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iamagenius

6,569 Posts.

470

22/05/16

08:15

Post #: 17833657
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Originally posted by ClownTrader ↑

Hi fellow RAPSTERs,

Much has been said about reigning in the hype etc. I too have utter disdain for baseless ramps.

But let me explain to you why I think that setting a $1 target is selling yourself short.

The population of RAP's current target market is as follows:

Europe: 740million people
US: 300 million
China: 1.35 billion

Current combined population of these is 2.4 billion people.

In a world population of 7 billion, the recent RAP presentation suggests that there are 700+ million respiratory health visits per year. So roughly 10% of the population visit a doctor for respiratory disease each year.

Statistically, this means in our immediate target market we have 240 million people visiting a doctor for respiratory disease.

So what is RAP worth? I’ll crunch some numbers with three scenarios: one with very pessimistic 1% of the target market captured, another other with a very optimistic 80% of the market captured, and a third capturing only two of the Chinese telehealth companies mentioned in the RAP presentation.

SCENARIO 1: IF 1% of market cornered

1% x 240million people x $5 per pop = $12 million revenue per annum
plus >$20million income from our WHO partner
= at least $32million income per annum.

PE of 40= $1.28 billion market cap
1.2billion/ current `$200milion market cap= 6
6x$0.30 =$1.80 share price

SCENARIO 2: IF 80% of market cornered

80% x 240 million people at $5 per pop = $950 million of revenue.

PE of 40 and you get $40 billion market cap…

Which translates roughly to a $60 share price

Note: I crunched these numbers assuming $5 per use RAP management have suggested they will charge anywhere between $5-10 per use, but I erred on the conservative side with these calculations to cover the operating costs (which are logically minimal).
So we see that even the so-called super optimistic calculation is based on the lowest sale price per use, and it doesn’t factor in expansion into India, Indonesia, other Asian markets plus South America. Remember our current target market, namely; the US, Europe and China, ‘only’ captures a third of the world’s population!

SCENARIO THREE: ResApp used by just two Chinese telehealth companies

Two Chinese telehealth companies as per 3 May 2016 Investor presentation:
Ping An Haoyisheng: 95,000 appointments per day * 360 days= 34 million appointments per year. Assuming 30% respiratory = 10 million potential RAP users.
Chunyuyisheng: 229 questions per minute 8 *10 hours * 360 days = 50 million appointments per year. Assuming 30% respiratory= 15 million potential RAP users.
25 million * $5 per use = $125 million potential revenue
PE of 40 and you get $5billion market cap…

Which translates to a share price of $7.50

CONCLUSION

You can see my projected share price calculations range anywhere from $1.80 - $60.

These calculations assume that RAP can/will generate revenue. They assume that there isn’t another competitor out there with a product that can do the same thing for the same price. I point out to any newbies that it currently does not earn a cent.

Of course, stocks where revenue and growth is imminent will often have a share price well ahead of the typical PE rates of a low growth blue-chip stock. Cochlear has a PE of 40 and its revenue growth has been stable over the past few years. Where growth is expected to accelerate, PE’s can be in the 100’s because the shares are priced well ahead of actual revenue.

So what is RAP worth today? That depends on three things:

1) The risk investors ascribe to the stock.
2) The anticipated revenue RAP can generate.
3) How long it will take before RAP can generate revenue

I can comment on all of the above at a latter date if people want me too. I have spent most of my research identifying risk and I hesitate to crunch numbers and display them unless I feel confident that they (at least the pessimistic end of the spectrum) are achievable.
I believe the upside to risk ratio is one of the best I have seen since I started trading 10 years ago.
I don’t ever say I get my calls right. Last year while RAP was 4 cents, I suggested it could be 20cents by Christmas- I was a couple months out.
Right now I am calling $2 by Christmas. Even if I am 6 months out I’ll be happy.

Hope this has been helpful for some.

Kind regards,
CT

Expand

Nice post but don't use PE It's not earnings its revenue you are forcasting
I work of revenue after fda approval

Last edited by iamagenius: 22/05/16

RAP Price at posting: 29.5¢ Sentiment: Buy Disclosure: Held
2 Upvote

0 Great analysis

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