$MILC , MILC - MILLENNIUM INVESTMENT & ACQUISITION CO INC.
Keep in mind my native language is Spanish; sorry in advance for any grammar mistakes.
Symbol:
MILC
Exchange:
OTC
Price:
USD 0.22
NCAV:
USD 0.45
Summary:
At
8x its medium-term EBITDA target of $5mn, Millennium could potentially
command
a valuation of $40mn, or $3.65 per share.
$40M
plant
$33M
in nuts *22.000 tons from 1k to 1.5k per ton
$4.8M
in stock
Current
market cap $2.4
Why
I like it:
Tangible
book value of $1.4. Incredibly understated, look:
Why
do you see this opportunity? This stock is tiny and hidden from screeners
because it is a closed-end fund. You probably won't get filled until you start
bidding over $1 if your account is in the hundreds of thousands or millions.
Catalyst:
over a month ago, they file to de-register (not to be confused by de-listing).
This means they do not want to be a fund but an operating company. Now that is
when it becomes interesting.
The
current CEO took over the fund and bought a failed project of activated carbon
plant next to a macadamia plantation. It turns out former's owners run out of
money.
The
plant gets the shells and burns them in special conditions in huge ovens to
turn them into activated carbon http://www.millinvestment.com/millennium-hi-carbon.html;
they are aiming to create such a great quality carbon that it could be used for
ultra-capacitors (batteries).
Capable
of producing activated carbon from 12,000 tons of macadamia nut shells each
year, which would generate more than $5mn of EBITDA as it reaches commercial
operations – before the impact of any byproduct revenues.
High-quality
activated carbon can achieve $12 / lb prices versus a range of $0.75
– $1.00 per pound for the standard commodity.
If
they achieve this, they will produce $5M in EBITDA a year, peer trade for eight
times multiple on that. So it would become a $40M company. Almost 20x from
today's 2.46 Market cap. They have 10.8M shares (down from 11M shares last
year), which would be a $3.7/share. Of course, this is an optimistic
scenario.
What
we know today comes from the last report 2020-11-19 and states:
https://www.sec.gov/Archives/edgar/data/1358656/000149315220022068/ex99-1.htm
Total
Assets $15,305,970
Total Liabilities $39,242
Net Assets $15,266,72
Share
10.8M
Assets
are conformed of
1. SMC Global Securities
Limited 8,804,690 $4,875,412. remember they are a closed-end fund? They started
like a decade ago to take the 3rd biggest brokerage in India and basically what
we know today as SPAC's. They put a lot of participation from India into this
fund and effectively trade in the US. They liquidate these shares in a schedule
to reinvest in the new project.
2. Millennium HI Carbon LLC
$6,683,791
3. Millennium HI Carbon
LLC-Secured Loan $1,989,626
But!!!
Next to the processing plant, a lot of inventory (not valued anywhere) look
"millinvestment.com/uploads/5/0/8/7/50870073/464787_orig.png"
Only
the biomass approximate worth is as much as what the company paid for the
factory. So, make your calculations. "The plant has two years
of macadamia nutshell inventory on-site and is located in proximity to key
logistics including a macadamia nut manufacturing facility, industrial zones,
and a port with shipping capabilities."
Do
you know how much the factory cost to build? "Site Improvements: A carbon
activation plant facility which is 95% complete for $45 Million."
Here
is an in-depth study from 2016 of
the project http://www.millinvestment.com/uploads/5/0/8/7/50870073/seethruequity_research_initiation_of_coverage_miac_10_3_16.pdf
Conclusion
of the study Price target $2.6 when the plant is operating (2016 prices)
But
how much would you have to spend to duplicate its assets?
Reposition
value of factory $45M+ = $4/share
biomass macadamia nutshells
22.000 tones ($1k per tone) = 22M just in
nutshells. $2/share
Yep,
it cost $6/share to former owners.
Millennium's
CEO, David Lesser, owns a 30% equity stake in the company, which should align
his interests with shareholders.
