diff --git a/docs/finance/revenue-model.md b/docs/finance/revenue-model.md index 06d9df0..4cdbe4c 100644 --- a/docs/finance/revenue-model.md +++ b/docs/finance/revenue-model.md @@ -483,51 +483,96 @@ boutique-heavy mix pushes the title line up and the volume down.) | Jacket (standard) | 0.40 to 0.92 | 13.3 to 30.4 | local carton partners; pass-through-ish | | Shrink wrap | 0.02 to 0.03 | 0.8 to 1.1 | film | | Energy | 0.12 to 0.23 | 3.8 to 7.6 | ~1.5 to 2 kWh blended per record at grid/solar mix | -| Production labor | 0.23 to 0.40 | 7.6 to 13.3 | 15 to 25 staff across shifts at Thai wage levels over 1.0 to 1.5M records | -| Stamper amortization | 0.03 to 0.07 | 1.1 to 2.3 | in-house stamper over 1,000 to 2,000 pressings | +| Production labor | 0.08 to 0.16 | 2.6 to 5.4 | Built up below from 13–19 direct staff at northern Thai rates, over 1.0–1.5M records | +| Stamper amortization | 0.03 to 0.12 | 1.0 to 4.0 | in-house three-generation set at ~60–150 USD marginal cost over 1,000 to 2,000 pressings | | Maintenance, spares, consumables | 0.12 to 0.23 | 3.8 to 7.6 | estimate | | Reject allowance | 0.12 to 0.17 | 3.8 to 5.7 | 5 to 10% reject rate carried by good units | -| **Total direct cost** | **~1.45 to 2.77** | **~48 to 92** | | +| **Total direct cost** | **~1.30 to 2.58** | **~43 to 85** | | + +**Labour build-up.** The previous 0.23–0.40 USD/record implied 44,000 to +63,000 THB per head per month, far above northern Thai production rates. +Rebuilt from headcount and wages, fully loaded at ×1.3 for social +security, overtime, bonus and PPE: + +| Role | Heads | THB/month each, loaded | +|---|---|---| +| Press and finishing operators | 8–12 | ~19,500 | +| Galvanics | 2–3 | ~32,500 | +| QC | 1–2 | ~26,000 | +| Maintenance | 2 | ~32,500 | +| **Direct production payroll** | **13–19** | **~312,000 – 449,000/month** | + +That is 3.7M–5.4M THB/yr (113k–163k USD), or **0.08–0.16 USD per record** +over 1.0–1.5M records. Mastering and cutting engineers are excluded — +they are title-services labour, not per-record — and admin, sales and +logistics sit in overheads below. ## Margin per record - Blended price 3.50–4.60 USD minus direct cost 1.45–2.75 USD gives a - **gross margin of ~1.95 USD per record at the midpoint (~64 THB, ~48%)** -- The spread around that is wide and worth stating rather than hiding in - a range: the adverse corner — low price meeting high cost — leaves - **0.75 USD (21%)**, and the favourable corner **3.15 USD (68%)**. - Neither extreme is likely, but it shows that price realisation and cost - control each move the margin by more than a third on their own -- Overheads on top: admin/sales, insurance, facility running costs, and - depreciation (~350k to 700k USD/yr on the 4.7M to 8.9M full-vision - capex over 10 to 15 years), together roughly 0.45 to 0.80 USD per - record at full volume + **gross margin of ~2.11 USD per record at the midpoint (~70 THB, ~52%)** +- The spread is wide and worth stating rather than hiding in a range: the + adverse corner — low price meeting high cost — leaves **0.92 USD + (26%)**, and the favourable corner **3.30 USD (72%)**. Neither extreme + is likely, but price realisation and cost control each move the margin + by more than a third on their own -Rough operating picture at full capacity: **EBITDA ~0.9 to 1.7M USD/yr -(~30M to 56M THB); operating profit after depreciation ~0.6 to 1.2M -USD/yr (~20M to 40M THB)**, before tax. The BOI CIT exemptions (solar, -automation, and any merit measures) shield a meaningful part of early-year -profits; see [boi.md](../boi.md). +## Operating picture at full capacity -**Both roll-ups predate the margin correction above** and sit at the -conservative end of what it now implies — a midpoint margin of 1.95 USD -over 1.0–1.5M records leaves more than this once overheads come off. They -are deliberately not re-derived here. The inputs they rest on -(utilisation, overhead per record, the blended price itself) are all -unvalidated, so re-running the arithmetic would give the output a -precision the inputs do not have. The whole P&L should be rebuilt when -the model is re-based after market validation, not before. +Built from the components above rather than asserted. Three scenarios, +each internally consistent: adverse pairs low volume with the low price +and high cost, favourable does the opposite, central takes midpoints. +Title-services contribution assumes 60–70% after lacquer blanks, styli +and nickel. Cash overheads (admin, sales, insurance, facility running, +IT, professional fees, marketing) are estimated at **200–450k USD/yr** +and deliberately paired high-to-adverse. Depreciation is the 4.7–8.9M +capex over 10–15 years. -Payback on the full-vision capex at these margins: **roughly 5 to 8 -years at mid assumptions** (the adverse corner, high capex meeting low -profit, stretches past 15 years), materially better if the phased entry -proves the market before the big blocks are bought. +| USD/yr | Adverse | Central | Favourable | +|---|---|---|---| +| Records | 1.0M | 1.25M | 1.5M | +| Blended price | 3.50 | 4.05 | 4.60 | +| Direct cost | 2.58 | 1.94 | 1.30 | +| Contribution per record | 0.92 | 2.11 | 3.30 | +| Pressing contribution | 0.92M | 2.64M | 4.95M | +| Title-services contribution | 0.10M | 0.28M | 0.48M | +| **Total contribution** | **1.02M** | **2.92M** | **5.43M** | +| Cash overheads | 0.45M | 0.33M | 0.20M | +| **EBITDA** | **0.57M** | **2.59M** | **5.23M** | +| Depreciation | 0.89M | 0.55M | 0.31M | +| **Operating profit** | **−0.32M** | **2.04M** | **4.92M** | +| Payback on 4.7–8.9M capex | never | 2.3–4.4 yr | 1.0–1.8 yr | + +Two things this makes visible that the previous figures hid. + +**The adverse case loses money.** At 1.0M records, the low price, the +high cost and the high capex, the plant is EBITDA-positive but does not +cover depreciation. The old roll-up quoted operating profit of 0.6–1.2M +and never showed a loss anywhere. Utilisation and price realisation are +not upside levers here — they decide solvency. + +**The favourable case is not credible, and that is a finding about the +cost table, not the business.** A 69% EBITDA margin is roughly triple +what pressing plants earn; even the central case at 47% is well above +industry norms of 15–25%. The direct cost table almost certainly +understates, because it counts only per-record consumables and direct +payroll. Missing at minimum: indirect production labour (supervision, +planning, warehouse), consumables beyond those listed, scrap and rework +above the reject allowance, water and effluent, inbound freight on +materials, inventory carrying cost, and sales commission. **Treat the +adverse column as the honest one until those lines exist.** + +So this table is a sensitivity, not a forecast. The BOI CIT exemptions +(solar, automation, and any merit measures) shield part of early-year +profits where there are any; see [boi.md](../boi.md). ## What moves the model -- **Utilization is everything**: the cost structure is mostly fixed, so - profit swings almost linearly with volume sold; 60% utilization at - mature fleet size roughly halves operating profit +- **Utilization decides solvency, not just upside**: the cost structure is + mostly fixed, so profit swings almost linearly with volume sold. 60% + utilisation at mature fleet size cuts operating profit by more than + half from the central case, and the adverse column above is already + loss-making at full volume - **Mix**: color/splatter and boutique runs carry 20 to 50% price premiums and suit the semi-automatic line; the title-services line (mastering, cutting, stampers) has software-like margins once the rooms exist @@ -546,10 +591,11 @@ proves the market before the big blocks are bought. - **The currency mismatch is a live exposure.** Revenue is quoted to export customers in USD or EUR while roughly two-thirds of the direct cost base (labor, energy, local cartons, maintenance) is incurred in - THB. A stronger baht compresses margin directly: at the mid case, a 10% - THB appreciation takes roughly 0.10 to 0.15 USD off the gross margin - per record without a single operational change. Worth deciding early - whether to quote regional customers in THB. + THB. A stronger baht compresses margin directly: a 10% THB appreciation + takes roughly 0.09 to 0.17 USD off the gross margin per record without + a single operational change — enough to move the adverse case further + under water. Worth deciding early whether to quote regional customers + in THB. ## Honest caveats