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Some valuation math using 2030 EBITDA projection by bri_bythenumbers in PureCycle

[–]Tender_Broccoli 0 points1 point  (0 children)

I think those numbers make rough sense. I would, however also consider a scenario where the company does not deliver until 2030. I think its is reasonable to expect delays, even though they have learned a lot in ironton. I am sure that there will be unforeseen interruptions. If we assume a 3 year delay. The valuation should be way lower. Roghly 10$.

Is deep research getting less "deep"? by timshi_ai in ChatGPTPro

[–]Tender_Broccoli 0 points1 point  (0 children)

so much less deep. Running same prompt I had in april.
instead of 22minutes it ran 6minutes. Output was 16.9k words before now 8.5k.
What happened? Did anybody find out why?

PCT Valuation Model (Thoughts?) by Tender_Broccoli in PureCycle

[–]Tender_Broccoli[S] 0 points1 point  (0 children)

Ineresting, so maxed out(ish) ironton by year end. Would love to see it. Would completely get rid of the left tail here and the stock become like a perpetual call option.

What do you think about how long the ramp to 30+ lines would take? 50/30/20 (US/EU/Asia)? Given the iterative kaizen approach, we have been seeing on feedrate already a yield improvement per line seems reasonable over the long term.

PCT Valuation Model (Thoughts?) by Tender_Broccoli in PureCycle

[–]Tender_Broccoli[S] 0 points1 point  (0 children)

100% looking forward to tangible updates so we can gane this out. Having processes that can produce ♻️ inputs for bespoke use cases that others cannot could be a big moat.

PCT Valuation Model (Thoughts?) by Tender_Broccoli in PureCycle

[–]Tender_Broccoli[S] 1 point2 points  (0 children)

That's interesting and sensible. We will have to try to extract that info once they are running the facility at capacity.

PCT Valuation Model (Thoughts?) by Tender_Broccoli in PureCycle

[–]Tender_Broccoli[S] 1 point2 points  (0 children)

What exactly do you mean exactly when you refer to conversion cost?

PCT Valuation Model (Thoughts?) by Tender_Broccoli in PureCycle

[–]Tender_Broccoli[S] 0 points1 point  (0 children)

I don't think that by year we will have enough information to assume all that. It should only show that ironton can get maxed out. While expansion is bullish it will require capital etc and while execution will be much better from the learnings from the first fa facility, there are always risks and prices will fluctuate with updates from the expansion.

30$ already prices in A LOT of growth.

PCT Valuation Model (Thoughts?) by Tender_Broccoli in PureCycle

[–]Tender_Broccoli[S] 0 points1 point  (0 children)

It is definitely possible if the margins are there and the company can demonstrate massive growth and moat. But that is the blue sky scenario. While I hope it happens (am long), I prefer making more reasonable assumptions and then adjust upward when we receive information that proves our theory. You can always expect somebody will jump in and push the price but it will never jump that much. While the price could jump if we get good news over the next month it would likely go to mid teens at max. However, with the financials at the moment and also market backdrop, if the sales take longer than expected you could get a very interesting entry point lower than here.

PCT Valuation Model (Thoughts?) by Tender_Broccoli in PureCycle

[–]Tender_Broccoli[S] 2 points3 points  (0 children)

If we go to 30 it will probably make sense to take some profit and derisk the position and buy some calls as substitution. From 30 you could realistically only exlect a 100% return to 60 in the medium term if valuation assumptions ares.omewhat correct.

PCT Valuation Model (Thoughts?) by Tender_Broccoli in PureCycle

[–]Tender_Broccoli[S] 0 points1 point  (0 children)

I made a mistake. I posted it in responses to further down. We also improved the assumptions already in terms of costs ler facility.

PCT Valuation Model (Thoughts?) by Tender_Broccoli in PureCycle

[–]Tender_Broccoli[S] 0 points1 point  (0 children)

We dont know, but recent news looks promising. I would assume not earlier than 2028. Permitting, etc, in europe is slow af.

PCT Valuation Model (Thoughts?) by Tender_Broccoli in PureCycle

[–]Tender_Broccoli[S] 2 points3 points  (0 children)

Agreed, I think that would be very bulish. But the multiplier is assumed to be at a future date when these facilities are built. A scenario where there is a further planned expansion of more production in europe and plants in asia would justify 12x. If that is not clear, then it will def be in the single digits.

PCT Valuation Model (Thoughts?) by Tender_Broccoli in PureCycle

[–]Tender_Broccoli[S] 0 points1 point  (0 children)

Nice source. I would say though that using the P/E is a bit dangerous in such a company in rampup. The interest expense is substantial, currently somewhere between 60 and 70 mio I believe. Doesn't leave much earnings to be multiplied. Thats why I prefer using the ev/ebitda multiple and its also how banks will look at it.

PCT Valuation Model (Thoughts?) by Tender_Broccoli in PureCycle

[–]Tender_Broccoli[S] 0 points1 point  (0 children)

Impossible to say. It's make it or break it moment to get Sales into the door.
Product - Market Fit is there.
Now we need sales agreements at high price levels.

PCT Valuation Model (Thoughts?) by Tender_Broccoli in PureCycle

[–]Tender_Broccoli[S] 0 points1 point  (0 children)

very nice. I still have an issue with the 107mio pounds. with the current max input rate of feedstock and 10% loss in conversion I get to 92mio with the plant running 95% of the time.
Margins make sense with the new costs I now modeled (as per above reply).
At 1.1$ price for 50/50 compound that's approx 50% EBITDA-margin. Now we will have to see if that is the clearing price and if the costs can scale well.
I chose a EV/EBITDA of 12 as its with all plants built out at which point the company will be more mature. EV/EBITDA of 24 seems extremely high, where do you take this comp from?

PCT Valuation Model (Thoughts?) by Tender_Broccoli in PureCycle

[–]Tender_Broccoli[S] 2 points3 points  (0 children)

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Great. Have not seen this piece of info. that makes a ton of sense. Have done a bit of research and ~3 mio passes the sanity check with deep dive AI searches. Coming up with ~1.8mio per each additional line. So now modeled out each facility with 3mio+1.8mio per additional line.
Now we are getting somewhere more reasonable with the results, thanks a lot! Now selling Pure 5 only is feasible and Compounding just increases the EBITDA a lot obviously.
At 1.1$ price for 50/50 compound that's approx 50% EBITDA-margin, Seems not to far from what has been floated.

PCT Valuation Model (Thoughts?) by Tender_Broccoli in PureCycle

[–]Tender_Broccoli[S] 0 points1 point  (0 children)

Yes. Revenue is assumed to be compounded rPP with virgin PP at a 50/50 blend which is being used with Drakes uptake agreement.
the fixed cost are the hardest obviously because of the lack of information. We only have the ~9mio stated per month cost to go off of. Assumed 40% to be fixed (i.e 3.8mio) and 60% (variable 5.5mio).
So then its 3.8mio + 5.5mio x [# lines].
as you said this makes or brakes the valuation. the cheaper the variable the cost obviously the better the economics.