TUB Snippets 3: Metech International Limited
I have so far written 2 TUB Snippets.
I have sold Tapestry Inc for a 20% profit. I have also sold FSL with a 10% profit once the dividend comes in. I am still holding on to the rest of the companies.
For this article, I just like to talk a bit more on Metech International Limited by attempting to predict the possible revenue in 2022 for its new business in lab-grown diamond.
After all, the company has already established numerous relationship around the globe and will have started producing the diamonds as of end Dec 21.
The Revenue Formula is:
Number of Diamond produced per machine X Number of Carat per Diamond X Success Rate X Number of Times the Machine Can Run in 1 Year (i.e 52 weeks) X Number of Machines Bought By The Company X Price per Diamond per Carat X USD/SGD Exchange Rate
|Taken from Alibaba Website|
|Taken from Walters and Hogsett website|
|Taken from with clarity website.|
Based on the information above:
Number of Diamond produced per machine - 100
Number of Carat per Diamond - Estimated 5 Carat (As a lower average)
Success Rate - 60% (Taken the lowest in the range)
Number of Times the Machine Can Run in 1 Year (i.e 52 weeks) - 6.5 times (if each cycle takes about 8 weeks)
Number of Machines Bought By The Company - Max out at 30 machines
Price per Diamond per Carat - A rough estimation is between US$400 to US$1000. Lets take US$600 as the base.
USD/SGD Exchange Rate - 1.35
Revenue = 100 x 5 x 60% x 6.5 x 30 x US$600 x 1.35 = S$47,385,000.
Current Market Cap (22 Nov 21) = S$41.02M
PS Ratio - 0.86
Since there seem to be no direct competitor on the SGX, I decided to take the medium PS ratio of over 640 companies (using SGX Screener). The Medium PS ratio is 1.266.
Do note that I did not take any direct competitor overseas because I believe investors in different platforms analyze companies differently. In addition, I believe target price is subjective and it should be the highest share price that you are willingly to sell the whole position.
Based on a PS Ratio of 1.266 and a Revenue of S$47.385m = Market Cap of S$59.989m - Which is a 46% upside!
However, do note that I am already on a slight gain from my purchase price and will probably sell if there is another 10% to 15% upside.
Please note that the above is just my opinion only. Please do your own due diligence.
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Stay tune for my next post!