IMA System Concept

Investors, Financing institutions and operators in general have to develop a deep understanding of the market of products and services associated to a given investment.

The concept of IMA (Investment Market Analysis) is relatively simple. All the units and outfits that can produce products and services reaching the target market are listed and analyzed in detail in terms of initial investment cost, depreciation, operating costs, financial and tax items.
The curve of market supply against price and quantities is calculated at break even conditions, in a number of likely scenarios determined by time, exchange rates, commodities prices, interest rates and so on.
The curve is dynamically compared with the market demand curves calculated in the same way or given by historical records.

Given the integrated approach, the system provides a real time analysis of scenarios. The risks pertaining to the estimated scenarios (associated to fluctuations of financial, currency, political, technical, market, inflation, time values) are analyzed on quantitative basis with the Monte Carlo method.

IMA has been designed on an integrated Microsoft Access and Excel platform.

The system enables to (a) enhance your understanding of costs, profits and risks associated to your investments, (b) have real time answers to your questions for any stage like: feasibility study, negotiations, evaluation of alternatives.

Example: forecast of electric power price in Italy (year 2001)

This market is moving forward from monopoly to competition. Many new projects are being promoted (some two hundred new plants for 65.000 MW extra capacity have been planned by several operators).
What level will market prices reach? When? Will these price levels be sustainable by old and new plants?

The problem

Energy demand: relatively accurate forecasts are available from historical trends and macroeconomic projections.

Energy supply: the trends for the development of supply are strictly related to the investments for new plants and revamping of old ones. Important factors are also the existing and future subsidies as well as the energy surplus from neighbor countries.

Free market price: the forecast of market price has to be determined on a dynamical and statistical basis. 

Sampling the market 

Some eight hundred existing and new planned plants have been listed and analyzed in terms of initial investment cost, depreciation, operating costs, financial and tax items. The analysis has been carried out with the IMA expert system.

The curve of market supply against price and quantities has been calculated at break even conditions, in a number of likely scenarios determined by time, exchange rates, commodities prices, interest rates and so on.

Results

The supply and demand curves calculated on analytical and statistical basis outline the likely scenarios for operators and decision makers.