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Input Capital (TSXV: INP) – Initiating Coverage - First ... - Baystreet.ca

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Page 21<br />

<strong>Input</strong> Comparable<br />

<strong>Input</strong>'s FV<br />

Est.<br />

EV/ EBITDA 8.7 12.10 $2.51<br />

P/CF 10.3 17.60 $3.14<br />

Average $2.82<br />

*<strong>Input</strong>s metrics were based on our FY2014 estimates<br />

*Comparable metrics were based on the trailing average of metal streamers, and grain/bean<br />

industry players.<br />

Returns are extremely sensitive to the net <strong>ca</strong>nola prices received by <strong>Input</strong>. Our share<br />

estimates based on varying <strong>ca</strong>nola prices ranges from $0.64 to $8.12 per share.<br />

Sensitivity analysis - <strong>ca</strong>nola net prices<br />

Net price of <strong>ca</strong>nola $ 350 $ 400 $ 450 $ 500 $ 550<br />

DCF Model $ 0.64 $ 1.33 $ 2.55 $ 4.65 $ 8.12<br />

Comparable fair value $ 2.10 $ 2.46 $ 2.82 $ 3.20 $ 3.58<br />

Rating<br />

Risks<br />

Based on our valuation and outlook, we initiate coverage on <strong>Input</strong> <strong>Capital</strong> with a fair<br />

value of $3.00 per share, and BUY rating.<br />

The following risks, though not exhaustive, may <strong>ca</strong>use our estimates to differ from actual<br />

results:<br />

• <strong>Input</strong> <strong>Capital</strong> is the first to use an agriculture streaming model.<br />

• The company may need to raise additional <strong>ca</strong>pital through equity offerings and dilute<br />

current equity.<br />

• A decrease in the price of <strong>ca</strong>nola would negatively affect <strong>Input</strong>.<br />

• Timely Deployment of <strong>ca</strong>pital is crucial to the success of <strong>Input</strong> <strong>Capital</strong><br />

• There may be new entrants to the industry increasing competition for <strong>Input</strong>. This<br />

may negatively affect returns.<br />

• Farmers may breach contracts with <strong>Input</strong> <strong>Capital</strong>.<br />

• Expected returns will drop, or rise, if any of the inputs used in our base <strong>ca</strong>se scenario<br />

move unfavourably, or more favourably, respectively.<br />

© 2013 Fundamental Research Corp. “10 Years of Bringing Undiscovered Investment Opportunities to the Forefront “ www.researchfrc.com<br />

PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT

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