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Michaeljob

5,209 Posts.

3267

30/05/15

05:35

Post #: 15380949
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Originally posted by Toxxxic ↑

Lets look at a scenario for a 1% market share which I think is optimistic but achievable , at least in the near term future (say 3 years). In this (overly simplistic) scenario we see ~$45 million in revenue. Anyone have any ideas regarding margins? I'm going to assume 10% based on RBC's analysis of the S&P 500 energy sectors profit margins:

View attachment 68774

$45 million in revenue at a 10% margin gives $4.5 million in earnings. Apply a P/E ration of 25 for a rapidly growing company (probably conservative) and we get market cap of $112 million.

In this scenario there is still plenty of room for share price growth, perhaps even a doubling. That is why my first up share price target is ~3c, possibly even that gap fill up to 3.3c.

After that it's going to depend totally on how the company's propants are received. If we have orders flying in the door then sky's your limit really, but its impossible to tell from this early stage. With the like of EAS on board I wouldn't bet against this having a long, sustained, LNG type run.

Looking forward to the journey.

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With the revenue I calculated above coming from royalties I would expect that the margin would be quite a bit higher than 10%. Perhaps more like 80%?

CKK Price at posting: 1.6¢ Sentiment: Buy Disclosure: Held
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0 Great analysis

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