New Energy Systems is a Bargain
posted by The Traveller on Friday, January 15, 2010

New Energy Systems (NEWN) looks very cheap at current levels. Here are some numbers from the recent presentation as filed with the SEC:
  • FY 2009 guidance is $23-25m revenue and $5.3-6.0m net income
  • FY 2010 revenue guidance is at least $89.1m (+271%)
  • FY 2010 income guidance is at least $15.6m (+173%)
  • Organic growth projected (incl. acquisitions) is net $11.7m -> $15.6m (33%) year-over-year

  • Shares outstanding (fully diluted): 12.6 million
  • current P/E '10e (PPS $8.25): 6.66
  • P/E/G '10e: 0.2
2010 Objectives:
  • improve sales and profitability
  • maximize synergies (cross-selling opportunities)
  • expand international focus
If successful there is likely upside to 2010 guidance as company guided only for 6.25% revenue growth for core NEWN pre-acquisitions (that's where the "at least" comes in)

More Objectives:
  • significantly increase awareness in investment community
  • uplist stock to a national exchange in 2010
Now here's where the big opportunity lies (besides the current low valuation). There aren't that many profitable battery companies listed on Nasdaq/Amex (that was an understatement) and an uplisting will not stay under the radar in this industry, at least not for long.

Here are some valuation scenarios:

P/E of 10 / 15 / 20: $12.40 | $18.57 | $24.77
P/E/G of 0.5 / 0.75 / 1.0: $20.63 | $30.95 | $41.26

Investor Presentation: http://www.sec.gov/Archives/edgar/data/1144320/000121390010000035/f8k111609ex99i_newenergy.htm

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