sdl: 10 vs. 100+ bagger sp before 2014 , page-43

Slats

Do you think high school maths students could do the exercise below?

Imagine generous case scenario:

1. 35mtpa

2. opex $22/t

3. revenue $152/t

4. 100% debt financing @ 7.5% interest

5. depreciation over 25 years

6. Capex $5b

7. tax = 30%

8. royalty = 5% (excluded)

questions:

1. how much profit per annum?

A: 35m x $130 - $200m depr - $375m interest x 30% tax x 90% project share = $2,500m net profit per annum

2. how much is the earnings per share (EPS)?

A: $2.5b divided by 3b shares = 84 cents

3. what is the share price on a generous PE ratio of 14?

A: $12

5. can SDL be a 100 bagger?

A: no