Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (38234)	6/9/2010 8:37:57 AM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78601

First of all, they changed the press release to read "incremental net income" and not "revenue" (and you quoted the changed release!!!), so your calculations are no longer valid. With the change, they are getting $2.4M income for $13.9M purchase price = 17% earnings yield, which is great. Unbelievable but great. :) Even if we went with original wording and your calculations, they would be buying 4.5% earnings yield on purchase price, which is not great, but also not horrible. There are tons of businesses trading and acquired at worse earnings yield. So I am not sure why the outrage?

To: Spekulatius who wrote (38234)	6/9/2010 8:39:36 AM
From: gcrispin	Respond to of 78601

I'm not sure how you are coming up with your numbers as the one million incremental number is on five months of production. Here are Brean Murray comments taken from the Yahoo board. Brean Murray notes that GFRE announced the signing of an agreement to acquire manufacturing assets involved in bromine and crude salt production from two individual residents of the People's Republic of China for a total consideration of $13.9 mln, or at less than 6x the expected full-year earnings contribution. Firm expects this acquisition to add approximately $3.6 mln to incremental rev and $1 mln to incremental net income in 2010, and approximately $8.7 mln to incremental rev and at least $2.44 mln to incremental net income in 2011, applying current market prices for bromine and crude salt and assuming ~28% net margin and ~70% utilization for both 2010 and 2011, which they view reasonable relative to historical levels.