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Gold/Mining/Energy : Markatech - MKD (VSE) -- Ignore unavailable to you. Want to Upgrade?

To: Ted Kosokowsky who wrote (306)	10/4/1998 11:55:00 PM
From: Ted Kosokowsky	Read Replies (1) \| Respond to of 416

Right now we are looking for a news release on the signing of the equipment purchase. Since we don't know when it will come, I thought it would be worthwhile to look at the impact of the news. Based on my financial model from earlier, we are looking at the following estimates for production and financial performance: Units sold 2,750,000 50% capacity Revenue $3,575,000 $1.30 per disk Other $ 225,000 Disk mastering Total Rev $3,800,000 Cost of Goods sold $1,200,000 raw matls and direct labor Gross Income $2,600,000 Oper Costs $1,100,000 Financing, overhead, lease costs etc Income $1,500,000 MKD Share $900,000 60% to MKD Earnings per share $.075 based on 12M shares Multiple of 20 $1.50 per share The biggest question marks are the capacity they operate at, and the share multiple they trade at. In this commodity business, one manufacturer is the same as another. In an efficient market then, all plants would be operating at the same capacity, or more accurately, the same lead time. If plant is not busy they could offer a quicker delivery and attract more business. Thus I believe the plant would be operating at least at 50% Growth rates in other geographic areas would in fact suggest the need to add additional capacity, but for now lets be satisfied that 50% is conservative. The earnings multiple this would trade at is hard to determine. But can you imagine a company that; has come from nowhere to earn 8 cents a share, is at only 50% capacity, is the only producer in Western Canada, is located so close to music and software giants in Seattle, is looking at the huge potential market of DVD, and yet still trading at only 20X. Need I say more? Ted