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Simple Way To Valuation SCTY.

|Includes:SolarCity Corp. (SCTY)


In SCTY Q2 the company developed 8000 new household roof. The whole 2013 SCTY will developed 30000 new household roof. In the IPO files we can find the net profit for each household is 15000 US. In other words the contract in 2013 will make 450 million US net profit in the future.

Let's say the SCTY developing new household roof as the same 30000 new roof in the next 10 year. Since the make share of the household in SCTY 14 business states only 0.1%. That means over ten year development. The SCTY market share still 1% of the total household. Still very low.

For an utility company its easy to have 20-30 PE range. AEP at PE 18. DUK at PE 25.SO at PE 22. At this point if we give SCTY PE 10 as 30000 new household roof continue developing every year. The net profit for each year will be 450 million US. In PE 10 the market Cap will be 4.5 billion. At this moment the market Cap is less than 3 billion.

In other way we can compare SCTY to the solar project which Warren Buffet invested. The Agua Caliente project Warren invest 1.8 billion for a 49% of 290MW. The SCTY Q1 2013 had 333MV,, at the end of this year the total MV will 560MW. For 333MV the valuation will be 4.2 billion. For 560MV the valuation is 7 billion..

Compare SCTY to Topaz and Antelope Valley, 550MW-579MW at 2 billion-2.5 billion. The fixed business valuation bottom line is 2-2.5 billion. And the SCTY had 3 billion development ability on hand, equal to 840MW.

I am long on $SCTY.

Disclosure: I am long SCTY.

Stocks: SCTY