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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: Mark Johnson who wrote (10541)4/20/1999 11:00:00 AM
From: FMK  Read Replies (2) of 27311
 
Mark, The $4.50 per share "contribution" from the NI plant after dilution is an astounding number. The Yahoo poster's numbers were based on 500mln watt hours per year capacity sold at $2 per watt hour or $1billion in revenue. I have worked the numbers myself on six production lines and came up with about 550mln watt hours per year. I also heard the 500mln figure came from analysts who visited the plant, and that was before we heard about the 30-40% boost in performance expected from the patented phosphate formula.

Using the pre-phosphate numbers, if six lines ran at 50% capacity they could produce an estimated 250mln watt hours or $500mln revenue at $2 per watt hour.

$500mln x 30% profit/30mln shares equals $5 per share profit. Sell 3mln shares at $16.66 and you have raised $50 million. With underwriting fees by a large brokerage firm, They may need $20 per share x 3mln shares or $15 per share for 4mln shares.

The $500 mln revenue (half capacity for six lines) at 34 mln shares and 30% net profit would then amount to roughly $4.41 per share.

IMO, they have at least 2 "lines", and possibly four, in operation at the present time. $500 million revenue should therefore be possible with the equipment they have now by running 3 shifts.

1 shift per day on three "lines" could very well earn over $1 per share. A PE multiple of 30 would then indicate a $30 share price.

We know they have been "ramping up" production in recent months and may very well be ready for several shifts of production. I believe Lev mentioned that they must announce PO's when the first large shipments are made under terms of the contracts, without naming the customer unless they have permission. Otherwise, announcements may come early from customers.
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