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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: FMK who wrote (2793)5/4/1998 10:19:00 PM
From: FMK  Read Replies (2) of 27311
 
Eye opener - correction for #shares

ULBI's offering reminds me of a comparison I once made between VLNC and ULBI. After the recent offering, ULBI has 7.9 plus 2.5 = 10.4 million shares outstanding while Valence has about 23.7 million.

It is known that the Valence high speed Italian lines have twice the capacity(batteries/year) as their line 1. Valence's first 3 lines therefore have 5 times the capacity of Valence's line 1 and therefore 5 times the capacity of ULBI's similar solid polymer line from the same Florida manufacturer as Valence's line 1.

Comparing Valence's first 3 lines with ULBI's single line and adjusting to a per share basis, (5 x 10.4/23.7 = 2.2), it appears Valence has 2.2 times the solid polymer production capacity per share as ULBI.

If you can project earnings according to production capability and can assume that ULBI is fairly priced at $14 , it should be reasonable to conclude that an equivalent price for Valence would be $14 x 2.2 or $31 once they announce contract(s) and get some analyst coverage as ULBI has done. An underlying assumption is that the bulk of ULBI's future earnings will be derived from solid polymer batteries as will be future earnings for Valence.

As stated in their press release:"..Lehman sees enormous growth potential over the next several years, fueled by highly promising lithium-ion solid polymer rechargeable batteries."

Another way to look at it is that a dollar invested in Valence at $6 buys 14/6 x 2.4 or 5.1 times the solid polymer production capability.

Add to the equation the likelyhood that OEM's testing are finding Valence batteries clearly superior.

Am I missing something here? Comments or questions?

Regards, FMK


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