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Combined GSI Group + Excel Review

Combined GSI Group + Excel Review. Dr. Rama Rao RRCM.COM. Combined GSI + Excel. Reshaping Laser Industry Solid Historical Performance Market Valuation of Profitable Laser Companies GSIG Stock – most undervalued Assessment of Fair Value of GSIG Great Opportunity

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Combined GSI Group + Excel Review

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  1. Combined GSI Group + ExcelReview Dr. Rama Rao RRCM.COM

  2. Combined GSI + Excel • Reshaping Laser Industry • Solid Historical Performance • Market Valuation of Profitable Laser Companies • GSIG Stock – most undervalued • Assessment of Fair Value of GSIG • Great Opportunity • Internal Growth Opportunity • External Growth Opportunity Dr. Rama Rao RRCM.COM

  3. Solid Historical Performance of GSI + ExcelNormalized Annual Sales of $450 M with Net Income of $30 M Dr. Rama Rao RRCM.COM

  4. Annual Sales ComparisonNow Combined GSI + Excel Ranks # 3 Dr. Rama Rao RRCM.COM

  5. Market Valuation ofProfitable Laser Companies • Most Profitable Laser Companies trade at Market Valuation ≈ One Time of Annual Sales (P/S =1). • The combined company of GSI + Excel is an exception! Trades at 1/10th of its annual sales. Dr. Rama Rao RRCM.COM

  6. Market ValuationProfitable Laser Companies Dr. Rama Rao RRCM.COM

  7. GSIG Stock PriceMost Undervalued • The combined company of GSI + Excel has outstanding shares of 41 M. • The stock trades at $1. • Market Valuation of $41 M. • The combined company has normalized annual sales of $450 M with net income of $30 M • GSIG trades at P/S ≈ 0.1 and P/E ≈ 1 • GSIG paid $350 M cash for Excel ($32/Share) • GSIG has $96 M in CASH ($2/Share) Dr. Rama Rao RRCM.COM

  8. GSIG Stock Recent PerformanceLast Year & This Year Acquisition of Excel Year to date Dr. Rama Rao RRCM.COM

  9. Fair Value Assessment ofGSIG Stock • Market Valuation should be one time of annual sales as other peer profitable laser companies. • The combined company should have a market valuation of ≈ $450 M (P/S =1). • GSIG should trade at ≈ $10/Share with 40 M shares outstanding. • This is the kind of stock – what Peter Lynch calls: “10 Bagger”! • Risk/Reward Ratio: 1/10 Dr. Rama Rao RRCM.COM

  10. Great OpportunityGame Plan • Take advantage of undervaluation of the combined company (GSIG) for a possible future investment appreciation. • Interact with Mgmt/Board in order to enhance the share holders value. • The combined company can become a nucleus - $2B industry consolidation – Excel Dream! • Established a monopoly in the Laser Industry – control/enhanced gross margins – further appreciation of stock price. Dr. Rama Rao RRCM.COM

  11. GSI Internal Growth Opportunity • New Products: • Fiber Laser/ Disc Laser/ Diode Laser (New Generation – Compact & Efficient) • New Emerging Asia Expansion: • Asia – China/India – Industrialization (Legacy Products) • North America & Europe Market Share Expansion • With New Compact /efficient Products • New Emerging Applications: • Solar Panel • Nano Structure/Semiconductor fabrication Dr. Rama Rao RRCM.COM

  12. GSI External Growth Opportunity • Now GSI + Excel with normalized annual sales of $450 M ranks #3 behind Coherent ($600 M) and Rofin ($500 M) • Consolidate other small players (ESI : $280 M– semiconductor, II-VI: $280 M – optics, IPG: $180 M – industrial) • Strategically buy small niche players with new product & technology – Silicon Valley, China, India etc. • Use the Marketing & Sales distribution net work and efficient manufacturing capabilities of the combined company to promote the new products globally.

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