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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: add who wrote (16428)11/27/1999 9:18:00 PM
From: Larry Brubaker  Read Replies (3) of 27311
 
<<So Larry, if VLNC delivers on producing and selling the $250M run rate next year, what do you think the price would be?>>

First of all, Lev's discussion of production capacity mentioned they plan is to have $80 million of capacity late next year and $250 million the following year. So $250 million run rate next year is not even on the table.

Secondly, if they do not crack the yield issues that require "further development," they will not even get to the $40 million rate which they say they have the capacity to do now. The increase in capacity to $250 million (which requires additional investment) will not happen until they can prove they can produce acceptable volumes and yields in order to earn a profit. Which I think they are a long way from proving, based on the statements in the filings.

But assuming everything goes right and VLNC does get to a $250 million run rate sometime in 2001 (not next year), the stock price will obviously be much higher than it is now.

If you assume 15% net profit on $250 million ($37.5 million profit) and assume 45 million shares outstanding by then, you've got .83 per share in profit. Give a 50 pe ratio to that .83 (a high pe ratio in anticipation of further growth and to allow for profits from JVs) and you get a $42 share price in 2001.
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