dantman859 2010 and 2011 projections

http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_C/threadview?m=tm&bn=102178&tid=2893&mid=2893&tof=1&frt=3

2010 and 2011 projections 12-Mar-10 09:33 pm Recently the company announced a $100M contract for 230,000 Tons scrap steel to be delivered b/w March and end of the year, with the new 1 M ton recycling plant to be rapidly ramped up to full capacity by the 4th quarter in order to meet the demand. Previously it had also issued guidance for 90 to 95M revenue and 0.45 to 0.5 eps for the full year of 2009. In order to finance the expansion into the new recycling business and the massive growth that comes with it, the company had also used massive share dilution in the form of 4.7 millions total of options and warrants at $5 strike that are now all in-the-money due to the recent huge runup of share prices. The following is a simple attempt at predicting the eps range that one can expect for 2010 and 2011 using available data and rough estimates absent more accurate info on margin, future demand and pricing for scrap steel and other metal ores. The model is based on the current reselling volumes and recycling capacity and excludes the impact of any future acquisition and/or financing.

Asuming the first 23 Thousand Ton (=23 KT) of recycled scrap steel will be produced in the month of March and the production ramped up linearly to a maximum of 250 KT in the 4th quarter (100% capacity) as per recent PR, we get a total of 550 KT for the year. Of that, 230 KT will be sold for $100 M per announced contract at $440/ton. We assume further that half of the remaining 320 KT will be sold to other clients during the year at the same price, yielding 320K x 440 /2= $70M. We also assume for simplicity the same revenue for 2010 and 2011 from the reselling business as in 2009, i.e. about 93M as per guidance.

- For 2010:
Est. revenue = 100M (contract) + 70M (excess production) + 93M (reselling) = 263M

Est Net Income= 263M x 6% (assuming same net margin as in 2008) = 15.8M

2010 eps= 15.8/14.8M = 1.07 ( assuming fully diluted O/S with all 4.7M options and warrants exercized this year and neglecting the extra cash they bring)


- For 2011:
Est. revenue= 0.8x1Mx440 (assuming 80% of recycled capacity sold at current price)+ 93M (reselling business) = 445M

Est Net Income= 445M x 6% = 26.7M

Est 2011 eps = 26.7/14.8= $1.80

The estimated eps of $1.07 and $1.80 for 2010 and 2011 would thus represent a year-over-year increase of 128% (vs. $0.47 for 2009) and 69% respectively. This kind of growth in this industry would probably garner a PE in the 15 to 20 range (in my opinion) that compares well with the PE's of industry peers (17.8 for SCHN and 24.5 for CMC) acc. to the 2009 Investor Presentation (Slide 18).

I have no doubt that the model will need further adjustments as more information from the company becomes available. As always, comments are welcome.

-Dan

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提供日期： 2009-7-1 作者： 信息来源：招商局
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项目概况 矿产资源严重短缺以成为钢材和金属发展的桎梏，金属等废旧资源的再生利用是减轻中国金属工业发展对不可再生资源的依赖，实现可持续发展战略目标的保障。利用废钢作为再生资源生产钢铁，也可减轻环境污染和节能降耗。总之，从需求、成本、环保、疏通物流等方面综合来看，建立废钢加工配送基地，这符合产业发展方向。

投资估算与效益分析 总投资额为7000万元，项目建成后可实现销售收入12000万元，利润2400万元，税金2000万元，解决就业岗位300多个。

市场预测 钢铁行业的发展直接影响了该项目的原料进口及销售收入，就目前国家形势来看，该项目市场前景广阔，受国家政策的支持。