Zev,
I have appreciated your comments and concerns about rattling off numbers here and there. I've tried to back up my estimates with baisc calculations as much as possible. I will admit that I will need to start working out the "hard" figures in a manner that will sound more convincing to you and others. However, the fact is that GRNO Bill Carraway and Bo O'Brien are by nature conservative in making estimates. And that is how they should be so that they don't get sued for misrepresentation. I, on the otherhand am attempting to present a much "rosier" scenario as this is what I expect to have actually occur. I'd like to think I have as much right to hypothesize on how I believe the true scenario will play out as the rest of you. I just want to start some mental gears in play out here.
I support my estimates by the fact, overall, Bill and Bo have not included the sales of #3 fuel oil in their production earnings estimates. None of the rates of return as explained in the Offering summary include sales of #3 fuel oil, only diesel fuel. They also have not included possible income generated from removing water from contaminated fuel supplies that they obtain. A quick explanation: There is a lot of fuel that becomes contaminated with water, and the general industry, lacking the ability to deal with this "waste fuel", pay to have it taken away. Bill had discussed with myself and Marty, my chemical engineer associate, about exploring the potential for incorporating this additional capacity with no detriment to the original processing capacity. This becomes a value-added service and GRNO will either charge a fee for this or would actually remarket the purified fuel for additional profit.
Regarding the amount of waste oil produced in the US, if you are dealing with the amount of waste oil collected you are correct. However, approximately 1.4 Billion gallons are produced. Hey, but who's counting... :0) Bo stated in the interview that it would require 800 units to process all of the waste oil produced in the US market alone. What about the rest of the world??
Let's stick to facts that have been publicized. According to the company they will have 55% profit margin on each manufactured $1.5 million unit. Assume they sell 6 over the next year and let's say they build 6 more for GRNO domestic operations. The 6 units built for overseas sales will equal $825,000 profit per unit, or $4,950,000 or close to $0.95 a share in pre-tax manufacturing earnings. That is from the sale of 6 units alone. What about the 6 company controlled units??
It is difficult to compute the figures for the 6 units the company theoretically could produce for themselves as they certainly wouldn't pay cash for them, and assuming one up and running every two months we would then have to calculate the amount of product being sold and subsequent tax credits they receive as each unit comes online.
Although the company states 12 units a year in production, I know that they will seek to produce more than that depending on availability of expansion capital. All of my predictions mean nothing as I don't have THAT MUCH of an inside track on what is going on, although I probably know almost as much as any other shareholder in the company, minus insiders of course.
I would suggest that everyone revisite the GRNO website and go to Bo O'Brien's original analyst report, (albeit now dated and currently being updated by him, I understand.)
greenoasis.com
I'm not an analyst, but Bo seems to think we will have over a $1 a share in earnings within 12 months and he stated a target of $10-12 within 12 months. I know that when he wrote that report he had expected that Unit #1 would be operational over the summer. Obviously between the delays in leasing the site and then being pummeled by Hurrican Fran and rain from TS Josephine there have been some delays with operation commencing sometime in mid to late November. However, I don't believe that his assesment has been negatively impacted by the news of the Tax Credit eligibility... :0) He stated a similiar target for MSU Corp and his target was pretty much on the money. I trust his capabilities and analysis.
Besides, Charles King said it best. Stock price is usually based on earnings expectations and if GRNO can grow at 100% a year, this stock certainly deserves a higher target.
Something tells me that the company will have a surprise in store for us as the Tax Credit finding has totally altered the market economics and made it MUCH more profitable to pursue the domestic side. However, I can't imagine Bill not arranging to have units produced overseas by liscensed manufacturers... I honestly don't know what the company plans to do, but I suspect that it will be better than what we currently expect...
Any way you stack it, this stock should be trading at $3-4 at a minimum, and anything below that is a table-pounding buy, (for speculative capital of course) Just my opinion.
Regards,
Ron
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