What is the value of ADB?What is the proper value of ADB?
How do we evaluate the value for an junior energy company like ADB?
It has about 250BCF of natural gas resources (about 1/2 are reserves), and it is expected to produce about $0.09 revenue per year per share by the end of 2005, and next year, the revenue to be 10 fold or $0.9 per share per year revenue. What is the proper price/sale ratio? Other CBM companies are selling at P/S ratio around 18 to 20 at this time. If we use P/S of 20, the company should be selling at $1.8, and the next year, it should be selling at $18.
If we use $1 per reserve, the company probably worth more than $3 right now, and more resources will become reserve in the future. Based on the natural reserve, it should be north of $4 within 6 months or so.
Other issues need to consider. Is the company going to raise more money? If yes, are they going to sell more shares or are they going to raise debt? If they are selling shares, how many shares are they going to sell?