FGF had a wonderful day, and is an example of the pool of hot money available to enter the sector.
Despite its rise, and many others of late, I believe we are still only seeing the tip of the collective iceberg for the sector...the market interest is just beginning.
I heard a funny quote the other day, which sums up how I see it, and it goes like this..."by the time the wise man crosses the river, the crazy people are already on the other side"
I have not seen any signs of the "wise man", I think they are still contemplating the pros and cons of cryptocurrencies, in the process missing the wood for the trees...so that just leaves us crazies I guess?
Anyway, I thought I'd take a look at the value metrics for FGF compared to OOK, as clearly (based on today's trading in FGF) the market is bringing forward expected value from future activity.
Which of course makes for an interesting comparison with OOK that has already embarked on the "future activity" via Brontech and various corporate DNA links.
In short, it appears from my estimates that FGF @ 4.1c equates to OOK trading at 31c.
Let me first make it quite clear, I do not think FGF is overvalued, I simply think OOK is significantly undervalued.
Comparative Analysis:
FFG
Off the top of the head (and based on today's announcement), after this transaction and including exercise of options, issuing new options (and future exercise of same), they will have on issue 1.92 billion shares (fully diluted), for a market cap around $79m @ today's close of 4.1c
Cash from the placement and exercise of new and existing options, and assuming near zero cash in the bank since their $1m in the Sept Qrt, they will end up with access to around $19m cash.
Deduct cash from the market cap, and we get an EV for FGF of $60m at today's close.
OOK
With all unlisted options exercised (and including the issue of all performance shares), OOK's fully diluted position is around 317m shares, for a market cap around $43m @ today's close of 13.5c
Cash from the exercise of unlisted options (and including $1m currently at bank) and their cash amounts to around $17m.
Deduct cash from the market cap, and we get an EV for OOK of around $26m at today's close
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On this basis, for OOK to equate to a similar value as FGF (EV $60m), OOK would need to have closed at (60/26 x 13.5) = 31c today!
And this...is still a long way from my upside yearly target.
Which is why I believe at 13.5c OOK has a long way to go, notwithstanding swings and roundabouts along the way, which are healthy.
Patience young grasshopper...
Cheers
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