CST Growth Projection

Well, well, well. After so many years of trying to make intelligent guesses about the future financials of Cellestis, out of the blue the Company has given us a sales forecast for the next two years. 

Now, like all forecasts, we can't really accept it as gospel and we do need to be cognisant of the disclaimer.


I do note that an earlier slide in the presentation presents what could be interpreted as an even more aggressive growth. It suggests that the number of tests sold might increase from the 1.9m in 2010 to between 2.6m and 2.9m in 2011. That represents a sales growth of between 37% and 52%. Without further knowledge I can only assume that the disparity is due to the mix of geographic sales (slightly varying prices) and some allowance for the vagaries of the Foreign Exchange rates.


Anyway, for my exercise, I have taken the (lower) financial figures of a Revenue growth of between 30% and 40%. Of course, for anybody that has watched this Company for any length of time, it is easy to make the assumption that they will have been quite conservative with their forecast. I would have no doubt that they will achieve their minimum target (30% growth) and would have a good chance of achieving the maximum (40%). Dare I say " or even more"?


Using these figures I have taken my previously released Growth Projection spreadsheet and made a couple of changes.

• I have corrected the historical figures to reflect the COGS reclassification that has been previously dealt with. I also added the forex gain to the historical figures that was previously overlooked (by me).
• I have made a change to the way that I project expenses. Previously I had these set as a percentage of Sales. On reflection, I don't think that made a lot of sense. Instead I have simply put in an annual growth figure for expenses. In the sample provided I have set this at 10%. Frankly, I don't really know how close to reality that is (Expenses growth from 2009 to 2101 was 9.9%). It's up to you to change it if you think fit.
• I have set the Income Tax at a flat 30% of Net Profit Before Tax. We do still have some tax credits in overseas jurisdictions so the tax may well be a little less than this, particularly in the next year or two. Better to be conservative than overly ambitious!
• I have set the COGS at 34% which is the figure from 2010. This may decrease slightly over coming years but once again I am keeping this conservative.
• I have not taken into account Foreign Exchange rates at all. The entire projection is expressed in Australian Dollars. Movements in the exchange rate could have significant impacts.

It's important to bear in mind that, even with the the forecast provided by the Company, we are still making a lot of guesses here. The fragility of the model increases as time moves forward, of course. I seriously don't expect growth to remain constant over a ten year period. Growth spurts (tipping point?) or unexpected events could have major impacts. However, regardless of all that, I think the projection has some value in painting a picture for us.

Anyway, you should be able to download the spreadsheet here. (File ->Download as-> whatever)

In the sample version provided I have set the Revenue Growth at the very lowest end of the forecast (30%). I'll leave you the pleasure of seeing what happens when you change it to a higher figure.

I won't provide any further commentary on the Spreadsheet here, other than to make one observation that is very obvious. At the Dividend payout ratio of 60%, the mountain of cash builds very quickly.