If anyone is interested in doing due diligence on this, there's a lot of information in Bioteq's
Fact Sheet and
Investor Presentation.
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Based on my back-of-the-envelope calculations, Bioteq should have a 2008 P/E of 25,
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They have no earnings.
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They have 4 smallish plants currently running, which pay for their own operating costs, plus the administrative costs. They should turn a slight profit this year. The key is, they'll open two giant plants at the end of 2007. You can see the projections for these on pages 14-15 of the investor presentation. Updating those projections to today's metal prices, those two plants alone will net $14 million Canadian. Administrative costs shouldn't go up much, so that should go straight to the bottom line.
Divide $14 million into their market cap (which has dropped since I last did this calculation), and you get a P/E of 19! That's not even considering the other two plants they have under construction, scheduled for '08 completion.
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which is incredibly cheap considering their profits should grow 50% annually for the next 3 years.
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There are no profits. They lost less money in '06 than in '05, but more than in '04.
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I'm assuming they'll continue to open 1-2 new plants per year, and expand operations somewhat at existing plants.
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They've been raising capital by issuing shares (being an environmental tech company probably doesn't hurt the cause), which is nice for their survival prospects (they can sustain their losses because of the capital influx) but not so nice, because of the earnings dilution factor, if you hope they will make a lot of money down the road.
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Ummm.... That's a strategy followed by
nearly every startup company. Their balance sheet is in great shape, they have $28 million cash and $1 million in debt. 2007-2008 is the critical period where they expand their operations on a much larger scale and start making some serious cash.
Obviously there are risks. The biggest is that BQE doesn't execute properly, and there are a lot of delays and cost overruns in the building of the plants. It's worth noting that they've built 4 plants in the past, and are expanding their engineering capabilities. A second risk is that their profits are tightly geared to metal prices. Still, even if metal prices drop by 50%, they'd still make $3 million in 2008, which, as worst-case scenarios go, is not bad at all.