GTAT Hyperion Equipment Business worth $13-20 at a Minimum Right Now!

Posted: March 14, 2014 by mattmargolis24 in GTAT Investor Information, My Publications
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GTAT Hyperion Equipment Business worth $13-20 at a Minimum Right Now! – by Matt Margolis

GT management spent several hours going through their technology tool set and threw a lot of information at investors.  I am attempting to put together the pieces to come up with a breakdown for everyone.  The first area I wanted to focus on was the Hyperion 4, which is commercially ready in 2014.  GT management also provided investors with their 4 year projected unit sales of Hyperion.  Going from approximately 10 units to 200-250 units by 2018.  The unit number is not tremendous but at a ASP of $4-15m each, the dollars and cents add up fast.  I have modeled up a sales ramp from 2015 to 2018 along with 3 valuations on ASP, from $4m to $15m with a most likely scenario of somewhere in the middle at $9.5m per Hyperion 4 unit.  I am valuing just the equipment sales component of Hyperion and this has nothing to do with material sales such as sapphire laminate for electronic devices and consumer applications.

Screenshot - 3_14_2014 , 1_39_17 PM

As you can see from my chart Hyperion has the potential to over $2b a year in sales and contribute over $3.00 per share to GT’s bottom line by 2018.  I have assumed GT can convert Hyperion sales of 50% of their potential identified market.  It is clear from the call today that the Hyperion 4 is head and shoulders above the competition.  Below are my estimated 2015 and 2016 contributions assuming middle of the road pricing and a 50% conversion rate of the potential market.  The Hyperion 4 technology is now a proven solution and is being used by beta customers today and will be delivered to several other customers by the end of the year in LED, Medical and other areas.

2015 – $48m – $0.08eps

2016 – $404m – $0.65 eps

Taking FY16E x20-30 I’m coming up with $13-20 valuation for just Hyperion 4 equipment sales!  However, if Hyperion is as good as GT management thinks it is my valuation is still very low.

Below are some Hyperion slides from today’s presentation.

Screenshot - 3_14_2014 , 1_26_24 PM Screenshot - 3_14_2014 , 1_26_40 PM

Full Disclosure: I am long GTAT and have no plans to buy or sell in the next 72 hours

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Comments
  1. Informative article as always. Thanks for the information.

    Like

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