To buy or not to buy ...

There are basically 2 ways of analysing a share price - depending on your trading style. Technical analysis Vs Fundamental Analysis.

The Technical Analysis is quickly summed up by the people at Barcharts.
http://www.barchart.com/opinions/stocks/ESI.AX
Currently, for ESI, all technical indicators say the same thing - BUY.
The Composite indicator - BUY
All short term indicators - 100% BUY
All medium term indicators -  100% BUY
All long term indicators -  100% BUY
Overall average - 100% BUY
In terms of technical analysis, it doesn't get much better than this!


The Fundamental Analysis is a little more difficult, but there are lots of things we could look at
We could look at the global situation, where the cries for environmental improvements are loud - it's ESI's time NOW.
We could look at India - and we all know Mr Modi's attitude - cheap power for the people - it's ESI's time NOW.
We could look at our technologies - they are ready to go NOW.
We could look at viable economic alternatives - we are out there on our own - it's ESI's time NOW.
We could look at the market for our technologies - it's huge - it's ESI's time NOW.
We could look at our ESI team - we have an excellent team in place, the ideal team to unleash our technologies  - it's ESI's time NOW.
So in terms of Fundamental Analysis, it doesn't get much better than this.

Technical indicators - 100%
Fundamental analysis - 100%


So what sort of valuation could we expect for our little company?
This is a little more difficult.
One possible case study is White Energy (WEC), however today's WEC is not very relevant to ESI - it is largely a coal company. The part of the WEC history that is relevant to ESI goes back a few years. It takes a bit of research to dig it out, but I recall it well, so I'll summarise it here.

Way back in May 2008, WEC commissioned a demo coal drying plant at Cessnock, in the Hunter Valley. At the time, they had around 110,121,019 shares on issue, and they were trading at about $2.50, giving a market cap of $275 million. They were also looking for a CSI (BHP bought in), and they had some minor assorted interests in coal deposits.

Based on the demo plant, WEC began work on the Indonesian project in Tabang.

By mid Oct 2010, the Tabang coal drying plant was ready for commissioning. WEC ended up being a 51% owner, in conjunction with a local Indonesian partner. At that time, the WEC share price was $4.27, with 307,225,811 shares on issue, or a market cap of $1.3 billion.

As we all know, WEC had some trouble with that plant. There were technical issues that took years to overcome, and the SP slowly fell away as the market lost interest.

WEC eventually changed it's focus to a straight coal company.


The fact remains, however, that at the time, the market saw the potential and pushed the value of WEC to $1.3 BILLION. And that was only based on a coal drying technology. And in my opinion, the ESI drying technology is simpler, cheaper and more efficient.

Compare WEC at $1.3 Billion, to where ESI is now ($39 Million), and the potential is huge, and that is just based on the drying technology.

PLUS - we have the added Matmor technology, which again, is a game changer for the steel industry. As we know, steel making is not exactly an environmentally friendly operation, and as economies grow, the old steel mills will be squeezed out, with more and more emphasis on cleaner industry - it's ESI's time all over again.