Forum Topics C79 C79 Bull Case

Pinned straw:

Added 2 months ago

I just watched the meeting with Chrysos. I know I'm a bit behind.

It does seem like a staggeringly good long term outlook and final question about what are people missing highlighted what was already resonating with me.

These units have a 3.8 mil outlay. Repay themselves in 1 - 2 years. Then they're an annuity stream. It's a very short payback for something which will run for 10 - 20 years. Similar reason to why I'm keen on Smartparking (SPZ) it the rapid payback of cap ex.

So then the question I guess is valuation. According to yahoo finance, C79 has a market cap of 942mil and a PE of 1960.

The PE is outrageous at first glance but around the inflection point this is pretty standard I guess.

How much money will this business be gushing in 10 years...? No seriously, how much? I'm struggling to work it out...

GazD
2 months ago

Looking through the Annual Report:


Between 2022 and 2023:


  • Revenue increased ~99%
  • Employee costs were up 99%
  • Maintenance costs increased 50%
  • Revenue from consumables remained a constant proportion of revenue at around 4%

Nice that revenue increased more than maintenance costs. Employee costs were in line with revenue increases but this at a time when new geographies are being entered so for a bullish take you might expect employee costs to diverge south of revenue as the business matures


I wondered about the flipside/downside of the long term annuity revenue being touted from long term leases of units, for example duration risk (inflation anyone?) but notably the annual report notes the risk and the ability to adjust lease rates for inflation.

It strikes me that with a payback of 1-2 years and already being operating cash flow positive this business has outstanding economics.

I think the unit economics stack up and revenue looks likely to increase at high rates for a long time but the valuation seems high (trading at about 40 x revenue)...

I don't often invest in capital intensive business like this. How should we value it?


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jimmybuffalino
2 months ago

I’m so annoyed I didn’t take a starter position when I began looking at it!

The wrinkle I couldn’t get comfortable with at the ~$6 sp at that time was the headcount and other opex increases. It seems like those increases are roughly in line with revenue and possibly that will decrease where you get efficiencies from sharing geographically close units, but how and when and to what extent that will happen seems like a stab in the dark.

I wonder how much of the sp increase is an attempt to find the next Audinate (ie. ex-CSIRO).

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Hackofalltrades
2 months ago

What I am curious to know is of the possibility of this technology being innovated into something that can assay things other than gold. I haven't been following the business, so sorry if that question is dumb.

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GazD
2 months ago

Dirk does touch on this in the meeting with @Strawman. He mentioned other commodities and the possibility of using photon assay in experimental ways but I got the feeling that would be quite down the track with plenty of blue sky purely in gold.

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TycoonTerry
2 months ago

Maybe the strawuniverse can do a company deep dive on this one because I watched that video and thought “this seems too good to be true”

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jcmleng
2 months ago

Went back to my notes of the Oct 2023 Dirk meeting on the topic of R&D and adjacents. This approach makes sense to me as they need to be laser focused on deploying as many and as quickly units as they can. Each unit deployed further embeds the technology in the industry and is a step increase in the company's economics.

R&D IMPROVEMENTS

  • Do not need to grow the TAM at the moment as it will take ~30 years to work through the TAM at 18 units per year - within the TAM how do you upsell, cross-sell, increase profitability
  • Focus is on iterative improvements to ensure that the PA technology remains the absolute best in what C79 does ie. analysing gold
  • Then looking at adjacent's, analysing other elements in and around the analysis of gold - currently can analyse copper, silver and moisture (for quick turnaround of process control samples), looking at other elements that co-present geologically that could benefit the customer


Discl: Held IRL and on SM

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TycoonTerry
2 months ago

Up again today…. It just keeps tearing higher.


I have been waiting for any pullback following the cap raise, noting that investors in that are sitting on around 35% profit already.

But as I watch it go higher am I just losing margin on what seems like a great investment hoping on a price opportunity that will never exist. Oh to be an investor

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GazD
2 months ago

If you believe in the long term prospects it’s probably best to get on board. I’m going to try to value it and decide whether to take a starting position.

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TycoonTerry
2 months ago

On alert for this

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