CTW.V CURRENT PRICE:
.155
CTW.V TARGET PRICE:
.70
UPSIDE POTENTIAL: 351.6%
GAIN SINCE INCEPTION: 34.8%
SHARES OUTSTANDING: 122,776,114
March 22, 2012 - Toronto, ON - TSX News reports that Catch the Wind Ltd. (TSXV:CTW), providers of laser-based wind sensor products and technology, traded up 7% on Thursday following the signing of a sales agreement with enXco to outfit their wind turbines with Catch the Wind's Optical Control System. The 5 units sold are expected to be installed in April, meaning the revenue will hit Q2 2012 results. At a price of $125,000 per unit, that will be $625,000 in total revenue for the company just from this transaction with 60% gross margin. The company's conference call on February 14th states that the breakeven revenue figure per quarter is $4.5M with expectations to hit that number in Q3 of this year.
The units are expected to come down in price as the company reaches greater economies of scale. If they are sold for an average of $100,000 the company would need only 45 units sold per quarter to breakeven.
Reviewing an excellent post from the Stockhouse message boards by smigel88 below shows the summary of units sold to date, company projections of 600 units expected to be sold for 2012 and an optimistic target that could lead to $16.66 per share in a few years. Having a look at enXco's project map shows that the company has over 1,000 turbines that could potentially be fitted with Catch the Wind's technology, driving a 10-20% increase in energy output for each unit. With the purchase announced today, enXco becomes Catch the Wind's second repeat customer so the economic benefit of the first fitted turbine must have been demonstrated. The chances that the they will eventually fit all current and future turbines with Catch the Wind's technology has greatly increased. Any announcement of a sales agreement in the hundreds of units will immediately positively impact the stock price to multiples of its current price:
"A summary of units sold since the start of 2010:
JUNE 28, 2010: 2 to BP Wind
JULY 20, 2010: 1 to enXco
SEPT 1 , 2010: 47 (over 4 years) to AXYS Technologies
MAY 12, 2011: 20 to TransAlta
MAY 16, 2011: 1 unit to Illinois Institute of Technology
JUNE 1, 2011: 1 unit to Kruger Energy Port Alma
JUNE 6, 2011: 6 units to Invenergy Wind LLC
JUNE 6, 2011: 6 units to Boralex
JUNE 13, 2011: 58 (over 5 years) to AXYS Technologies (update to last agreement)
JULY 4, 2011: 1 unit with TechnoCentre éolien (not a sale but agreement)
AUG 25, 2011: 1 unit leased to unknown manufacturer
FEB 6, 2012: 5 units Saturn Power (outfits entire wind farm ie no trial)
MAR 19, 2012: CTW outsources production to Sanmina-SCI
Total: 43 units sold + agreement for 58 more + follow on orders thay may be coming in the future.
From Q1 2011 conference call guidance was:
2011: 45 units
2012: 600 units
2013: 1000+ units
Some of my own assumptions/projections:
Global wind market size of 940,000 MW by 2025 (11.6% CAGR from 2010) [source below *]
Global wind market size as of 2010: 188,100 MW installed [source below *]
Assume average turbine size 2MW (ie 94,000 turbines installed in 2010)
Assume 10% of market captured. Market growing at 11.6%. (there will be competitors)
Assume no portion of existing market only new turbines (conservative)
Ramp up to 10% of total market share
2014: 3,000 units
2015: 5,000 units
2016: 20,000 units
Continue to get 10% market share and 11.6% market growth
2017: 20,266 units
2018: 22,617 units
2019: 25,241 units
2020: 28,169 units
2021: 31,436 units
2022: 35,083 units
By 2016 20,000 units sold at $.125M each = $2500M revenue
Assume 10% net profit margins = $250M net income
Assume p/e of 10 (since growth rate is around 10 ie PEG = 1) = market cap of $2500M ($2.5B) in 2016
$2500M / 150M (fully diluted) shares = $16.66 price per share
$16.66 /
.15 = 111 X in 5 years!
To make it more conservative:
Assume due to competition and economies of scale selling price is reduced to $62,500 / unit
Reduces share price in 2016 to $8.33 or 55 X in 5 years!
Remember CTW traded at $2/share 2 years ago when the outlook was much less clear.
Let me know what you think please.
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reposting this. thanks for that insight on how fast this company is growing and generating huge revenues."
TSX News has a 70 cent target for CTW.