Chris Castle wrote a good piece on SUB last Sunday in the SST - for those
of you who missed it here it is:
He raises the point that the company seems to have a high cost structure
for such a simple operation. If that's the case it doesn't really matter
how cool the sub is or where it's located - either way the company just won't
make any money.
(Disc. do not hold SUB)
Sent: Thursday, April 04, 2002 10:29
AM
Subject: Re: [sharechat] SUB - Is it a
buy at $0.06?
Sorry - the (too small) sub will go down down
down.
Lakes are boring more than 30 feet down and away from the
shore.
Trout are scarce out in the lake - no very much else to
see.
IMHO - Subs need 20+ persons @ $50 - $90 ea to be
a go.
I shuddered when they floated.
I was not surprised when they
sunk.
Any value left will be absorbed by the last foot in the
trough.
Better to find a Co making a new type of can
opener.
Have a good day Paul - Cheers Larry
----- Original Message -----
Sent: 04 April, 2002 8:47 a.m.
Subject: [sharechat] SUB - Is it a buy
at $0.06?
The story is that the sub lost money at Milford Sound and
there is
a backup plan to operate in the lake at Queenstown.
30
June 2001 Financials showed book value of assets was $3.15 million.
$2.2
million of this is the submarine itself, which they built for
$1.5
million.
The market is valuing this company at $0.06 x 8.7
million shares = $0.52
million
Suppose the company were
liquidated. Suppose we value the sub itself at
zero.
Losses in
Milford Sound were est at around $600k, so that leaves
$3.15-$2.2-$0.6 =
$0.35million
or about $0.04/share, as a conservative lower bound.
The sub must be
worth _something_,
right?
Now having been down
on the sub, I can say that the sub is pretty cool.
If it were run in
Queenstown, it would be in a much higher traffic area
than in
a remote
corner of Milford Sound. The lake is stocked with trout, so
I
suppose
there would be some amusement value in the dive (though the
dive at
Milford Sound
was probably more interesting from a biological
perspective).
The problems I see are these: (1) it gets cold at the
lake in the winter
(does it freeze up?); (2) You can see the trout from
the underwater gift
shop at the jet boat pier; (3) The jet boat is a
better adrenalin rush
(the sub might be better for old people as long as
they aren't
claustraphobic).
I suppose I should be buying a bit
more rather than posting this;
eventually they will find a
sensible
place to run the sub (why south? why not north? or someplace
tropical in
australia or fiji?), or they will run out of money.
Which do you think
will happen
first?
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