Stock Master Flash

On Oct 15, CCDS-TSXV, Carrier Connect, said they found a 4 MW facility to lease on a 20 acre lan parcel near Atlanta Georgia for potential data center clients—and that the facility could take up to 10 MW. Just a few days later, Oct 19, CEO Mark Binns said he has signed a new tenant for that facility--a contract over 5 years, The stock is slowly starting to re-rate here—from a nice long tight base. I’m going to do the back of the napkin math (because I’m long up the wazoo!!) on what this could potentially value the company at, IF THEY FILL ALL 10 MW capacity. Again—today they have 3 MW here. The initial ACTUAL contract is only covering 3 MW, and that works out to an immediate CAD$17.8 M annualized run rate (US$1.05 million/CAD$1.48 million per month), starting Nov 1, next Monday. The 4th MW is coming very soon says the PR, and then annualized billings will be at CAD$23.7 million, or just a hair under $2M per month. The only upfront payment is 4 months rent as they are just taking over a 15 year lease. Rent is U$282k/month for the entire facility and they generate U$250k/month/MW in revenue. They were competing against 4 hyperscalers and won because they big boys needed minimum 10MW now. CCDS is already in contact with the utility and got them to bump their power from 3MW to 4MW immediately. The utility has indicated they can go to 10MW once they prove they can fill 4MW. Here’s what the numbers look like—with the Georgia facility FULL: At 10MW capacity this will do U$2.5M/month in revenue with 60-70% gross margins and 25-30% EBITDA margins. So that’s US$30M revenue (CAD$42M) with U$7.5M-9M (CAD$10.5 M – 12.6 M) in EBITDA. I’ll conservatively add 3 MW existing business, which is CAD $4.2 M revenue and midpoint of roughly CAD$1.15 M EBITDA—making a combined grand total CAD$12.65 M in EBITDA at the midpoint of the range. If there is 35 M shares out, that’s 36 cents a share EBITDA once the now empty 6 MW extra capacity is filled. Give it a 15x multiple (at most for now) and we get a potential valuation $5.40. And of course, if Binns can convince the Street that more deals are coming, then that will go up. A 10x multiple = $3.60/share. Today it’s $1.47—and honestly it’s fairly valued by what they have TODAY. The stock is not cheap TODAY. Binns has to fill the building for any of these valuation numbers to be worth anything. But he got his first client pretty quick. The last financing price of $1.60 will surely be some technical resistance for the stock—as there was a half warrant put on that.