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daveyjones

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23/08/18

15:21

Post #: 35130215
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Originally posted by daveyjones ↑

Thanks for the product market intel Dr Fouad which bodes well for future product prices. Thanks also for your previous reply (post #35009330 18 Aug 18) appreciate all the good work digging back into the historic financials.
I’ve been thinking more about the probability question and I agree each investor has to decide from here if the chance of success outweighs the chance of failure. And I agree it is a subjective judgement about the future of the MZI business but I still think it means making an explicit (or implicit) probability call.

Say assuming if/when operations are 'stable and normalised' (soon we expect) and debts are satisfactorily restructured (at reasonable rates and terms for the long run) the future value might be say .45c. Very roughly this might come from 100kt p.a. product sold at AIS margin of $350/t to give an EBITDA around $35m x say 8 multiple = $280m less $170m debts =$110m/246m shares.
The payoff would be around .37c (.45 -.08) for 'the win'. and -.08c for 'the bet' being approx. price today.
If we say the likelihood of the business successfully achieving the turn-around is 60% (3 in 5 chance) and therefore to fail is 40% this would imply a positive ‘expected value’ of .19c. That suggests its a bet worth taking. (.37c x 60% = .22c) less (.08c x 40% = .03) = .19c
Of course this boils down a very complex situation, with many known (and unknown) variables. But perhaps it is reasonable given the recent evidence (processes optimising, improved recoveries) and a careful and methodical problem solving approach now underway?

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Sorry about the double posting!

MZI Price at posting: 8.2¢ Sentiment: Hold Disclosure: Held
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Sorry about the double posting!

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