MICRONICS ANONYMOUS QUESTION: What is a FMV (fair market value) for MRPS? I did the following DD for myself this evening and thought I may as well share it. I don't consider this hype.
******** Try $15 per share (see below calculations) *********
You tell ME.....am I far off? and even if I am a way off, it would seem the $7.50 per share was a given, agree?
One of the things I am now evaluating is a proper valuation. It is a mix of actual contractual revenues and expected revs. This is a challenging math problem here but I think I am reasonably close. Incidentally the company will be announcing conservative projections in a couple weeks, which I think we will really like.
As per the press release below, MRPS had $10 million in sales lined up as of April 1998 ( to be delivered later in 1998 and early 1999) pending manufacturing being ramped up and deals signed with Bulova and the other company.
Deliveries have now rapidly begun and production capacity will not hold them back any longer. Here are my conservative estimates of actual and projected sales. Remember the company will announce more accurate figures in about 2 weeks after more deals are signed and/or expanded. When a figure below is estimated or a guess, it is so marked, other wise it is a firm contract. By the way, I am not aware of all the contracts that are firm. These are just most of the BIG ones. Trying to be a little conservative here.
FORD: 6,500 units @ $400 each (qty discount) = $2.6 million
FORD PLANTS (est): 700 units @$1,800 each = $1.26 million
(this is an educated guess that the Ford plants will follow GM's lead)
GM: 40 units so far @ 2,000 each = 80,000 and another 1,000 units projected this year (my low guess) as more plants accept delivery =
1,000 @ $1,800 each (add'l qty discount?) = $1.8 million
then for GM Dealerships ala Ford = $3.0 million
DELCO: Let's guess they will sign up soon = $1 million (guess)
CHRYSLER: Let's guess they will sign up mid year = $1.5 million (guess)
OTHER CAR MANUFACTURERS (Toyota/Nissan/etc): $3.0 million
OTHERS: $2.5 million (from european companies....Mercedes, Volvo, BMW, etc)
(remember they signed up a European company in April to find them business in Europe..thsi number could be way low...PR release below says it expects their Euorpean distributor to have significant sales)
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TOTAL APPROXIMATE 1999 = $17 million @ 70% minimum margin**. = $12 million gross profits less overhead = $5 million net profit.
10 million authorized shares / $5 million profit = .50 cents per share
.50 per share x PE 30 = FMV of $15 per share.
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**NOTE: Remember cost on the $500 unit is $83 and on the $3000 unit is $480 roughly.
Then read this partial press release text from April 1998:
"Our ultrasonic diagnostic testing equipment uses digital
technology to convert ultrasonic sounds from a variety of electronic charges
to audible sounds. This year, we have already received contracts for orders
totaling nearly $10 million. In 1996, sales were just under $600,000. Most
of our sales to date have been to U.S. automotive manufacturers for quality
control and we expect that DDSI will be able to mirror our success in Europe
within a year."
Said Mr. Cohn [of Digital Descriptor Systems who signed a European Marketing deal with MRPS], "We believe we will be very successful with MicroPhonics in
Europe due to our established international sales offices. Currently, we have
offices in Brussels, Belgium and Gothenburg, Sweden and will open additional
branches in London, England, Rome, Italy and Hamburg, Germany."
Obviously, Europe could be much much higher than the $2-4 million that I projected for 1999
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