Partners Embrace Win-Win Proposition In Solazyme's Tailored Oils [View article]
Adam Aloisi,
I agree with you that the lack of clarity on various metrics provides haziness as to the pricing of the company stock in the present. However, I am a strong supporter of the idea that until proven otherwise the company's information should also be taken at face value. The company has provided various figures that allow us to piece together a decent picture of market potential. There are many here who would be quick to discredit this as being reliable, and yet they have no reason apart from their doubts as to state why. There are many here who also disagree with me on this principle of trusting what management has been saying and are going to be quick to attack whatever I say here, so bear with me.
When we look at SZYM, the inherent value of the company's future isn't even being realized at all. One simple test of this would be the fact that the company now carries a higher book value on its balance sheet than at its IPO & has made significantly more progress than at its IPO and yet now trades at less than half the price of the IPO. One can argue that the IPO itself may have been overvalued, but the fact the initial momentum actually carried the stock 50% higher over $18 to $27, and it's clear that market demand had a much stronger appetite upon the potential than the IPO price.
I believe that the traditional metrics of analyzing a stock fall short in development companies, especially those in the promising biotech space. One look at more promising pharma companies like ARNA & VVUS give a credence to this. Clearly if we were to use the conventional metrics for ARNA, a price-to-sales ratio of 63 and price-to-book ratio of 15 is far from warranted. But the reason such a price is here is due to the market's realization of the value inherent in the company's future regardless of the possible setbacks that could come about. I'm not arguing for a valuation that high, otherwise we'd be looking at a price of $70 for SZYM on book value alone.
Yet if we stick strictly to the numbers as your post might suggest, we lose sight of what is actually to be valued in an investment. The $44 million fails to remain representative of the company's future revenues. Only $16 million were actual product revenues, and the majority of this was related to the company's own efforts to penetrate a market from scratch. Not so going forward. Practically none of the revenues were related to actual business model that is to soon be expected.
Yet we do have some clarity as to what those revenues can look like, and we have some clarity as to what those margins could look like. We know what nameplate capacity is able to produce. We know the range of ASP's the company is aiming for. We have an approximate range of the company's cost structure. We have a defined pathway for market entry.
Simple math alone suggests that within 24-36 months, revenues attributable to the combined company could reaching levels north of $500 mil/yr alone if an ASP of $3000/mt across the board is applied and existing facilities under development are maxed out. Even before considering the reality of additional facilities, the revenue growth ramp justifies a higher multiple.
To be clear, Adam I understand your point and would never suggest for anyone to lose sight of their own portfolio diversification just as I myself maintain. It is never wise for anyone to put more than 5-10% of their portfolio into a particular equity. In the same sense it is ideal to see this investment as being speculative as it stands as a company in development without a firm grasp as to metrics which can be relied upon.
As to what I believe the stock price should be valued at, I think its safe to say that the IPO price is still my short-term target floor just on the basis of the simple test of market expectation potential stated above. I honestly believe that no one has a clear concept of valuation at this point (which you could justify as meriting a lower share price if you discredit the progress thus far proven). The analysts themselves still have PT's all over the board due to the lack of clarity as you mention even though the majority each agree with the much higher price target.
I'm sure those wanting to level me out will weigh in with their input after this. No problem on jumping the gun, newalker j/k (thanks for apology & no offense taken). Replying to comments have taken a real toll on me in terms of time, so forgive me if I don't put the amount of effort in that I used to in addressing those looking for a rebuttal.
Solazyme Partners With Mitsui - An Interview With Solazyme's Business Development Director (Part 1) [View article]
Whether you stay or go & think this or that is really up to you. I just feel like you're wasting your time. And you're definitely wasting mine by presenting unfounded arguments. If you actually wanted to tell me something, you were free to msg me privately. But because you wanted to invoke a response, you brought it up on the forum here. So be the case, I've given my reply. Just don't expect me to invest so much time into you in the future.
Solazyme Partners With Mitsui - An Interview With Solazyme's Business Development Director (Part 1) [View article]
refer to my last comment entered right before you replied.
Last of all, your assumption of an answer in non-response isn't confirmation of a fact. Also, why would a company also care about independent confirmation when they're able to do it themselves?
As for the risk to Bunge, there was 50% risk to both parties. One can absorb the blow easier than the other should something go wrong, but you made it seem like they just threw out chump change & said whatever. The fact they're excited about the venture proves more than enough of their lack of ambivalence in the issue.
By the way, I know its often hard to read into someone's writing, but I really am saying this in a nice way. If I'm wasting your time with my writing, you are always free to stop reading. You are also free to not invest if you don't believe in what the company's presenting.
Now i've just spent 20 mins talking about this. Have a good day. The floor is yours.
Solazyme Partners With Mitsui - An Interview With Solazyme's Business Development Director (Part 1) [View article]
Just in case we really do have a misunderstanding going on let me throw in one more word:
You do realize that there is reason for a contingency right? The process is still technically not yet established on a commercial scale. If the technology proves unable to scale up into a commercial scale facility that plant may be better used in another way.
But in no way does this mean that validation of the process hasn't occurred. It's just part of development. It's also a risk one takes in investing.
Anyways, thats all i'm going to say about this. Have a good day, newalker.
Solazyme Partners With Mitsui - An Interview With Solazyme's Business Development Director (Part 1) [View article]
The rep says nothing about validation. Rather he gives a very clear understanding of a contingency from the standpoint of someone concerned from Bunge's perspective.
On the other, you come in with this view that validation has not occurred and when the concept of a contingency comes up you presume that such a contingency is proof of non-validation.
Your own quote: "I think it is apparent that Bunge's due diligence efforts accrued to a great deal for themselves, but did not validate the SZYM process."
You're just applying your presuppositions into what the rep said. So be it if that's what you want to do, but you're really just wasting my time here.
I'm sure you'll have a response so have the last word. But i'm not here to argue this or continue this debate. Sorry.
Solazyme Partners With Mitsui - An Interview With Solazyme's Business Development Director (Part 1) [View article]
Are you really about to conclude with your own presuppositions of non-validation on the basis of an answer from an investor relations rep that actually says nothing of the sort? Thank you for the comment, newalker, but what exactly are you trying to prove to me?
If you don't believe the company is presenting itself fairly, maybe you should stay away from it.
Solazyme Addresses The Limitations Of Oil Production - An Interview With Solazyme's Director (Part 2) [View article]
mktake,
They already have the backing of Chevron who's an investor of the company in the background. There's also a relationship with EcoPetrol SA. Not quite sure what you're expecting though. Not quite sure what you're expecting though. Most "biofuel" plays also have ongoing relationships with Big Oil, but not much more.
I think you should realize that it was actually a more specifically crafted statement than you might think if you haven't been following the company for some time. The company's critics over the past few years have been very skeptical & doubting of the ability to scale up in a linear fashion. For those fearing the seemingly large jump from 128,000 L tanks to a possible 625,000+ , the factor of five seems daunting. Yet when put into perspective of the company's scale-up from lab-size tanks of about 5 liters, the intention of the reference was to actually reassure and provide confidence that the upcoming jump in scale shouldn't nearly be as big a challenge than what has already been accomplished. If you heard Licari's chat on the conference call about a year ago, I think you would've caught the reference rather than think it was a mere tout.
I'm not sure, Considering United already flew the first commercial flight in the US on its fuels, I'm sure that's also a very good sign of granted approval or something more along the way of being accomplished. The fuels have also been approved for military use so i'm sure that helps speed the process up either way.
Partners Embrace Win-Win Proposition In Solazyme's Tailored Oils [View article]
I agree with you that the lack of clarity on various metrics provides haziness as to the pricing of the company stock in the present. However, I am a strong supporter of the idea that until proven otherwise the company's information should also be taken at face value. The company has provided various figures that allow us to piece together a decent picture of market potential. There are many here who would be quick to discredit this as being reliable, and yet they have no reason apart from their doubts as to state why. There are many here who also disagree with me on this principle of trusting what management has been saying and are going to be quick to attack whatever I say here, so bear with me.
When we look at SZYM, the inherent value of the company's future isn't even being realized at all. One simple test of this would be the fact that the company now carries a higher book value on its balance sheet than at its IPO & has made significantly more progress than at its IPO and yet now trades at less than half the price of the IPO. One can argue that the IPO itself may have been overvalued, but the fact the initial momentum actually carried the stock 50% higher over $18 to $27, and it's clear that market demand had a much stronger appetite upon the potential than the IPO price.
I believe that the traditional metrics of analyzing a stock fall short in development companies, especially those in the promising biotech space. One look at more promising pharma companies like ARNA & VVUS give a credence to this. Clearly if we were to use the conventional metrics for ARNA, a price-to-sales ratio of 63 and price-to-book ratio of 15 is far from warranted. But the reason such a price is here is due to the market's realization of the value inherent in the company's future regardless of the possible setbacks that could come about. I'm not arguing for a valuation that high, otherwise we'd be looking at a price of $70 for SZYM on book value alone.
Yet if we stick strictly to the numbers as your post might suggest, we lose sight of what is actually to be valued in an investment. The $44 million fails to remain representative of the company's future revenues. Only $16 million were actual product revenues, and the majority of this was related to the company's own efforts to penetrate a market from scratch. Not so going forward. Practically none of the revenues were related to actual business model that is to soon be expected.
Yet we do have some clarity as to what those revenues can look like, and we have some clarity as to what those margins could look like. We know what nameplate capacity is able to produce. We know the range of ASP's the company is aiming for. We have an approximate range of the company's cost structure. We have a defined pathway for market entry.
Simple math alone suggests that within 24-36 months, revenues attributable to the combined company could reaching levels north of $500 mil/yr alone if an ASP of $3000/mt across the board is applied and existing facilities under development are maxed out. Even before considering the reality of additional facilities, the revenue growth ramp justifies a higher multiple.
To be clear, Adam I understand your point and would never suggest for anyone to lose sight of their own portfolio diversification just as I myself maintain. It is never wise for anyone to put more than 5-10% of their portfolio into a particular equity. In the same sense it is ideal to see this investment as being speculative as it stands as a company in development without a firm grasp as to metrics which can be relied upon.
As to what I believe the stock price should be valued at, I think its safe to say that the IPO price is still my short-term target floor just on the basis of the simple test of market expectation potential stated above. I honestly believe that no one has a clear concept of valuation at this point (which you could justify as meriting a lower share price if you discredit the progress thus far proven). The analysts themselves still have PT's all over the board due to the lack of clarity as you mention even though the majority each agree with the much higher price target.
I'm sure those wanting to level me out will weigh in with their input after this. No problem on jumping the gun, newalker j/k (thanks for apology & no offense taken). Replying to comments have taken a real toll on me in terms of time, so forgive me if I don't put the amount of effort in that I used to in addressing those looking for a rebuttal.
Kevin
Solazyme Partners With Mitsui - An Interview With Solazyme's Business Development Director (Part 1) [View article]
Solazyme Partners With Mitsui - An Interview With Solazyme's Business Development Director (Part 1) [View article]
Last of all, your assumption of an answer in non-response isn't confirmation of a fact. Also, why would a company also care about independent confirmation when they're able to do it themselves?
As for the risk to Bunge, there was 50% risk to both parties. One can absorb the blow easier than the other should something go wrong, but you made it seem like they just threw out chump change & said whatever. The fact they're excited about the venture proves more than enough of their lack of ambivalence in the issue.
By the way, I know its often hard to read into someone's writing, but I really am saying this in a nice way. If I'm wasting your time with my writing, you are always free to stop reading. You are also free to not invest if you don't believe in what the company's presenting.
Now i've just spent 20 mins talking about this. Have a good day. The floor is yours.
Solazyme Partners With Mitsui - An Interview With Solazyme's Business Development Director (Part 1) [View article]
You do realize that there is reason for a contingency right? The process is still technically not yet established on a commercial scale. If the technology proves unable to scale up into a commercial scale facility that plant may be better used in another way.
But in no way does this mean that validation of the process hasn't occurred. It's just part of development. It's also a risk one takes in investing.
Anyways, thats all i'm going to say about this. Have a good day, newalker.
Solazyme Partners With Mitsui - An Interview With Solazyme's Business Development Director (Part 1) [View article]
On the other, you come in with this view that validation has not occurred and when the concept of a contingency comes up you presume that such a contingency is proof of non-validation.
Your own quote:
"I think it is apparent that Bunge's due diligence efforts accrued to a great deal for themselves, but did not validate the SZYM process."
You're just applying your presuppositions into what the rep said. So be it if that's what you want to do, but you're really just wasting my time here.
I'm sure you'll have a response so have the last word. But i'm not here to argue this or continue this debate. Sorry.
Solazyme Partners With Mitsui - An Interview With Solazyme's Business Development Director (Part 1) [View article]
If you don't believe the company is presenting itself fairly, maybe you should stay away from it.
Rising Jet Fuel Costs Leave Airlines Looking For Answers [View article]
Solazyme Addresses The Limitations Of Oil Production - An Interview With Solazyme's Director (Part 2) [View article]
They already have the backing of Chevron who's an investor of the company in the background. There's also a relationship with EcoPetrol SA. Not quite sure what you're expecting though. Not quite sure what you're expecting though. Most "biofuel" plays also have ongoing relationships with Big Oil, but not much more.
Kevin
Rising Jet Fuel Costs Leave Airlines Looking For Answers [View article]
Rising Jet Fuel Costs Leave Airlines Looking For Answers [View article]
Rising Jet Fuel Costs Leave Airlines Looking For Answers [View article]
Rising Jet Fuel Costs Leave Airlines Looking For Answers [View article]
Rising Jet Fuel Costs Leave Airlines Looking For Answers [View article]
I think you should realize that it was actually a more specifically crafted statement than you might think if you haven't been following the company for some time. The company's critics over the past few years have been very skeptical & doubting of the ability to scale up in a linear fashion. For those fearing the seemingly large jump from 128,000 L tanks to a possible 625,000+ , the factor of five seems daunting. Yet when put into perspective of the company's scale-up from lab-size tanks of about 5 liters, the intention of the reference was to actually reassure and provide confidence that the upcoming jump in scale shouldn't nearly be as big a challenge than what has already been accomplished. If you heard Licari's chat on the conference call about a year ago, I think you would've caught the reference rather than think it was a mere tout.
Kevin
Rising Jet Fuel Costs Leave Airlines Looking For Answers [View article]
I'm not sure, Considering United already flew the first commercial flight in the US on its fuels, I'm sure that's also a very good sign of granted approval or something more along the way of being accomplished. The fuels have also been approved for military use so i'm sure that helps speed the process up either way.
http://bit.ly/POTGqE
Kevin
Rising Jet Fuel Costs Leave Airlines Looking For Answers [View article]