Had some time recently so checked over HMC history. Look at how...

Had some time recently so checked over HMC history. Look at how their revenue has steadily increased over 10 years.

2000 5.3m
2001 6.3m
2002 11.6m
2003 4.7m
2004 9.6m
2005 16.5m
2006 13.5m
2007 19.6m
2008 33.1m
2009 27.9m

Note that there has been a fundamental shift in their main earnings, from mainly EAF processing to lead battery recycling. For the previous 6 months reporting period (1st half FY10) for the first time they have finally given details of the earnings split (which is also very nice to know, and follows quite a few requests). 14m earned from lead and 5m from other metals. Still a nice split and some diversity.

And over 19m has been earned in the first 6 months of 2010, on track for 40m revenue for the full year.

At the same time, look at their P&L figures over the 10 years.

2000 -2.30m
2001 -1.60m
2002 1.40m
2003 -4.40m
2004 -1.00m
2005 2.00m
2006 -0.90m
2007 2.30m
2008 2.50m
2009 -3.40m

This is clearly the source of concern for the market.

If we ignore the first 5 years, where they had quite a few issues that are no longer so relevant, the most recent 5 years has produced some better results - with a couple of major exceptions. i.e. Two years when they got hammered by writing off products sold when the spot market prices collapsed. In 2006, they wrote down selenium, and 2009 they wrote down a range of products when prices collapsed during the GFC. This is HMC's achiles heel. If they can smooth their earnings through a range of financial instruments or otherwise, then the revenue increases can be turned to consistent cash.

Overall considering that their revenue continues to rise, and they should not make the same "hedgeless and bad hedge" decisions of the past, along with the fact that the GFC "should" not happen again, it would seems that the share price does not accurately reflect the value of this stock. Especially if they can raise the funds for the lead smeltor.

I'm happy with my holdings at the moment, even if the market isn't.