Re: USU
Ok, here goes -
To be misunderstood, there must be hidden assets. Are there?
First let's value inventories correctly (I admit that valuing
much of it at DOE's cost is not an accurate reflection of the
value):
In stock on books at DOE cost:
7.944M SWU @$90/SWU --> $715M
12,145 Metric Tons Uranium @35/kg --> $425M
Just got from DOE for free, on books at DOE cost:
7000 metric tons uranium --> $245M
3800 metric tons uranium --> $133M
Just got from DOE for free, on books at estimated current value
given that this is raw material that must be broken down into
Uranium and SWU:
45 tons LEU --> $25.3M
0.8 tons HEU --> $22.4M
50 metric tons HEU --> $176.8M
Other assets include cash of $50M, AR of $222.5M, Russian product
paid for but not delivered $162M, property of $121.6M (I'll assume
that's true), and several other assets that add up to about $600M
There's also a big "other" at $574M which I'll throw in as true.
So that's $2920M in assets
Assuming liabilities are real, there's 980M in current accounts,
$150M long term, and 127 other for about $1.25B.
That gives me $1670M in adjusted book, which is at the high end of
the projected IPO price. No dollar for 50 cents as far as I can
tell, but yeah, it's a dollar of real book for about 85 cents,
assuming that the present value of future dispositions is a wash.
For 85 cents of book, I get a 7.7% dividend, first paid 12/31/98.
I also get about $200M in reproducible free cash flow. And I get
a product mix that is increasingly leaning on Russin HEU, which
as far I can tell there buying for about $85/SWU and selling
for about $90/SWU. I'm doing this as I'm late for dinner with the
inlaws, so that may require rechecking. That lower margin business
is now at 37%, up from 25% of business. And SWU prices have ranged
from $49 to $91 in the last ten years, making the increased reliance
on Russian HEU more risky, IMO.
It dominates the Asian market to the tune of 68%, which I see
as a great opportunity for the company, as more than anybody
Asia once it gets going again will need what the company sells.
And it's laser enrichment technology is exciting, but would
be more exciting if it was being deployed sooner than 2005. The
competitors already have cheaper processes, and one of them
will be getting an even cheaper process around 2001. The company
competes primarily on price.
I see a decent value play, but I think the government is getting
close to fair value, give or take a few hundred million ;)
Good Investing,
Mike |
