Sky Century Investment, Inc. (OTC Pink: BNRM) To Benefit From Growth In The Marble & Stone Market
The global stone market is expected to see an uptick in growth over the next several years. According to Global Industry Analysts, Inc., the global market for marble, granite and other stone minerals is expected to reach 19.6 billion metric tons by 2020. Furthermore, the research agency says that Asia will not only continue to be the largest stone mineral market, but it will also see the strongest compound annual growth rate (CAGR) of 6.20% through 2020. Aside from Asia, the United States, the Middle East, and Africa are expected to see strong growth in crushed stone demand over the next several years.
In their report, Global Industry Analysts, Inc. highlights a number of factors that will help drive the growth in demand for stone minerals. First, the agency says new housing construction will help assist demand, as stone building materials are often part of the construction process. Next, building renovations and remodeling projects will drive up demand for stone, as consumers look to upgrade their existing interior to a more aesthetically pleasing design. Global investments in infrastructure projects will greatly increase the need for stone and aggregates. The U.S. appears to be a major player within global infrastructure improvements, which was a big topic in the U.S. presidential election. In addition, the continued urbanization of developing countries will greatly increase the need for stone minerals. Lastly, the increasing global demand for commercial real estate investments is expected to be another source of stone demand.
One company that stands to be a major benefactor of growth in the marble and stone market is Sky Century Investment, Inc. (OTC Pink: BNRM).
Overview: Sky Century Investment, Inc. (OTC Pink: BNRM)
Sky Century Investment, Inc. (OTC Pink: BNRM) is a Hong Kong-based investment holding company, which focuses on the acquisition of mining rights, leases, licenses, and other mining assets. Formerly known as Band Rep Management, Inc., the company recently completed a reverse merger and launched a new website (skycenturygroup.com).
In addition, Sky Century Investment, Inc. (OTC Pink: BNRM) is currently in the process of acquiring a 60% majority stake in the Hong Guang Mine, which is owned by Prosperity Marble Mining & Investment (HK) Ltd. The majority stake will cost US $5 million to acquire and will be paid out in five increments over the next six months. As of December 2016, Sky Century Investment, Inc. (OTC Pink: BNRM) has signed a Letter of Intent and is finalizing its funding for the marble mine stake. Ultimately, the deal is expected to be completed during 2017.
Asset Analysis: Hong Guang Marble Mine
As mentioned prior, the Hong Guang Marble Mine is currently majority owned and operated by Prosperity Marble Mining & Investment (HK) Ltd, which is located in Shaoguan City, China. The Hong Guang mine started to apply for mining license rights in September 2006, but they did not receive government approval to begin mining until 2010. Ultimately, the company began mining at the Hong Guang Mine in September 2010.
While the government approval process for the mining is quite extensive, receiving the mining license rights is a major asset, as the Chinese government begins to limit certain industries and locations near urban areas due to their pollution impact. Roughly eight mines nearby the city did not get their license renewed because of the close proximity of Shaoguan City. This is a big advantage for Sky Century Investment, Inc. (OTC Pink: BNRM), which already has a valid mining license that was approved in 2010 and renewed again in August 2016 for marble mining operations.
The Hong Guang Marble Mine has a radius of two square kilometers, which is the size that was approved by the government. Furthermore with the current mining machinery and equipment on site, the mine is able to produce between 300 and 600 cubic meters of marble per day.
In total, the Hong Guang Marble Mine has estimated reserves of around 200 million cubic meters of marble. Based on a market price of $10 per square meter of marble, the mine’s reserves are worth around $2 billion. However, when factoring in sales to distributors, management estimates the market value to be around $20 billion.
BNRM: Hong Guang Marble Mine To Generate Strong Earnings Growth
The deal is not yet official, but the two parties are very near to finalizing the agreement. Sky Century Investment, Inc. (OTC Pink: BNRM) and Prosperity Marble Mining & Investment (HK) Ltd have already signed a Letter of Intent and laid down the terms for the deal, which is a 60% stake in the Hong Guang Marble Mine for US$5 million dollars.
The mining license for the mining project was just renewed in August 2016 and will be effective until August 2035. In 2035, the joint venture will be able to renew the mining license for an additional 30 years.
As Sky Century Investment, Inc. (OTC Pink: BNRM) prepares to take a majority stake in the active marble mine, the investment holding company is forecasting strong earnings growth over the next several years. Here are the company’s estimates moving forward, based on a selling price of $150 per cubic meter of marble:
·Full year 2017: $8 million in revenue, $4 million in EBITDA earnings
·Full year 2018: $12 million in revenue, $6 million in EBITDA earnings
·Full year 2019: $18 million in revenue, $9 million in EBITDA earnings
·Full year 2020: $25 million in revenue, $13 million in EBITDA earnings
Needless to say, marble mining production is expected to pick up over the next several years. Sky Century Investment, Inc. (OTC Pink: BNRM) plans to continue to invest in more mining equipment over the long-term, which will help increase mining capabilities.
BNRM: Financial and Industry Analysis
Now turning to Sky Century Investment, Inc. (OTC Pink: BNRM)’s financial and industry analysis, the company maintains a market cap value of over $105.62 million, as of December 2016. Furthermore, the investment holding company has a share structure consisting of 200 million authorized shares and 110.02 million shares outstanding, as of August 2016. As Sky Century Investment, Inc. (OTC Pink: BNRM) closes in on finalizing its deal to acquire 60% of the Hong Guang Marble Mine from Prosperity Marble Mining & Investment Ltd., earnings will likely start to pick up momentum. Management of Sky Century Investment, Inc. (OTC Pink: BNRM) is forecasting full year 2017 earnings of $4 million, full year 2018 earnings of $6 million, full year 2019 earnings of $9 million, and full year 2020 earnings of $13 million.
Overall, there are currently no other pure plays on marble mining in the U.S., but there are a few companies that do have a small marble mining business. In addition, it could be helpful to take a look at other Hong Kong and China-based investment holding companies, which could help give a better look at the company from a holding company angle as well. Here are five companies worth taking a look at with regards to a fair valuation for Sky Century Investment, Inc. (OTC Pink: BNRM):
China Natural Resources, Inc. (NASDAQ: CHNR) is a Chinese investment holding company that focuses on acquiring, exploring, processing, and selling mining minerals and assets. The company focuses on non-ferrous metals, such as iron, zinc, and other minerals. As of December 2016, China Natural Resources, Inc. (NASDAQ: CHNR) has a market cap value of $65.27 million, 24.91 million shares outstanding, and a float consisting of 9.6 million shares. During the second quarter 2016, the company did not report any revenue and a net loss of CNY 5.06 million. In addition, the company listed total assets of CNY 23.6 million and total liabilities of CNY 57.65 million.
Fox Marble Holdings PLC (LON: FOX) is a U.K.-based marble mining company, which has mineral mining assets across Eastern Europe and Kosovo. Currently, Fox Marble Holdings PLC (LON: FOX) has four active marble mining operations: Cervenilla, Syrigane, Malesheva, and Prilep. In total, the mining company has extracted roughly 10,700 tones of marble from its four active mines. As of December 2016, Fox Marble Holdings PLC (LON: FOX) maintains a market cap value of GBP 14.02 million. During the first six months of 2016, Fox Marble Holdigns PLC (LON: FOX) reported total revenue of GBP 262,000, but reported net loss of GBP 1.19 million.
Martin Marietta Materials, Inc. (NYSE: MLM) is engaged in the mining, processing, and sale of aggregate products for use in the construction, infrastructure, non-residential and residential industries. The company operates three main businesses: Aggregates Business, Cement Business, and Magnesia Specialties Business. Within Martin Marietta Materials, Inc. (NYSE: MLM)’s Aggregates Business, the company operates its mining and processing unit of minerals such as: marble, granite, limestone, sand, gravel, and more. As of December 2016, Martin Marietta Materials, Inc. (NYSE: MLM) maintains a market cap of around $14.08 billion. Furthermore, the materials company maintains a share structure consisting of 63.47 million shares outstanding and a float of 63.15 million shares, as of December 2016.
Lowe’s Companies, Inc. (NYSE: LOW) is a home improvement retailer, which operates 1,860 home improvement stores across all 50 states. The company also operates 40 stores in Canada and 10 stores in Mexico. Ultimately, Lowe’s Companies, Inc. (NYSE: LOW) supplies a wide variety of home improvement solutions, such as: Lumber and building materials, tools and hardware, appliances, fashion fixtures, plumbing, and more. Amongst Lowe’s Companies, Inc. (NYSE: LOW) wide variety of building materials and home improvement solutions, the company sells processed marble materials. As of December 2016, Lowe’s Companies, Inc. (NYSE: LOW) maintains a market cap valuation of $63.54 billion, 873 million shares outstanding, and a float consisting of 868.42 million shares. During the company’s fiscal third quarter, Lowe’s Companies, Inc. (NYSE: LOW) reported total revenue of $15.74 billion and net income of $379 million.
Overall, the global marble and stone market is set to continue strong growth and reach 19.6 billion metric tons of crushed stone by 2020. Furthermore, Sky Century Investment, Inc. (OTC Pink: BNRM) is located in the largest market for marble and stone mining, as Asia consumption of marble and stone minerals is projected to grow at a compound annual growth rate of 6.20% through 2020. The Hong Kong investment holding company expects to finalize its acquisition of a majority stake in the Hong Guang Marble Mine in 2017 and begin generating strong revenues moving forward.
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