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Strategies & Market Trends : The Rational Analyst -- Ignore unavailable to you. Want to Upgrade?

To: majormember who wrote (496)	3/24/1998 12:57:00 AM
From: HeyRainier	Read Replies (3) \| Respond to of 1720

[ Sunrise Technologies: SNRS ] That's a very impressive report Skane. Please pardon my rather negative tone in my last post to you. Given the nature of the company's fundamentals to the untrained eye (coincidental pun?), comments such as your last one that went unbacked by research or rationale quite often can be (and was, as in this case) misconstrued as hype. I'm sure we've all met the kind somewhere here on Silicon Investor. Please pardon my tone that implied your message was of that group. It is in my nature to not accept at face value any claims that are not supported by facts or research, hence previous my tone. Now that you have provided that, I think you've got an interesting candidate here. I'll take a look at its other competitors for a better perspective of the group's trading behavior, and will comment afterwards, perhaps with more follow-up questions. Thanks very much for the DD. Regards, Rainier

To: majormember who wrote (496)	4/8/1998 11:08:00 AM
From: HeyRainier	Respond to of 1720

[ Valuation for Sunrise Technologies: SNRS ] Skane, referring from a portion of your last post: "...Hyperopics comprise approx. 31% of the worlds population. This is an over age 40 group and more affluent then myopics who generally have to become accustomed to wearing glasses at a young age. Over 200 Million people are candidates for the SNRS procedure. This represents a $40 billion market potential..." From the dialogue that's taken place at the SNRS thread, it appears that the company currently has no direct competition in treating Hyperopia (a.k.a. farsightedness) in the same fashion as SNRS. Assuming approval from the FDA, what is the first market SNRS will open their product to? I'm not a fan of granting any valuation that's dependent on world population. Compared to the first world countries, most countries are in a state of poverty, and I would never expect much response given the relative expense of such a corrective procedure. So let's keep the valuation based on the first-world countries that are (1) most likely to use the procedure and (2) can afford it. (Here's where I kindly ask for the thread lurkers' help for sources) Arbitrarily, let's target the more affluent over-40 market in the US. We need to look for statistics that will tell us how many over-40 people there are in the US (the one's most likely to need and pay for the procedure), and filter that with an income requirement of about over $40,000 a year in household income (I picked this number arbitrarily, but am open to a more realistic figure, should there be one.) Once we get that number, we need to find out the percentage of such people who have Hyperopia, and then filter it out even more by looking at an expected response rate for the procedure. Once that's in place, we can multiply that number of people by the expected sales per procedure done (we're just calculating the revenues from the procedure here, and we're not including the revenues from sales to hospitals, so there's upside to this). And lastly, we cannot assume that SNRS will hold the entire market, so we will further reduce their hold to the 60% market share that innovators (the first ones to market) are generally granted for new drugs (even though this is not a drug). Then voila, we have a rough estimate in the future of what SNRS can potentially bring in from the US market from the procedures performed. That can be the market cap valuation we can apply to SNRS, assuming a fair valuation is a Price/Sales ratio of 1.0. Let's find this number, then we can really put a price tag on SNRS. (Anybody have suggestions on how we should discount that future value for today?) Regards, Rainier