Post by
lifeisgood1010 on Sep 24, 2024 8:18am
The beauty of these contract addition...
Is that the addition to the Lilly contract is again for phase 2.
ADF as now won phase 1, phase 2 and two addition to phase 2.
At the AGM, i was told that ADF deals directly with Lilly.They don't go
through the project manager.They told me that Lilly likes very much the
work being done by them.
Phase 3 was announced on May 27th 2024.It will be massive.
It's a 5.3 billion US$ or 7.2 billion Canadian$ project.
If you read the MDA, ADF says and i quote
"Generally, structural steel accounts for about 10% to 20% of a project’s total cost, depending on the project’s nature"
So lets be conservative and use the lower 10%.This could be a 720 million CDN$ contract.
It took 12 months between Lilly announcement of phase1 and ADf announcement of the contract winning.
It could /should take at least 12 months for phase 3 since it's much bigger than phase 1
This would take us in the vincinity of next year AGM or a few month after.
This is pur speculation on my part but i think some investors are selling because
they think that the 35 million delay is tied to Northvolt.
Is it Northvolt?, i don't know but this is not a concern to me.
Like i wrote previously, the order book is very strong and there will be many addition going foreward.
But most importantly is the profitability of this company.
Once this correction over, and it will, we will see a much better valuation of our share.
How long will it take?, again i don't know.
But what i do know is that this company is worth much more than $11
I think they will earn more than $1.75 this year.
And if they do the right capital allocation next year, we could see EPS north of $2
Even though some(not all) of these contract addition were included in the July order book,
We could/should see a positive day.
But i am not invested in ADF for daily, or even monthly price movement.
I'm in for the long run. I did a big mistake in March selling 80% of my position (40,000 shares)
at $9.40.These share had been bought below $2
Now i am rebuilding my position.At a higher price then what i sold them.
Like i said, this was a big mistake on my part, sold too early and now paying more to buy them back.
The key to this announcement is that they once again won work with Lilly and it's on phase 2
Wait next year, if they win phase 3(high probability.).