stab at a china financial model

Here goes, back of envelope numbers courtesy of google!

Assumptions

1. China has the police manpower to enforce a national drug testing program covering workplace, schools, sport and entertainment venues ie nightclubs, bars etc

2. The test process involves one off use of application and potentially multiple tests on individuals

3. The adult population (target market/age range from 12 to 65yo) in China is say, 750 million. The total population of China is currently 1.4 billion

4. China has a one child policy enforced

5. Given the size of the market in China, a quick and easy to use saliva test application is the only one suitable.

6. The JV partner of SBN in China has officially received Quality control and test approval to proceed to field trials. Full manual and documenation for the use of Oraline has been completed by the Ministry of Public Services in China (MPS)

7. SBN will earn revenue from the China JV through its 15% equity stake in SiYi and on the wholesale margin of each product membrane estimated to be around $0.75 for the JV. (This price is for the JV and is not applicable to the general market price structure). This model excludes any potential revenue from the 15% equity interest of SBN

8. The China drug test program will potentially multiple test individuals at say, night clubs. This multiplier effect on test numbers for the purpose of this model is ignored.

9. The model has configured a 10% test penetration rate once the program is fully under way and is applicable after Year 2 of the rollout.

10. The Oraline product will be the only mandated and approved saliva based product used in the national drug testing program in China.

11. The full penetration rate of 10% is achieved after year2 and is the basis of this model


The Finacial Model (after Year 2)

Target Population 750,000,000

Target rate @ 10% 75,000,000

Margin on each test A$0.75

SBN revenue (membrane only) A56,250,000

50% model discount A28,125,000
applied

SBN EBITDA A28,125,000

Business multiple X20
(conservative for Biotech Cos) X10

Market Capitalisation A281,250,000

Number of shares (undiluted) 750,000,000

SP A$0.375



This model has a 50% dicount applied and ignores any potential revenue generated from the 15% equity which would include full retail price margins on the total product including the membrane.

Cheers