LVMH currently employs more than 83,000 people. 30% of LVMH's staff work in France. LVMH operates over 2,400 stores worldwide. Its current business plan aims to tightly control the brands it manages in order to maintain and heighten the perception of luxury relating to their products. For example, Louis Vuitton products are sold only through Louis Vuitton boutiques found in upmarket locations in wealthy cities or in concessions in other luxury goods shops (such as Harrods in London). Some of LVMH's other brands include Moët et Chandon, Dom Pérignon, Krug, Veuve Clicquot, Hennessy, Glenmorangie, Fendi, Donna Karan, Marc Jacobs, Thomas Pink, TAG Heuer, Zenith, Bulgari, De Beers Diamond Jewellers
LVMH Perfumes and Cosmetics include:
Acqua di Parma
Parfums Christian Dior
And.....LVMH owns DFS!
DFS Galleria (often simply referred to as "DFS") is a chain of department stores and shopping malls (gallerias) comprising shopping boutiques, located primarily within Oceania and around the Pacific Rim. DFS was originally founded as Duty Free Shoppers, referencing the company's origins as an operator of duty-free shops.
If I were to choose a likely candidate for acquirer of Algenist it is luxury giant LVMH. After all Algenist is already positioned as a luxury cosmetic brand, Their key retail partner is Sephora. LVMH owns Sephora.
The French conglomerate LVMH (Louis Vuitton and Moet Hennessy) bought Sephora in 1997. Sephora is Solazyme's largest retail partner and the chain includes more than 1,750 points of sale in 30 countries across the world. Sephora offers beauty products including makeup, skincare, fragrance, hair care, bath and body products, and hair and make-up tools. Carrying more than 100 brands, along with their own private label, this is where Algenist would fit nicely into their portfolio.
I have to chime in.
Jim, your subterfuge postings are always an attempt to wrap a core of truth around a shell of lies and coated with fear. Your recent "markup" posting is no different. At least get the facts straight before you shell it and coat it with your deceit.
Goozle won't agree with me on Algenist, and that's fine. I see the product, I see the sale growth and I see the brand value as a huge opportunity, albeit small compared to 2015 and beyond revenues.
Algenist has booked to-date tens of millions of dollars which has helped cover the operating expenses of Solazyme. As they continue to expand product lines and grow markets, revenue will grow exponentially. As I posted, we should see $30M from them in 2013 and then $55M/$80M/$100M. The world is a big place and Asia notably is a huge market.
I have made argument that Soalzyme should at one point get out of the cosmetics brand business and focus solely on scaling up capacity, developing offtake partners and continuing to bring novel renewable oils to market. Conversations for the sale of the Algenist Brand could reasonably be $100M. I already posted on this and we can discuss brand valuation modeling at length in a separate thread if you wish.
Furthermore, I've thrown out the question if someone should buy SZYM soley because of Algenist. I wouldn't. I stressed that the importance of Algenist right now is to help pay for the capex needed for a 200K MT plant that will produce oils with Mitsui, Dow, ADM or others. Because this is where the core business lies. I would prefer this revenue came from the sale of the brand (more on that in the following post).
2013 revs are meaningless.
2014 scale developments are everything. nothing else much matters.
I don't disagree, but you tell that to the street! Solazyme will come in higher than the high # anyway. My calcs have them at just over $60M if plants open accordingly.
For 2014 Revenues you're right on. This is where real revenue really begins. Analysts really have no idea where Solazyme will book. Just look at how disparate the estimates are:
This means the average is at $281.97M giving Solazyme plenty of room to blow the doors off the top line numbers. Clinton is going to surprise in 2014!
Announcements for the offtakes, as well as the next capacity partnership will be coming soon.
2013 Revenue Estimates
Note that that is a tight bandwidth between the Low & High. I'm looking for Solazyme to beat on Revenues for Q4 based on my calcs for Product (SRN, Moema, Algenist) + R&D.
I woke to a bit of broader market concern this morning. After turning on CNBC I saw an interview that discussed the insane interpretations of Bernake's comments that were flying around. The bottom line was that the US economy is recovering and the Fed still has its toolbox to deliver what's needed and when. No matter that it is highly unlikely economic data will come in showing sufficient strong and sustained growth to justify tapering bond purchases any time soon. No need to worry.
St. Louis Fed President James Bullard, speaking to reporters in London, said the Fed will move very slowly. He said: "we are not is a position where we are having to make decision about cutting the whole program in half or bringing the program to a halt in a short period of time."
Then there was a great interview with Meg Whitman who addressed the China concerns, which came down to this: There have been 4-5 months of slowdown in China but this will be countered by their government stepping in to provide stimulus to bolster growth. They are better at this than any other nation. Centralized government planning has its advantages. No alarms there.
Then the reports came out. Here's the summary if you weren't paying attention:
• New-home sales second-best since recession | U.S. home prices up
• Fewer U.S. homeowners now owe more than their house's value
• Drop in jobless claims continues to show modest employment growth
Even if the broader market were to trade sideways over the next 7 months, Solazyme will soar. The only thing that will keep this stock down is a crisis like we saw in 2008 and this is not on the horizon.
Off to the races.
After the US, Japan is the second largest market for cosmetics in the world, The Japanese skincare market had total revenues of $21 billion in 2012. It is a brand-conscious, fast-moving market, where a favorable review by a leading magazine and "kuchikomi" (word of mouth) by mobile young women can catapult a fresh brand into billions of yen in sales in a few years.
An Algenist launch in Japan is an easy triple-bagger in revenues.
Then there's China.
China's middle-class has now grown to a size larger than the entire population of the US. And China loves both luxury and youth (i.e. anti-aging). During 2011, premium anti-agers continued to register dynamic growth, mainly driven by the increasing popularity of products featuring gene-repair functions and rejuvenation effects. Following some hot sellers, such as Advanced Night Repair Synchronized Recovery Complex from Estée Lauder and Lancôme Génifique from L’Oréal, more new products highlighting anti-ageing functions were launched by leading players in skin care. For instance, L’Oréal launched L’Oréal Paris Youth Code Prodigious Rejuvenating Pre-essence in August 2011, which was widely welcomed by women consumers. Anti-ageing has gradually become a popular concept among local women with middle or high income levels, and young women in their 30s or even 20s have begun to show a greater interests in anti-ageing products, leading to heavier investment by manufacturers in the anti-ageing skin care category.
An Algenist launch in China is an easy tripple-bagger in revenues.
For the younger generation here, you may have missed the Randy Newman reference, so here you go.
Good article out there commenting that the most-shorted stocks in the S&P 500 are outperforming the broader index (Solazyme is no different).
These are dark days for the short seller.
Maybe if you have deep enough pockets, you can endure it and the chronic covering until the long-overdue market correction. But for now, if you’re short, you’re getting about as much respect as you’d get from Randy Newman right now.
As Andrew Wilkinson, chief economic strategist at Miller Tabak & Co., points out in his Wednesday note aptly entitled “Eat My Shorts!”, the most shorted stocks on the S&P 500 Index are outperforming the broader index for the first time since July 2012.
“With the exception of June and July, just as the shorts quickly scrambled to cover fast-evaporating gains, never has the short index outflanked the performance of the broader S&P 500 index,” Wilkinson wrote. “That tells us that on those occasions when the data hints at a decent opportunity for the market to pullback, it is the desperately short investors who pile back in to exit the market. But as they do, bullish investors see this as yet another signal that the broad market is heading higher.”
Wilkinson goes on to point out that the average year-to-date return of the top 20 shorted stocks in the S&P 500 is 17.8% vs. 16.22% for the index as a whole. Breaking up the rest of the top 100 most shorted stocks in the index into groups, he found 21 through 40 have an average year-to-date return of 21.4%; 41 through 60 are up an average of 22%; 61 though 80 are up 18.1%; and 81 through 100 are up 17.6%.
Fair Value for futures are fine. Don't get too excited.
S&P Futures as of 12:54am EST are only pointing down 0.16%
Breathe. Relax. Accumulate.
It was rough for lots of companies in the renewable space today.
Stop taking it so personally - especially after a 30%+ run up Solazyme has had in the last month. If you're a trader, you take profit on a day like today. After such big gains, most traders were using trailing stops, and on a big pull back these orders kicked in.
Well here's a look at the damage done across the renewable sector:
SolarWinds Inc -13.71%
Renewable Energy Group Inc -5.56%
First Solar, Inc. -5.81%
GT Advanced Technologies Inc -6.24%
SunPower Corporation -8.62%
Clean Energy Fuels Corp -6.85%
KiOR Inc -3.45%
Amyris Inc -5.56%
Green Plains Renewable Energy Inc. -3.33%
You see the point. We go back to $12 when this movement settles down.
Read this thread.
Do I think anyone should be buying Solazyme solely for the Algenist brand value and revenues? No. Although you may consider that when Algenist expands globally, paying particular attention to Asia, we could easily see revenues grow the around 5x over the next few years.
Algenist therefore acts like insurance on this investment not unlike the food and chemicals business units originally did for the speculators buying Solazyme for the fuel. Algenist, Food, Chemicals has now become a proven business model. Quite proven that many are now calling for these units to become the core business due to the higher margins. Some posters have even asked why Solazyme should be chasing a lower margin business when then can continue to ramp up to 1 Million MT over the next several years focussing all of the offtake on the higher value oils (Food Chemicals and Cosmetics/Personal Care). "Blends Blends Blends" the fuel lovers are shouting. Okay, I digress.
Algenist is insurance. Depending on has fast they scale sales growth in Mexico, Asia we should see $30M from them in 2013 and then $55M/$80M/$100M.
Should you buy Solazyme because of Algenist? I wouldn't. Will Algenist revenues help pay for the capex needed for a 200K MT plant that will produce oils with Mitsui, Dow, ADM and others? Yes.
You see the point.
How the Gasoline Gets There
The gasoline will either be transported to the gasoline retailer by a jobber or the gasoline company will purchase its own fleet of trucks that will transport the gasoline to their gas stations. The jobbers usually work for multiple retailers.
Prices can go up or down based on various market forces. When retailers anticipate that prices will oscillate, they sometimes purchase futures that will guarantee that they will have specific prices for a delivery at a specific date.
The process of producing gasoline is a long, complicated and expensive process. However, the process is also very necessary and lucrative, since most of the world is powered by petroleum.
It's not just that Solazyme's technology to create renewable oils is disruptive, it's the entire oil paradigm that is about to be disrupted.
And finally Downstream.
What is the Downstream Sector?
The downstream sector focuses on the process of refining crude oil to create different products, including gasoline, petroleum gas, jet fuel and diesel fuel. Additionally, there are numerous products that are not fuels at all, including pesticides, antifreeze, synthetic rubber, plastics and pharmaceuticals. All of these products are created and distributed through the downstream sector.
How is Gasoline Produced?
One of the most common products, gasoline, is made in a refinery. Crude oil is refined into one of several crude oil products, including gasoline. Gasoline is created through a process of fractional distillation. The oil is boiled using hot steam. Much of the crude oil is evaporated and the leftover crude oil is sent to the distillation column.
Selling the Gasoline
The gasoline is often sent to a gas station. Some of these gas stations are owned and operated by the oil companies themselves. However, they only make up a small percentage of the total industry. The majority of the gasoline in the United States is sold by branded independent retailers. According to the Association for Convenience & Petroleum Retailing, 55 percent of the gasoline industry are made up of these retailers. The gas stations have to pay a surcharge per gallon for relationships that they have with specific refineries. However, doing so will help make sure that the refinery has a more secure source of gasoline.
Less than 5 percent are run by the oil company. The rest are sold by unbranded independent retailers who do not pay the marketing surcharge. Refiners usually have contracts with the branded independent retailers and have a certain number of gallons that help them meet their contracts. The gasoline that they sell to the unbranded independent retailers are not a part of the contract.
The Oil Rig
There are various oil rig systems that are used to extract oil from within the Earth. The most distinctive part of the oil rig is the Derrick, which is the structure that holds the drilling apparatus. Some of the more sophisticated equipment is located underground. The methods by which oil drilling is conducted change periodically as new technologies are developed and as new environmental standards are set forth.
Then comes Midstream.
When oil is drilled from a location where it is originally discovered, the oil must be stored, marketed and transported. This aspect of petroleum production is known as midstream. Petroleum is marketed as a commodity at this point.
The point where upstream ends and midstream begins is at the gathering system. This system collects wet natural gas and petroleum and begins the transportation process to the gas processing plant. While some gas processing occurs near the point where the gasoline is extracted, in other cases, the midstream process involves the transportation of wet gasoline through pipelines. In many cases, midstream is considered a part of the downstream process.
In some of the largest distribution networks, enormous cargo ships are responsible for transporting oil across multiple oceans.
The Storage of Petroleum
One of the most important aspects of the midstream sector is the storage of gasoline, which helps ensure a stable supply of gasoline. The U.S. has a strategic petroleum reserve that is tapped into in the event that current oil supplies run short and lead to rising petroleum prices. This stockpile has about 570 million barrels of crude oil that is kept in underground caverns. These reserves could be considered either a part of the upstream or midstream sector, since the oil has already been located and simply needs to be drilled.
At some point, ancient dead plants and animals are refined into a valuable liquid that is then pumped into over one billion cars. This entire process is divided into three sectors: upstream, midstream and downstream.
What is the Upstream Sector?
Upstream is the part of the oil production process that focuses on locating and recovering crude oil and natural gas. Those in the upstream sector are focused on locating underground and underwater oil fields.
How Oil Fields are Located?
These oil fields are located by drilling exploratory wells. There are many parts of the world that are known for having large oil reserves. Geologists are used to determine which areas have the right conditions for an oil trap. The surface rocks and terrain, as well as the shallow drilling, can help the geologist predict if there is oil in the particular location. Other ways that geologists an locate oil include the use of gravity meters to detect small differences in the gravitational field of the Earth. There are electronic noses known as sniffers that can smell hydrocarbons. Finally, the most common approach is to use shockwaves through the rock and interpret these shockwaves to determine if there is oil.
What Risks are Involved?
The upstream segment of the petroleum sector can have profits that are less predictable. There is no guarantee that oil will be successfully located. Also, care must be taken to search for and drill for oil in an environmentally sound manner.
There are many legal considerations that are factored into the oil drilling preparation process, including the purchasing of necessary permits and leases, an assessment of the potential environmental impact and titles and right-of-way accesses.
Preparing to Drill
The site for oil drilling must be prepared before the process can begin. There must be a source of water – natural or manmade – that is nearby the drilling site. The drilling company must also dig a reserve pit.
Solazyme operates like a fully integrated energy company has all the oil business areas covered including upstream, midstream and downstream. Yet the beauty of this business model is they have no exploration costs.
Instead they just need to keep adding capacity
Oh, and here is the CNBC story on Goldman Sachs Upgrades S&P Target
Goldman Sachs has upgraded its target for the S&P 500, forecasting that the U.S. benchmark index will climb a further 5 percent to 1750 by year-end, from an initial estimate of 1625, supported by robust dividend growth and an improving macroeconomic environment in the U.S.
In a report released late Monday, the U.S. investment bank also raised its targets for the coming years, expecting the index to rise by 9 percent to 1900 in 2014, and advance by 10 percent to 2100 in 2015, compared to earlier forecasts of 1775 and 1900, respectively.
"If interest rates stay low despite better growth, then upside to S&P 500 may be greater than we currently forecast. Monetary easing by Fed, BOJ, and ECB keeps sovereign yields low and would support this potential outcome," he added.
I believe that if the broader markets continue to support growth stocks, then Solazyme will deliver what most longs have outlined here on MB.
Back in December when I listed my entry point and laid out my investment path I was heckled by Jim6b, Martin and others for what I envisioned Solazyme to be. This was a time when we longs could see the whites of the eyes of shorts who were calling for $5. Included in my declaration was that we would see a market cap of $3 to $4 Billion in 2014. Brazen some said, but I laid down an investment which to-date has increased 70%.
I still believe that the metrics are in-line for SZYM's valuation to increase to levels which bring about a $50+ stock price sometime next year. My only concern has been the broader market. If the broader market continues to support risk-on then Solazyme should gain significant traction after Lestrem turns the lights on. Also, before Moema goes live I expect to see a $20+ stock, and when Clinton goes live in 2014 we'll be in the high $30s. From there we move up to $50, not because of these 3 plants, but because of an understanding of proven technology combined with announcements for additional capacity that will drive investors to pay a premium for future revenue streams.
So back to the broader market. It's always refreshing to see the S&P perform that way it has in 2013. This has led to risk-on and has indeed helped fuel the 50% ytd return for SZYM. I believe that when combined with With continued broader market buying the milestones that Solazyme will hit this year will be the combination for a powerful growth stock story that buyers will be paying a premium for (see TSLA, SCTY, DDD, AMZN).
I realize I may be accused of spamming the board with my palm oil excitement, but I am realizing now that if I wasn't already long this stock I would be buying SZYM JUST FOR THE PALM OIL REPLACEMENT OPPORTUNITY. This is huge. Forgive my excitement but I didn't realize what I (we) were sitting on. GLTA
Oh, and if I can kindly ask for members response to my original 3 questions in light of the tremendous global market for a sustainable palm oil replacement. Thanks!
1. For the palm oil replacement that Solazyme will be selling to Unilever and others, what will it be called?
2. What will be the name consumers will see on the product ingredient list?
3. Will this be a Solazyme trademarked product?