Baltia DD Post and Price Analysis ~ Per the pro-fo
Post# of 41413
Posted On: 12/29/2013 7:49:54 PM
Baltia DD Post and Price Analysis ~
Per the pro-forma, Baltia projects $120M revenue year one, with $18M profits at 64% capacity and fuel charged at $3.50.
Fuel currently trades at $3.00, and Baltia will realistically have at least 90% capacity year round, simply due to the high demand for the JFK-St. Petersburg route.
Now, the float is 1.4B, with most of the shares locked up by insiders. If we use a common trading multiple of 20 EBITDA for startup airlines, we can see that 20x18M = $360M market cap by end of year one of flights.
BUT, Baltia will likely pay $3.00 and under for fuel, so that profit jumps to at least $30M, ~25% profit margins. Calculate the market cap using this more realistic figure, and it jumps to $600M by end of year one of flights.
A standard valuation of the share price at that point, which does not factor hype, will reveal a share price of 42.8 cents/share.
Hype factored in, that value DOUBLES. By the end of first year of flights, the stock will be at 85.6 cents/share, conservatively.
Now, if they acquire a SECOND plane by first flight, profit margins remain the same, but the size of the profit doubles. Now we're talking $1.2 Billion market cap by end of year 1 of flights. The share price, without hype, becomes 85.6 cents/share, and with hype, we're looking at $1.71/share by the end of year one of flights.
What does "hype" mean? Hype refers to any advertising that Baltia may do: radio ads, newspapers, subways, trains, commercials, etc...
I know for a FACT (because I've seen it with my own eyes several times) that Baltia has an excellent advertising blitz campaign coming soon. I expect this stock to be trading at a minimum of .50-.60/share by the end of 2014.
Per the pro-forma, Baltia projects $120M revenue year one, with $18M profits at 64% capacity and fuel charged at $3.50.
Fuel currently trades at $3.00, and Baltia will realistically have at least 90% capacity year round, simply due to the high demand for the JFK-St. Petersburg route.
Now, the float is 1.4B, with most of the shares locked up by insiders. If we use a common trading multiple of 20 EBITDA for startup airlines, we can see that 20x18M = $360M market cap by end of year one of flights.
BUT, Baltia will likely pay $3.00 and under for fuel, so that profit jumps to at least $30M, ~25% profit margins. Calculate the market cap using this more realistic figure, and it jumps to $600M by end of year one of flights.
A standard valuation of the share price at that point, which does not factor hype, will reveal a share price of 42.8 cents/share.
Hype factored in, that value DOUBLES. By the end of first year of flights, the stock will be at 85.6 cents/share, conservatively.
Now, if they acquire a SECOND plane by first flight, profit margins remain the same, but the size of the profit doubles. Now we're talking $1.2 Billion market cap by end of year 1 of flights. The share price, without hype, becomes 85.6 cents/share, and with hype, we're looking at $1.71/share by the end of year one of flights.
What does "hype" mean? Hype refers to any advertising that Baltia may do: radio ads, newspapers, subways, trains, commercials, etc...
I know for a FACT (because I've seen it with my own eyes several times) that Baltia has an excellent advertising blitz campaign coming soon. I expect this stock to be trading at a minimum of .50-.60/share by the end of 2014.
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