Todd: Hexcel bought Hercules Composite Products Division for $135MM. But, that included an acrylic precursor plant, a carbon fiber plant and two prepregging plants. Figure sales were split roughly 50/50 between prepreg and fiber yields around $70MM cash for a carbon fiber business which produces around 3 million pounds (actual production) with an average selling price of around $20/lb. That would mean about 1.2 or so times sales. Note that this acqusition INCLUDED a precursor plant which probably is more than 50% of the carbon fiber assets. My guess is that those who bought Hexcel's convertable notes at $12.50/share and financed the acqusition will make a hell of a lot more than those who financed ZOLT's latest offering at $31.
As for SGL, they paid "around" $40MM for 2 million pounds of large tow capacity and 2 million pounds of oxidized PAN capacity, no precursor, assume average selling price of a $12/lb for fiber and $4/lb for PANOX or around $32MM in sales (again around 1.2 times sales).
Todd, I agree with your analysis, if ZOLT is really depending on $5/lb fiber as the way to grow the market, how can you justify the current valuations.
Also, recognize that Hexcel (as well as Toray, Toho, Amoco and Mitsubishi) make significantly higher margins on their aerospace fiber sales. For example, the current state of the art fibers IM-7(Hexcel), IMS(Toho), T650-42(Amoco) and T-800/1000(Toray) all sell for over $50/lb and probably earn over 40% margins. With a margin of over $20/lb on these fibers, ZOLT will have to sell 20 lbs of $5/lb fiber to get the same earnings as the other companies have TODAY.
If any of these other companies split off their fiber business for the financial markets to evaluate and presented their market position to the public, ZOLT would be yesterday's news.
Watching ZOLT and waiting for the other shoe to drop.
Flyguy. |
