Wednesday, September 14, 2011

Particularly Profitable

Corn oil extraction has proven to be a particularly profitable diversification technique for the company. All of GPRE’s plants are now producing corn oil by extracting it from the distillers grains. “You’re taking something that’s worth about 9 cents a pound and converting it to something that’s worth around 36 cents a pound net, so you’re turning a low-value feed product into something that’s a high-value energy product,” Becker said. “We’ve deployed this technology at all nine of our plants at a cost of $20 to $22 million and we’re going to generate somewhere between $30 and $40 million of operating income from these investments in the next 12 months.” Becker expects corn oil production to remain profitable through the next several years, pointing out that if every ethanol plant in the U.S. were to add corn oil extraction technology to their operations only about 250 million gallons of oil would be produced. “That’s not very much product for all the value that we’re able to generate for our shareholders,” he added.  SEE ENTIRE ARTICLE HERE

SkunK

And it helps to have the right technology provider . . .

PS.  At just 20% market penetration of that conservative 250mmgy estimate (for the industry by Mr. Becker above), (20% penetration is approximate GERS goal for end of year), at about 70 cents per gallon - that is $35M in revenues.  Take out $10M in administrative and other costs and we are left with $25M in earnings.   At a ten times revenue earnings (P/E ratio) we have a $250M market cap.  Divide that by post r/s 14M shares? that is a pps of over $17/share.  Pipe dream?  Perhaps.  If it is wrong,  then either my numbers or my calculations are wrong.   I will be the first to admit my past future price calculations have not been spot on by any means.  What if my numbers are off by 50%?  Is that $8/share?  Guess we will only know for sure in a year looking back.

SkunK-ism on life in general?  "The future is what makes the present so interesting."

14 comments:

Anonymous said...

welcome to price/time pergatory

nobody12378 said...

Skunk,

You estimate is only for revenue/income from GPRE. Many more mmgy already under license, litigation to yield significant revenue, other methods to be licensed with greater yields. With only 14 million shares O/S this translates into a literal gold mind that the world is ignoring. I continue to ask what does the rest of the world know that we do not, or what do we know that other smart folks do not? It is lonesome being this far ahead of the world. Time will tell.

Anonymous said...

off by 50% ???
then its maybe $8 pps ... or $25!!!

Anonymous said...

GPRE is already trading at $10 a share. What is Skunk's point?

nobody12378 said...

Anony, he is making a conservative estimate for the PPS of GERS post R/S.

Anonymous said...

Conservative or a wild over estimation? I know that looking at it with the glass half full you might hope for this but the reality is that we are at no bid right now. We will still have a 20 billion AS and over 200 billion shares worth of dilution/converted debt possible. This can't go anywhere until this is cleared up. Not even if they report 100 million dollars in revenue in the 3rd quarter (drastic exaggerated example). My money hopes I am wrong. Just my thoughts.

Anonymous said...

I am not going anywhere until this IS cleared up.

I'll be here when it is cleared up . . .

At only ten dollars a share the debt is gone with moving the post R/S shares from 14 to 17M shares = only 3M shares pays off the debt.

Not a big deal when the ppps is right. Why do you think so many people are on the boards trying to beat down the price? The shareholders are just collateral damage. They are aiming to bk the company.

P/E is more likely to be 20-30 once we start getting momentuem

Anonymous said...

It's pretty simple to see why the price doesn't go up. They owe over $30 Million which comes due at the end of next year. They won't be able to pay that off no matter how quickly the revenues increase from the COES they have and are commissioning. They need to refinance, but in order to do that, they need to show that they are profitable and not just for a quarter or two. Who's going to loan a company who's just barely making it over $30 Million?

Anonymous said...

ALL THES DEBT IS DUE END OF NEXT YEAR!

Go back and look at the old 10ks. It is always due at the end of next year. It is always renegotiated so that what is left is due the of the next year. It has been moved every year for years so that is not a problem. Greeenshift has never been in a beter position to pay back its debt. Things are looking up. Way up!

Anonymous said...

Buy!!!! Buy!!!! Buy!!!! at 0.0001 while it is a bargain.

Anonymous said...

20% of the industry? wouldnt that be like 50 mill a year or more with inflation? 30 mill debt wont last long.

Anonymous said...

Yeah, today's high is .0001 like all week long. It's going way up.

Anonymous said...

Just remember the reverse split of 1/10000 shares by the end of the year. Still worth a shot though, why not :)

Anonymous said...

Meant 1/1000 shares split

 
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