Prime1
I agree with your comment "presentation from CEO Shaun Verner is not the specific content, most of which we have seen before, but the underlying confidence that is displayed." but what would concern me as a potential investor is the following;
Is it realistic for Syrah to have 15 to 20 % market share in 2018 and then 40% market share by 2020? Yes this is possible if they Syrah wants to sell below market prices enough for buyers to switch to Syrah but then Syrah will be operating on very low gross margins and thus will not support their current market cap.
Question: Why does Syrah continue to compare and benchmark themselves vs. non revenue Jr. Graphite mining companies? Why is Syrah not benchmarking themselves to existing graphite revenue companies such as but not limited to Nacional de Grafite, Etablissements GALLOIS S.A., Skaland Graphite AS, Qingdao Black Dragon Graphite Co. Ltd., Qingdao Haida Graphite Group Co. Ltd., Qingdao Jinhui Graphite Co.,Ltd., Heilongjiang He Yu Graphite Company, Heilongjiang Austrian Yu Graphite Group Co., Ltd.
With Syrah current negative cash flow and Syrah projected cash balance of only Us$55m by end of Q2 2018 and the fact they will need to spend US$25M at Vidalia, Louisiana I would project that Syrah will run out of cash by end of Q4 2018. Will Syrah then raise more cash or take on debt to keep the company operating? How will this effect their market value?
As I review their presentation Syrah is reporting that the battery market graphite demand in 2018 will grow from 120,000/mt in 2017 to 200,000/mt in 2018? This projection seems very optimistic especially now with 4 months of 2018 already completed and there is no market data that supports this amount of growth between 2017 and 2018.
Remember Besides Syrah 2018 projected capacity of 160,000/mt to 180,000/mt the graphite mining industry added additional 76,000/mt of new capacity outside of China which is now competing with Syrah in the market today.
I believe Syrah will become a major graphite supplier and will also become profitable graphite producer and processor in next few years. What I do have a concern about is Syrah’s market value. I believe Syrah’s market valued today is nor realistic. The graphite mining and processing industry is not as profitable as Syrah as what investors have been lead to believe.
Yes like you report Syrah’s management is very confident which is a good . Will the confident management be able to add market value to Syrah when I and others (All the shorter) believe the company is overvalued? I believe investors are going to experience a very difficult road ahead.
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