In the interview he said that our plant has been depreciated out so out cost is low… something of that effect.
What kind of logic is that? his plant of 450tpd might be depreciated, what about the 550tpd thats coming on stream in october and 1100tpd yet to be announced? the stock trades such premium valuation and they are talking about the depreciation advantage is really absurd. On one hand he keeps saying that Chinese producers have various subsidies and we cant compete without import restrictions and when the duty is removed/not renewed he’s talking about advantages of his legacy plant.
In the end the valuations are depended on the margin profile of the business. Company has been counting on fund raise to set up 1100tpd plant. with margins under pressure the valuations will compress in the future. I don’t know how will the company fund its next leg of expansion. Now they are saying that the German acquisition is also on hold. This is not a very high asset turn business to begin with and because of that fact the margin profile of the company becomes very very crucial. I’d have been happier if the company tried to give a margin impact range instead of talking about march 2023.
Company has been trying to raise funds for the next leg of capex for a long time but they did not get much interest. Now lets see what they do with the 1100tpd capex.
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