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Gold/Mining/Energy : Napier International Technologies Inc. (T.NIR) -- Ignore unavailable to you. Want to Upgrade?

To: AL who wrote (901)	7/25/1998 5:14:00 PM
From: xray	Read Replies (1) \| Respond to of 2444

Thanks for asking. A while ago I responded to some of the unsupported market figures given by others here by proposing the following (and if you look way back you would probably find it, but I can recreate it here): Market capitalization = $60,ooo,ooo (approx. in CDN $) Take expected p/e = 25, therefore earnings = $2,400,000. Then, is it reasonable for earnings to be 10% of revenue? (Don't forget the majority of gross margin that will go to ICI, etc. for their efforts.) Then revenue is $24,000,000. Some will say, "Wait a minute...NIR doesn't have that kind of revenue right now, does it?" No, of course it doesn't, but "it will have revenues much higher than that", others will say, "so discounted back to today the future market justifies our $2.00 price". Okay. Given that the price doesn't reflect current earnings, but future earnings, let's look at future earnings projections, based on the numbers we have today and some assumptions of market penetration and risk. Let's say risk is 70% (very generous, since I haven't heard of any independent scientists quoted by the company who have verified the uniqueness of the nir product to attest to the strength of its patent, and the other companies in the business who have known about the upcoming U.S. regulation of methyline cloride for many years haven't quickly moved in to buy or license nir's formula). Okay, 70% risk, and let's give a generous 25% market penetration. Therefore we can take the product of chance of success and penetration as 30% x 25% = 7.5%. Thus, if current investors expect nir rev to be 24,000,000 very soon (it has to be soon, since we did not discount for interest rates), then the market size based on current share price and reasonable p/e, risk and penetration assumptions has to be: 24,000,000 divided by 7.5%. That's a pretty big expectation for the paint stripper market. Gino? Got the answer to 24,000,000/7.5%?