AEI Valuation Discussion, page-10

This is from an earlier thread on which I posted on 3/5/20. Market cap is now $136 million so PE is now 13.5 on next year's earnings on this calculation. It is unclear whether the US capacity mentioned in the most recent announcement means total capacity will now be more than the 3 times the capacity in the second half of FY20 that was mentioned in the presentation of 31/3/20 page 4. I am assuming not until clearer figures are provided.

For FY2020

Assume $13 million revenue in FY2020 and a gross profit margin of nearing 50% (from the presentation of 31/3/20 page 4).Gross profit is $6 million. Overheads are stated at $6 million pa (presentation page 14 and confirmed by Appendix 4C).

So net cash flow/profit nil in FY 2020. I ignore depreciation which was minor in first half.

For FY 2021.

For FY 2021 assume revenue of $30 million (capacity at 3 times 2H FY20 from presentation page 4).This assumes they can sell whatever they produce. The $10 million of revenue in 2H FY 20 certainly suggests over $20 million next year given capacity is expanding.Gross profit margin 55% (over 50% in future from presentation page 4)

Gross profit $16.5 million less overheads $6 million.So net cash flow/profit $10.5 million, with guess at depreciation of $0.5 m, so net profit $10 million.

I assume no tax given tax losses of $8.3 million were available at end FY19 (annual report).

At market cap of $150 million the price earnings ratio in FY 21 is 15.

AEI is at early stages of growth and so future estimates have a very high risk. There is no guide to possible growth in FY22, particularly if covid stimulated demand is falling by then. So whether a PE of 15 next year is cheap or expensive is up to you.