Posted On: 06/16/2016 12:21:48 PM
Post# of 15187
some basic sales projections and valuations that these can provide. long post with several examples but gives an objective view to what real FV (fair value) is for the PPS assuming existing dealers are running at the existing SSS rate.
assume 30 dealers up and running and averaging 50 stores per dealer, 1.5 cases, a week sold, and $1.25/bottle avg revenue to HJOE:
DEALER REVENUES
Dealers 30
Stores/Dealer 50
Cases/week/store 1.5
HJOE rev/bottle $1.25
HJOE rev/case $15.00
HJOE Rev/store/yr $1,170
HJOE Rev/Dealer/yr $58,500
HJOE Rev/All Dealers/yr $1,755,000
DEALER FEES/LICENSING
Avg License/dealer $30,000
HJOE Rev/Dealers $900,000
Total Revenues: $2,655,000
that is just below the target zone of the $3-5MM that the company put out and reiterated. granted, they got a slower start than they wanted but that is business. that is only 30 dealers. lets assume same sell through rate and 100 dealers:
DEALER REVENUES
Dealers 100
Stores/Dealer 50
Cases/week/store 1.5
HJOE rev/bottle $1.25
HJOE rev/case $15.00
HJOE Rev/store/yr $1,170
HJOE Rev/Dealer/yr $58,500
HJOE Rev/All Dealers/yr $5,850,000
DEALER FEES/LICENSING
Avg License/dealer $30,000
HJOE Rev/Dealers $3,000,000
Total Revenues: $8,850,000
now - lets assume they just go from 50 accounts/stores to 250 (target is 300 per dealer/territory).
DEALER REVENUES
Dealers 100
Stores/Dealer 250
Cases/week/store 1.5
HJOE rev/bottle $1.25
HJOE rev/case $15.00
HJOE Rev/store/yr $1,170
HJOE Rev/Dealer/yr $292,500
HJOE Rev/All Dealers/yr $29,250,000
DEALER FEES/LICENSING
Avg License/dealer $30,000
HJOE Rev/Dealers $3,000,000
Total Revenues: $32,250,000
Now - the licensing fee is a one time revenue source but at a mere sell through rate of 1.5 cases/week in 250 stores with only 100 dealers - that is $30MM in revenues/year. that does NOT include chips, new products, or ANY international sales. also does not include the big box stores or larger c-store chains once the brand gains traction.
Now - Taking a look at profitability from above standpoint and only including revenues from product sales (not licensing since it isnt reoccurring and only SMS sales on current shots):
PROFITABILITY
Avg Rev/Bottle $1.25
Laid in Cost per Bottle $0.25
GM/bottle $1.00
Assumed overhead 75%
(marketing/advertising, SG&A, legal, etc)
Net profit/bottle $0.25
Net Profit/revenue % 20.0%
Net Profit on Product Revenues: $5,850,000
Corporate Tax Rate 40%
Corporate Tax Due $2,340,000
GAAP Net Income $3,510,000
more importantly for today's price consideration on best guess for CURRENT sales situation of 30 dealers, 50 stores, 1.5 cases/week, $1.25/bottle rev to $HJOE:
MARKET CAPITLIZATION AND RATIOS
O/S (assumed per last filing) 1,900,000,000
Current Price $0.0015
Market Cap $2,850,000
Revenues (product) $1,755,000
Price to Sales (P/s) Ratio (MC/Rev) 1.624
Comparative P/s 11.24 Monster Beverage 6/16/2016
Comp P/s applied to Revenues: $19,726,200 (FV Market Cap)
FV PPS $0.0104
I used Monster (MNST) as it is publicly traded, still in growth mode, and probably the closest in terms of history/story. now - if I include dealer revenue as it IS pertinent in initial FV (Fair Value) calculations before SMS model matures - that brings FV PPS to $0.0157
now - excluding licensing fees and going to 50 stores with 100 accounts - FV PPS becomes: $0.0346
so - when I (and others) start talking about $0.03-0.05 PPS based on current business environment - it is NOT pie in the sky. due to their growth mode being dramatically larger than MNST - one could double or triple the P/s multiple to project that future growth (from 30 dealers to 50 to 100 or from 50 accounts per dealer to 100 to 300). that ratio will be assigned a larger premium once the growth curve can become somewhat validated.
when financials are reported - and revenues look ANYTHING like the above model (wrt to SSS through SMS business model) - the price per share will quickly start reflecting the potential. even if OS was 3BB - FV today would be closer to $0.01 PPS based on the $3MM in revenues. that is only with a 11.24 multiple applied. so - again, if/when they file and revenues look like this - a penny should come very quickly and then possibly 3-5 cents shortly thereafter.
finally - the $1.00 PPS target (with no splits or buybacks). if one provided a 28.1 P/s ratio (or 3X current Monster P/s) - the company would have to have 100 dealers, 300 accounts per dealer, and doing 3 cases a week at $1.25/bottle to justify $1 PPS at 1.9BB OS. at current P/s to MNST (11.24), there would need to be 541 dealers with 200 accounts and 2 cases a week per store. not impossible but definitely years out.
now - from a totalrevenue side: at 100 dealers, 200 stores, 2 cases/week - that gives $31.2MM in revenues. at current 11.24 P/s multiple - it would take an ADDITIONAL $137.8MM in revenues to give a $1 PPS. if the multiple were tripled to take into account the future growth - it would only take an additional $25MM in revenues (or $56.3MM total) to give $1. regardless - this would more than likely be years away but certainly possible based on the multiplier effect of retail sales and a brand taking off.
all the more reason shareholders need filings to be published and company allowed to move forward. also why i think PPS will start moving aggressively before they do file and/or when it become imminent. if a TRO is granted today preventing KBM from further conversions - that would go a long way.
assume 30 dealers up and running and averaging 50 stores per dealer, 1.5 cases, a week sold, and $1.25/bottle avg revenue to HJOE:
DEALER REVENUES
Dealers 30
Stores/Dealer 50
Cases/week/store 1.5
HJOE rev/bottle $1.25
HJOE rev/case $15.00
HJOE Rev/store/yr $1,170
HJOE Rev/Dealer/yr $58,500
HJOE Rev/All Dealers/yr $1,755,000
DEALER FEES/LICENSING
Avg License/dealer $30,000
HJOE Rev/Dealers $900,000
Total Revenues: $2,655,000
that is just below the target zone of the $3-5MM that the company put out and reiterated. granted, they got a slower start than they wanted but that is business. that is only 30 dealers. lets assume same sell through rate and 100 dealers:
DEALER REVENUES
Dealers 100
Stores/Dealer 50
Cases/week/store 1.5
HJOE rev/bottle $1.25
HJOE rev/case $15.00
HJOE Rev/store/yr $1,170
HJOE Rev/Dealer/yr $58,500
HJOE Rev/All Dealers/yr $5,850,000
DEALER FEES/LICENSING
Avg License/dealer $30,000
HJOE Rev/Dealers $3,000,000
Total Revenues: $8,850,000
now - lets assume they just go from 50 accounts/stores to 250 (target is 300 per dealer/territory).
DEALER REVENUES
Dealers 100
Stores/Dealer 250
Cases/week/store 1.5
HJOE rev/bottle $1.25
HJOE rev/case $15.00
HJOE Rev/store/yr $1,170
HJOE Rev/Dealer/yr $292,500
HJOE Rev/All Dealers/yr $29,250,000
DEALER FEES/LICENSING
Avg License/dealer $30,000
HJOE Rev/Dealers $3,000,000
Total Revenues: $32,250,000
Now - the licensing fee is a one time revenue source but at a mere sell through rate of 1.5 cases/week in 250 stores with only 100 dealers - that is $30MM in revenues/year. that does NOT include chips, new products, or ANY international sales. also does not include the big box stores or larger c-store chains once the brand gains traction.
Now - Taking a look at profitability from above standpoint and only including revenues from product sales (not licensing since it isnt reoccurring and only SMS sales on current shots):
PROFITABILITY
Avg Rev/Bottle $1.25
Laid in Cost per Bottle $0.25
GM/bottle $1.00
Assumed overhead 75%
(marketing/advertising, SG&A, legal, etc)
Net profit/bottle $0.25
Net Profit/revenue % 20.0%
Net Profit on Product Revenues: $5,850,000
Corporate Tax Rate 40%
Corporate Tax Due $2,340,000
GAAP Net Income $3,510,000
more importantly for today's price consideration on best guess for CURRENT sales situation of 30 dealers, 50 stores, 1.5 cases/week, $1.25/bottle rev to $HJOE:
MARKET CAPITLIZATION AND RATIOS
O/S (assumed per last filing) 1,900,000,000
Current Price $0.0015
Market Cap $2,850,000
Revenues (product) $1,755,000
Price to Sales (P/s) Ratio (MC/Rev) 1.624
Comparative P/s 11.24 Monster Beverage 6/16/2016
Comp P/s applied to Revenues: $19,726,200 (FV Market Cap)
FV PPS $0.0104
I used Monster (MNST) as it is publicly traded, still in growth mode, and probably the closest in terms of history/story. now - if I include dealer revenue as it IS pertinent in initial FV (Fair Value) calculations before SMS model matures - that brings FV PPS to $0.0157
now - excluding licensing fees and going to 50 stores with 100 accounts - FV PPS becomes: $0.0346
so - when I (and others) start talking about $0.03-0.05 PPS based on current business environment - it is NOT pie in the sky. due to their growth mode being dramatically larger than MNST - one could double or triple the P/s multiple to project that future growth (from 30 dealers to 50 to 100 or from 50 accounts per dealer to 100 to 300). that ratio will be assigned a larger premium once the growth curve can become somewhat validated.
when financials are reported - and revenues look ANYTHING like the above model (wrt to SSS through SMS business model) - the price per share will quickly start reflecting the potential. even if OS was 3BB - FV today would be closer to $0.01 PPS based on the $3MM in revenues. that is only with a 11.24 multiple applied. so - again, if/when they file and revenues look like this - a penny should come very quickly and then possibly 3-5 cents shortly thereafter.
finally - the $1.00 PPS target (with no splits or buybacks). if one provided a 28.1 P/s ratio (or 3X current Monster P/s) - the company would have to have 100 dealers, 300 accounts per dealer, and doing 3 cases a week at $1.25/bottle to justify $1 PPS at 1.9BB OS. at current P/s to MNST (11.24), there would need to be 541 dealers with 200 accounts and 2 cases a week per store. not impossible but definitely years out.
now - from a totalrevenue side: at 100 dealers, 200 stores, 2 cases/week - that gives $31.2MM in revenues. at current 11.24 P/s multiple - it would take an ADDITIONAL $137.8MM in revenues to give a $1 PPS. if the multiple were tripled to take into account the future growth - it would only take an additional $25MM in revenues (or $56.3MM total) to give $1. regardless - this would more than likely be years away but certainly possible based on the multiplier effect of retail sales and a brand taking off.
all the more reason shareholders need filings to be published and company allowed to move forward. also why i think PPS will start moving aggressively before they do file and/or when it become imminent. if a TRO is granted today preventing KBM from further conversions - that would go a long way.
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