ContrarianValue44

Absolutely, makes sense, thanks!

I would recommend for you to listen to this podcast episode, starting from 31 minutes 10 seconds in. Ethical MLM's and peer-to-peer selling in Mexico is not frowned down upon like it is in the US: https://ericschleien.com/podcast/jeremyraper-2021/

"The company has purchased Cu puts @ $3.75/lb strike, locking in profitability, an unusual but welcomed action from a mining firm." - This should lock in more than $80M of operating income for CMMC! For some perspective, the company's entire operating income for 2020 was $66.4M. "CMMC has the ability to triple Cu production from ~80-90mm lbs to 250MM+ lbs by ~2025 at a cost of ~$400MM" - @DeepSouth Can you expand on how you got $400M? From my research this figure is about $800M. Let's expand on 2025 targets for the company. From my findings, the total initial CAPEX (the majority of the CAPEX cost) for the company to triple production is $800M. Let's take the worst case scenario and assume that all of this is funded by debt (it absolutely will not be, it will probably a split between funding the projects with FCF and debt). This would increase the enterprise value of the company from 838M to 1.638B. I then did a sensitivity analysis based on various copper prices. Today's copper price is about $4.16. 1. In a very bearish scenario of a $3 stock price, 2025 and onwards annual EBITDA should be about $200M, about a 12 percent EBITDA/EV yield. 6x EBITDA/EV valuation is a price per share of $0.69 (75 percent downside) - I find this very unlikely. At 10x EBITDA the stock price should be $5.55 (200 percent upside). 2. In a base case scenario imo, with copper prices at $4.50 the 2025 and onwards annual EBITDA of the company is north of $600M. This is about a 35 percent EBITDA/EV yield. 6x EBITDA/EV valuation is a stock price of $9.37 (339 percent upside). 10x EBITDA/EV valuation is a stock price of $20.83 (755 percent upside). 3. Using Bank of America's copper price forecast, copper's 2025 spot price will be $6.50. This is the very bullish case and would result in an EBITDA of $1.1B per year starting from 2025. This is about a 65 percent EBITDA/EV yield. 6x EBITDA/EV valuation is a stock price of $23.69 (858 percent upside). 10x EBITDA/EV valuation is a stock price of $44.70 (1,620 percent upside). That's my profile of the risk/reward ratio. I know that some of these seem far off, but look at the effect that the recent copper price rise has had on CMMC (stock increased by about 10x).

I have a challenge for everyone and I'm going to try and figure it out as well. If the company does raise and buy 30B Japanese Yen, what approximately will be their annual recurring services revenues? In other words, what will be the approximate increase in annual recurring revenues like insurance, mortgage financing, energy, etc.?

Could either of you please expand on this? I don't fully understand the ADR vs. LP units idea. Many thanks in advance!

Couldn't have said it better myself! ?

Makes sense, I think that people are focusing too much on the next year, rather than the long-term. Copper miners and copper have been crashing because China may release their copper reserves. This should only affect 2021. In the long-run however, demand can likely double and supply quality should diminish rapidly and already has been actually since the early 2010s

Hey @Spekulatius thanks for your feedback and research! Saying that the company had trouble executing I think may be an overreaction. The company had one bad quarter (Q1 of 2021) after having four record quarters in 2020. From my understanding this was for two very temporary reasons: 1. An extra long winter in Poland - it is illegal for the company to perform many of their operations when there is snow on the ground (such as cleaning up the landfills). This should no longer be an issue in Q2. 2. A massive uptick in COVID Cases in Poland - In Q1 of 2021 there was a massive spike in COVID cases in Poland. This disrupted the company's operations severely. However, COVID cases have come back to the lowest they've been in Poland since mid-2020. This improvement in the pandemic situation should be reflected in Q3 at the latest probably. Overall @Spekulatius I absolutely agree with you that the company didn't have the best quarter. But, I think that the reaction from the market was WAY overdone and that either Q2 or Q3 will show tremendous improvement from Q1.

Any thoughts on Geotrans S.A.? Geotrans process waste in Poland, install solar panels in what used to be landfills, convert waste to biomass fuel to sell, etc. They are expecting massive revenue contracts to continue coming in, and to begin being able to process new types of waste (therefore new types of contracts) There is actually a massive transformation in Poland right now where they're being required to process most of their waste and clear a lot of their landfills. More detail's can be found in the article below that discusses Mo-Bruk, a competitior of Geotrans: https://seekingalpha.com/article/4415777-mobruk-polish-esg-champion-long-secular-growth-runway-value-multiple The company is expecting 27M in EBITDA in 2022, which sounds reasonable to me, and compares very favorably to today's EV of 61M (nearly a 50 percent yield). This year's EBITDA was 21M. Company expects to be 6x today's size by 2026 (partly achieved through acquisitions). I don't think that they'll quite get to this ambition, but they should be able to grow revenues at over 30 percent per year for a few years and then 20 percent or more per year for another few years. This company is on a time line though, the renovation efforts and sanitation measures in Poland are expected to take until about 2030. Thoughts?

Any thoughts on Copper Mountain Mining Corporation? I believe that at today's copper spot prices the company can generate about 300M CAD of operating income per year with current production levels. This is more than a 25 percent yield on the company's 1.17B CAD Enterprise Value. The company has a clear path to tripling 2020 production by 2025 (expansion of current mine and two new mines). New mines have strong unit economic and should repay the initial CAPEX in a span of about 2 years. All mines are in SAFE jurisdictions - current mine is in Canada, 2 new mines would be in Australia. Also, if you believe like I do, that there is a structural deficit of copper supply (remaining average copper grade has declined rapidly during the last decade) and that demand for copper will boom from electric vehicles and renewable energy, it's not hard to see copper at $6.50 per pound by 2025 (Bank of America prediction). This should roughly double the company's profitability. Royalty hikes in Chile could also limit supply by discouraging foreign investment: https://www.reuters.com/article/us-chile-copper-idUSKCN2D82HC Chile alone produced about 27 percent of the world's copper. A doubling in profitability from copper's spot price going to $6.50 per pound and a tripling of production levels could allow CMMC to produce $1.8B of operating income by 2025. Not saying that this will necessarily happen, but even half of this happening is still tremendous upside. And all of this doesn't even mention that CMMC's valuation multiples could double and still be less than the cheapest comparables. Thoughts? What am I missing here?

I absolutely think that this company has the potential to be at least a three-bagger by 2024 and at least a five-bagger by 2026. Reasoning: Management's projecting $254M of 2023 EBITDA, this could be $400M for 2025 in my opinion (26 percent EBITDA growth rate for 2024 and 2025). At 10x EBITDA (a very reasonable multiple and only slightly higher than today's 8x EBITDA), the market cap would be 2.54B in early 2024 and 4B in early 2026 - 200 percent and 400 percent upside respectively. 15x - 20x EBITDA might even be more reasonable (and is more in-line with competitiors), which could make the market cap as high as $8B - 900 percent upside by early 2026. Shares outstanding may go from 80M to 120M depending on earnout shares, warrant's and redemptions. However, usually these are not activated in full, so a share count between 90M and 100M may provide a more accurate picture. So, yes, there will likely be some dilution, each share in 2023-2026 will likely only have a "slice of the company pie" that is 80-89% of that of a share today. Adjusted for dilution, there is 220 percent upside by early 2024 and 380 percent upside by early 2026. That's at a 10x EV/EBITDA multiple, at 20x there's 780 percent upside by early 2026. So the upside seems to be very attractive. And as mentioned earlier the business model seems to be generating strong returns and tremendous growth. It is also lead by capable highly prestigious management. But let's discuss the downside. This mostly relates to regulation risk. OppFi has really been the target for numerous lawsuits, including the current one against the company from the District of Columbia (DC). Amigo Loans (a company in the same industry, but in the UK) has been suffering heavy pressure from UK regulators on what regulators claim are predatory processes to the UK's poorest borrowers: https://amp-theguardian-com.cdn.ampproject.org/v/s/amp.theguardian.com/business/2021/may/25/amigo-loans-shares-dive-high-court-compensation-fca?amp_js_v=a6&amp_gsa=1&usqp=mq331AQHKAFQArABIA%3D%3D#aoh=16236759700421&referrer=https%3A%2F%2Fwww.google.com&amp_tf=From %1%24s&ampshare=https%3A%2F%2Fwww.theguardian.com%2Fbusiness%2F2021%2Fmay%2F25%2Famigo-loans-shares-dive-high-court-compensation-fca Needless to say, the company's stock price has fallen from 2.5 pounds a share to 8 pence (0.08 pounds). What is to stop these kinds of regulation from entering the US and also destroying OppFi's business model? Both Biden and his nominee to the Consumer Financial Protection Bureau (CFPB) Rohit Chopra seem to be poised to take bold action on the matter soon. Chopra "has spoken out strongly against what he sees as predatory lending practices, in areas from education finance to payday loans." https://amp-ft-com.cdn.ampproject.org/v/s/amp.ft.com/content/d2b62fc8-b759-4ab5-9067-16db399b0232?amp_js_v=a6&amp_gsa=1&usqp=mq331AQHKAFQArABIA%3D%3D#aoh=16236762519614&referrer=https%3A%2F%2Fwww.google.com&amp_tf=From %1%24s&ampshare=https%3A%2F%2Fwww.ft.com%2Fcontent%2Fd2b62fc8-b759-4ab5-9067-16db399b0232 What are the communities thoughts on the risk and reward of OppFi based on what is discussed above? Many thanks! Looking forward to any further updates @Spekulatius

Thank you so much for your help and comments! I see that I was wildly wrong on NAV. Thank you for the DCF and the articles as well, they were both very helpful! Users like you are what makes this community so great and educational!

Hello I'm looking for people to be "devil's advocate" on my stock write-up idea (bring up potential pitfalls of the investment thesis). Here is my write-up: https://www.itaiparnes.com/post/equity-research-publications-amedeo-air-four-plus I do think that the stock has up to 700 percent upside, and a potential 50 percent dividend yield, therefore strong potential. But I'm looking for users to help by pointing out any shortcomings or risks that I missed. Disc: long Amedeo Many thanks! ?

Took a look at it a few days ago, it's probably not quite cheap enough for me though. Also KPG historically trades near today's valuations or at even lower valuations, so do you have any catalysts for a re-rate of the stock?

Thanks!!