Hi Sid,
Thanks for the link to the Ballard-DB news article. I've been awfully busy the last while, so this response is a little late...
I assert that fuel cell cars will not be profitable to DB or Ballard for some number of years after they are introduced. Everyone here attacks my viewpoint.
No they didn't. Not once that I could find have you been attacked for *that* suggestion. I think most people here realize that subsidising the first sales of FC cars is in D-B's best interest, since they are going after market share (they could probably choose not to subsidize, if immediate profit was more important than market share). What you *have* been attacked on is your ridiculous statement that D-B and Ballard will have to subsidize methanol infrastructure.
By the way, all, the Mohawk Gas Station at 25th and Oak in Vancouver has an M85-pump, which is 85% methanol, 15% gasoline. Apparently Chrysler and Ford both sell a model of car that uses M85. In California there are many, from what I hear. Any Californians on this thread are welcome to give some eye-witness info. Also, there is a rumour (as yet unsubstantiated) that Mohawk is considering putting pure methanol pumps in nationwide.
BTW, what did you think of my methodology for looking at development stage stocks, and comparing them?
Well, it is mixed. IMO, the approach is sound, at least in qualitative terms. I think part of the trouble comes in applying the formula, e.g. your tendency to pull seemingly random numbers out of the air. You peg the bus market at 15000 buses/yr. (note: a 3 fold increase from your previous number of 5000). Last year, D-B produced 40,000 buses. Although D-B is the biggest, there are numerous other bus manufacturers. So 100,000 buses/ys. is a more likely number. D-B will not gain 100% market share, but I'll bet other bus manufacturers will get engines from D-B, and of those that do not, some may/will get fuel cells from Ballard, so the market is quite sizeable.
My way of looking at it is more quantitative. I try to project revenues, profitability, and finally EPS in 2nd/3rd year of profits (1st year's PE ratio is basically useless, often in the 100's). Putting numbers to it, assume bus engine sells for $10K and Ballard's revenue is $5K. At 30% margins, that is $1500 to the bottom line. If they sell 40,000 buses/yr. equivalent, that is $200M in rev. and $60M/yr going to the bottom line. Add to this trucks, tram/trains, marine and other applications, as well as stationary power, and you will come to some numbers, say $350M and $100M/yr. Use this to project EPS, (about $4.00), apply a reasonable multiple, (say 20-30 for good growth stock) and you have $100 stock. Discount at some percentage/yr. back to 1yr from now, and get a 12-month target price of say $75.
Note that this example gave NO consideration at all to the FC car market - this should be added, but discounting will be greater, due to the longer time frame. That will enhance the stock price.
Analysis should also try to factor in risks of failure, competition, shrinking market, negative legislation, etc., numerically if possible (not done here).
This is only a rough and over-simplified example, but it is basically how I do my own analysis. Numbers are off the top of my head or guesses, and are not nec. correct by any means.
Garth. |
