Hi Gannp...thanks, add $14m for the tax credits in the first...

Hi Gannp...
thanks, add $14m for the tax credits in the first year.

Rob, good question.. I'm not entiely sure myself :) i guess the chance of launch failure is 'known' through the premium paid for the insurance, so i tried to see what discount rate is being applied given a 'known' chance of launch failure to arrive at current share price.

You're right though, if you take a higher risk rate, then surely it's incorporating the chance of failure, so the true discount rate is surely >30% ... which is very good value.

Re: valuation methods, I think it depends on management's intentions and strategy. If they intend to build up a portfolio of 5-6 satelites then sell them off I would value coy based on EBIT multiples. If the intention is to hold for the life of the assets and receive the income stream, then free cash flows would give a better valuation.. imo.