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

Metech Intl Press Release

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!