1. In PE the E = Earnings. This is not revenue nor is it cash flow.
2. Where are you getting $2.5 Income from? Is it the USD2m converted into AUD? If so, the USD2m is next cash flow expected to be generated this year. That is, it has not been booked already. Besides, it is cash flow and not Earnings.
As I discussed with a well-regarded poster here off-line, it seems BRK is under-valued because:
1. Punters cannot grasp the business model; a model which is far more common in the US than AU. Imo, the misunderstanding stems from lack of knowledge of off-balance sheet financing.
2. BRK changed its name from RFE in 2015. Michael Fry and David Prentice are common to both. Imo, RFE demise was due to macro factors outside the control of management. Smart money associated with James Packer lost a bundle.
3. Green metals [Li, Co, V] are grabbing all the headlines and punter's attention. I am a big investor in these and we are at the start of an EV and Energy Storage revolution which will transform the global economy. However, solar/wind farms will not be producing petro-chemicals and plastics.
The BRK business model and valuation is underpinned by the price of oil. The cartel and the Russkies have cut production and the price of oil has increased. I will be keeping an eye on production and current/future price of oil.
The nest metric to attempt valuation is a simple land/price per acre. This is the metric used in all the M&S activity currently happening in that neck of the woods. The greater the development per acre, the greater the value. The greater the number of developed acres, the greater the company valuation for a future t/o which is, imo, the exit strategy.
BRK Price at posting:
1.9¢ Sentiment: Buy Disclosure: Held
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