It's not hard to come up with that $15 target. The current market size is around US$4.5bill and growing.
Given Spontan's clear advantages, it is not difficult to think that it could reach at least a 2-3% market share reasonably quickly. It definitely might be able to do better.
3% of US$4.5bill is US$135mill. This is a very high margin product. Gross profit could exceed 90% or US$121.5mill That's A$181mill. I'm allowing 15% of that GP ($27mill) is spent on overheads and R&D. That would leave NPBT of A$154mill and NPAT of A$108mill if paying the full 30% tax rate. I'd expect strong year on year growth and therefore a potential PE of 20. That would require a market cap of A$2.157bill and a sp of $13. A 5% market share bumps my sp target to $21.70. These are unrisked targets. They still need regulatory approval and then to deliver the market share so I'd expect a very volatile ride.
LTP Price at posting:
$1.75 Sentiment: Hold Disclosure: Held
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