Verde Agritech Ltd T.NPK

Please help! My conservative calc come to $96 per share. WTF

[KirklandX]

Please help! What am I missing?

 

Forget 50mt of production pa. 

Forgot even 23mt production pa. 

Forget the current potash / MOP spot price of US$1,250. 

 

I just wanted to do some rough thoughts on near term achievable production rates. Also using a sensible potash / MOP price. 

 

So simple inputs:

• Production rate,13mt (this is the planned installed production rate that has already been announced with Plant 3 in the pipeline. This rate accounts for roughly 10% of the Brazilian market. Very achievable). 
• Price for a tonne of basic Verde product, US$90 / C$117. I’m taking this as a CIF price. i.e. Verde must pay cost to transport product to farmer (this price is taken from today’s announcement, modelling out a long term reference price. This price is a 70% discount of today’s spot price)
• Transport cost for Verde to ship a tonnes of produce to farm, C$55 (for the last number of quarters this cost has been around C$40/45 per tonne. So increasing the cost to be conservative). 

 

So:

 

1. Operational revenue pa = 13mt production x (sales price C$117 - transport cost C$55) = 13m x 62 = C$806m net revenue pa. 

 

1. To get to a valuation, what revenue multiple should be applied? For a mature mining business you can normally value off a x3/5 multiple. But this is a growth company, with an almost infinite resource, growing to 50mt? To be conservative let’s use a x6 multiple. So valuation is 6 x C$806m = C$4.8bn 

 

1. So value per share = val C$4.8bn / no. of shares 50m = C$96 per shares.

 

So:

• using currently planned and announced production capacity
• using a sensible long term product price (70% discount to current spot)
• capex modest and achievable 
• no uplift for high value products, BAKS etc
• modest growth multiple to size of opportunity 
• value per share coming to C$96. 

 

• WTF !! Please help. What have I missed? C$96 per share!!!!!!!!

[GeneralAladeen]

70% discount seems punitive?? Are you assuming war is ending and supply shocks end?? Will be bit before we get to those numbers on supply and discount. $96 sounds pretty doable. 

[KirklandX]

I agree. I just pulled the number directly from the study released today. Seems sensible, well backed by data, and conservative. Why do more work on that input if someone has already put the hardwork in, and done it for you!? I'm just blown away by the per share valuation this opportunity seems to reflect. Even if you chop back the numbers pretty aggresssibely. 

[mjh9413]

Why not look at the Audited Financials on SEDAR and take it from their. Maybe you forgot to deduct costs of prod which are about 26% of revs. Anway the company's own projections are pretty definive and can be used to calculate all sorts of tonnage increases Period                         Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022

[rodrabal]

Sell on news I guess. Probably consolidate back to the 8.50 area. It’s had a good run over the last month or so. But I’m staying long.