sales in china, page-5

Hi Jenny,

I would like to see your figures. I agree, there is upside potential to this company, but I don't see 50million for a while.

I think they make about $0.4 per tablet of Pepp (they sell for about $10 for a box of 10 and they make about half of that per box. I have said $0.4 to be conservative).

Yes, They do have a 6Million test kit deal for bird flu testing. They have announced a multi million dollar deal, but my guess is it will be say $5 Mill over 2 years. It might be lower or higher - I don't know.

Then there are ongoing costs of around 500K per quarter or 2Mil per year.

Realistically, I think 1Mill Pepp sales is feasible next year - although the sky is the limit but I wouldn't expect it to jump to 5Mill.

So, as a rough calculation, I get:
(note, I am not including HIV tests or their other tests as these make up a small percentage of sales. I think they sold 500 HIV tests last quarter - not enough to worry about but I do like the product concept still:-).

Worst Case:
Pepp Sales + Bird Flu Sales - Ongoing Costs:
0.4Mill*0.4 + 0.5Mill - $2Mill next year, i.e., -1.34Mill

Likely:
Pepp Sales + Bird Flu Sales - Ongoing Costs:
1Mill*0.4 + $2.5Mill - $2Mill next year, i.e., 0.9Mill.

Best Case:
Pepp Sales + Bird Flu Sales - Ongoing Costs:
5Mill*0.4 + $5Mill - $2Mill next year, i.e., 5Mill


Let us assign a probability of 25% to the worst case, 50% for the likely case and 25% to the best case. The expectation would then be:

Expected outcome for next year: -1.34*.25 + 0.9*0.5 + 5*0.25 = $1.365 Mill.

So, I guess what I am saying is that I would expect $1.365 Mill next year. This will give earning of about 2c a share - so 1c a share now would be good.

I would be curious to see your $50Mil estimates.

These are my rough figures as I don't have heaps of time to do a more thorough investigation so do your own research.