- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
re: Diving Deeper on Origin Materials?
Posted on 1/6/23 at 9:49 am to GeneralLee
Posted on 1/6/23 at 9:49 am to GeneralLee
This is a long-term hold for me providing that management continue to check the boxes.
I know that a company's projections should be taken with at least a little salt, but if you look at the company's projections and with an EBIDTA multiple of 1.5x that of established chemical companies, the price target in 7 years would be $100-300.
It is a speculative investment but I'm confident enough that I've got almost 9% of my portfolio in it. In pre-revenue companies I look for those at an inflection point with the real potential to capture significant market share. Those are very few and far between but I think Origin fits that bill.
I know that a company's projections should be taken with at least a little salt, but if you look at the company's projections and with an EBIDTA multiple of 1.5x that of established chemical companies, the price target in 7 years would be $100-300.
It is a speculative investment but I'm confident enough that I've got almost 9% of my portfolio in it. In pre-revenue companies I look for those at an inflection point with the real potential to capture significant market share. Those are very few and far between but I think Origin fits that bill.
Posted on 1/6/23 at 10:09 am to Diseasefreeforall
I believe that they had consultants put together their financial projections from the original SPAC deck and they articulated (at the time back in early '21) that those projections were supposed to be fairly conservative. Since then, the potential for income streams from carbon black and FDCA has grown quite a bit, and those were not included in the projections. I'm hoping those will offset any underestimation of costs that could be in their projections. NexantECA did a viability report and generally signed off on the tech and assumptions but thought that costs could be slightly higher than ORGN assumed.
Given the binary nature of this tech working or not, I think assuming the tech works that dual train facilities will be the model for O3 and beyond (maybe even O2), and there should be considerable cost savings there as well compared to single train facilities.
I have a detailed DCF of Origin that I've made and I think in today's dollars that ~$17/share (or $58 by 2030) is fair value if they use single train facilities and ~$27/share (or $120 by 2030) is fair value if dual train. These assumptions also include earnout shares that would vest at various price targets, annual company LTIP/board member share grants, 20% cost of capital, 3% terminal growth, no cost share/tax incentives, and no licensing deals.
If they are as close on their projected economics as they were on the O1 finish date, then this should be a home run. They claimed to be cost competitive at $30 oil, if it ends up being $40-50 I think that's more than OK and they'll still be in a spot to provide a carbon negative green discount which will be unheard of in these markets and could generate demand for dozens of these plants.
What are some of your other speculative plays besides Origin?
Given the binary nature of this tech working or not, I think assuming the tech works that dual train facilities will be the model for O3 and beyond (maybe even O2), and there should be considerable cost savings there as well compared to single train facilities.
I have a detailed DCF of Origin that I've made and I think in today's dollars that ~$17/share (or $58 by 2030) is fair value if they use single train facilities and ~$27/share (or $120 by 2030) is fair value if dual train. These assumptions also include earnout shares that would vest at various price targets, annual company LTIP/board member share grants, 20% cost of capital, 3% terminal growth, no cost share/tax incentives, and no licensing deals.
If they are as close on their projected economics as they were on the O1 finish date, then this should be a home run. They claimed to be cost competitive at $30 oil, if it ends up being $40-50 I think that's more than OK and they'll still be in a spot to provide a carbon negative green discount which will be unheard of in these markets and could generate demand for dozens of these plants.
What are some of your other speculative plays besides Origin?
This post was edited on 1/6/23 at 10:15 am
Popular
Back to top
![logo](https://images.tigerdroppings.com/images/layout/TDIcon.jpg)