Hours of Fun.

As I mentioned a week or so ago, I am retiring my old "CST Valuation Matrix" spreadsheet. I now think that our perspective of the company should be viewed on the basis of Sales value (and more specifically, sales growth) rather than kit volumes. Coincidentally, at the recent broker presentation it was mentioned that the  Company has largely taken this view also. The company has now reached the stage where it deserves to be analysed on real financials. Trying to squeeze the concept of "kit sales" into financial projections no longer makes sense.


Consequently, I have now made my first attempt at a spreadsheet "CST Growth Projection" that approaches this analysis in a more conventional manner.



Some notes about this spreadsheet.


As with the previous spreadsheet, this is a tool, not my own prediction of the future. The current figures that are in the spreadsheet are purely for example purposes. You should definitely play with your own figures. There is a lot of potential flexibility in the spreadsheet. You can start off with a minimum amount of interaction and then fine tune as you become more comfortable with it.


In essence, all I have done is to take the 2009 FY profit and loss figures as a base and then applied a growth scenario over a ten year period.


In its simplest form it assumes a static annual growth in sales revenue. You can put whatever growth percentage figure that you fancy into the yellow cell. That figure will be automatically used for each year of the ten year time span.


If you wish, you can also change the Gross Margin from it's current value of 61%. However, it seems that that figure is probably not too far from reality.


The remaining income and expenditure figures are represented purely as a percentage of sales. Again, you can change these figures in the yellow cells.


It will soon become obvious that the scenario resulting from that simple approach is unrealistic. For example, it is probably unlikely that the Marketing expenses would remain at a constant percentage of sales as sales increase. In the example figures supplied, you would think that Marketing expenses when sales reach $400m would not be anywhere near $100m. To achieve a more useful result you can change the percentage figures in any of the pale blue cells. Note that these percentage rates cascade - that is, a percentage figure entered in one year will be automatically replicated for all future years (unless you modify those percentage figure also).


Alternatively, if you cannot achieve the result that you want in this way then you can, of course, modify the actual dollar figures directly. The spreadsheet will still work quite happily.


Ultimately, the spreadsheet will calculate a current DCF value for the share based upon the discount factor that you enter.


As always, I claim no copyright on this spreadsheet. Feel free to do with it as you wish - copy, modify, share, whatever. Of course I would be more than pleased if you provide others with a link back to my blog so that I can have more friends in my dusty little corner of the Internet.


This spreadsheet was written in Open Office. I have, however, saved it in .xls format. It should open happily in both Microsoft Excel and Open Office. If you are like me and refuse to pay hundreds of dollars to purchase Microsoft Office, I suggest you download the free Open Office (which is better, anyway). The spreadsheet will also work happily in Google Docs.


Download here: CST Growth Projection.

(The spreadsheet will open in Google Docs. If you want to save a copy to your computer, select "File" -> "Download as" and choose the appropriate format (Excel or Open Office).

If you find any mistakes, please let me know.