and also before the update provided above on the Desulfurization process .
Robert Continues: The Aldersyde facility might, by my calculations produce $11 million CAD in EBITDA in 2021 with a run rate by producing 1000 LPH (LPH=Liters per hour , 1 liter = 0.26 gallons) .The potential doubling of capacity at Aldersyde might take that to 2000 LPH for potentially $ 20 million CAD in annual EBITDA.
Cielo has joint venture partners ready to build 5 facilities at $50 million CAD each and $250 million CAD in total. Cielo is expected to receive a 7 % construction royalty on that capex which equates to $8 million CAD per year. Together with the other $20 million we are looking at close to $30 million CAD in potential EBITDA .
With a 15 times EBITDA multiple, on that you get a potential $450 million CAD market cap.
If you then look at the 5 joint venture plants producing 10,000 LPH that’s about 400 million liters a year or 105 million US gallons per year . One gallon of renewable diesel is about $6.68 CAD ($1.67 CAD per Liter) equalling a total potential revenue of $668 million CAD per year. Cielo is expected to receive 30 % of the profit on these 5 plants until they’re paid off and doesn’t have to invest any money since that’s provided by the joint venture partners. After the facility is paid off Cielo is expected to get 50 % of the profit.
We still haven’t taken into account Cielo’s own planned Edmonton facility which is expected to bring in revenues of $55 million CAD per year that Cielo plans to own without joint venture partners.
The demand is clearly there for Cielo’s products. Barclays has stated that there is a demand of close to 700 million liters (185 million gallons) of renewable diesel in Canada alone. That equals 22 potential Cielo plants to put 2 % renewable diesel into Canada’s on road diesel fuel market.
Don (CEO of Cielo) has said he gets calls every day to build plants around the world so clearly there appears to be global demand!
ESGFIREAT40 wrote:
Do not miss this exclusive interview with investor Robert Mcwhirter on his investment in Cielo Waste Solutions!