Tuesday, May 5, 2015

100 Billion: April Income and Balance Sheet, identifying our tech II income sources

April was almost a carbon copy of March: we made about the same amount of money (net) although time in the game suffered due to a mix of real life obligations and the time we spent rolling out the new contributed applications feature.  After the numbers, I'll list out our main tech II income sources and do a quick calculation on tech II drones as a way to describe the margins we're seeing.

As I'm writing this, a significant announcement was made regarding EVE Online's twelfth birthday.  The TL;DR is that every active account is receiving a Genolution Core Augmentation CA-3 and CA-4.  If you've been paying attention to this blog, you'll know that our existing stock of these items represent a significant part of our asset value.  The introduction of more of these will cause prices to drop so we expect to see a big hit in the value of the corporation.  At the same time, this is a great buying opportunity.  It's very likely some players will decide to dump these items for some quick ISK.  I'm on my way to put in some buy orders now.

April By The Numbers

Here's where we were at the end of March:

and here's where we stand after April:

We see a healthy bump in cash (so yeah, we failed to make much of an investment this month...again), but really the big boost here is due to increase in asset value.  The asset value increase actually exceeded the drag on PLEX to fund the accounts, so staff equity jumped almost two billion over the course of the month.  Asset valuation is a fickle thing, we'll have to see how stable this increase is.  It may be a sign to sell, so let's look at the top asset valuation for April.

Here's the top 20 assets from end of March:

and here's the top 20 at the end of April:

And...Genolution Core's are up in value again.  That pretty much explains the big boost in equity (but see the note in the intro!).  There are also two new notable entries: the "t-shirts" which were given out to FanFest attendees.  Combined, these almost pay for one of the two PLEXs we need to fund the corporation every month.  I looked at some of the market data here and while CA-1's and CA-2's move pretty frequently, the CA-3 and CA-4 almost never sell.  I'll have to think a bit as to whether it's worth valuing these a different way.

I've started watching the Prosper show to get some ideas about potential investments.  Prosper usually covers trends in PLEX, minerals, moon materials, and some ships.  I don't feel like I have good enough tools yet to really try a large investment here.  Stay tuned for some upcoming ideas.

The income statement for the month shows continued stable income from tech II production (but still lacking any real analysis on where the best margins are).  Here's where we stood at the end of March:

and here's where we are at the end of April:

The income side was significantly better than last month, but we also accrued higher expenses.  The main culprit there (as you'll see below), was POS fuel.  We'll need this soon as we're fairly close to running out of blueprint copies for tech II production.  So we'll need to go through a round of invention to refresh our stock.  We've been doing invention in our POS for convenience (it's much closer than the nearest station supporting invention), but cost-wise that may not be such a great idea anymore.  Yet more analysis we need to do...  You'll also note we had even less time for mission running.  When we go back into a round of invention we'll need to pickup mission running to keep up reasonable income.

Here were the top 20 transactions by value for March:

and for April:

As we said above, we continue to drive fairly steady income from tech II sales.  Tech II drones continue to be an easy sale and this month we dumped stock in tech II rail guns.  0.01 ISK botters were mostly a nuisance this last month.  It's still on my list to document some strategies for dealing with these idiots.

On the debit side, we had to refill on Caldari fuel for our POS.  See below for some quick calculations on how running our own POS affects our profitability.  Prior to Crius or so, it was a no-brainer to run your own POS for any serious production.  Now, I'm not so sure.  The rest of the debit side of the month was spent on raw supplies for tech II production.

The one thing I didn't do in April which I said I might do is dump more Toxic Metals.  Before I do that, I want to work out a better strategy.  There's no hurry to dump this PI material at the moment as we don't need the cash.  What I'm trying to work out is whether I can efficiently produce enough of this to bring in significant income (think: several hundred million ISK).  Currently, I'm netting about 50000 units per month (net of using this material for production).  At current prices, I'll need about 6 times this amount just to make ISK 100M.  That's a major scale up.

That's it for the 100 Billion corp financial update, now let's talk about our tech II production choices and dive a little deeper on tech II drones.

Tech II Production Choices and Profitability

Successful industrialists in EVE know that PvP drives most production.  In high sec, where the 100 Billion Corp make a living, PvP is dominated by duels, mission fits, ganking and some fringe piracy (e.g. pirates popping into high sec briefly to pick up supplies).  Except for newbies or comedy fits, tech II or better is the fit of choice.  As a result, there's a very active market in the production and sale of tech II items related to PvP.  Some markets are busier than others, but most regions have room for producers selling lots in the small hundreds or less.

The 100 Billion Corp is currently active in the following Tech II modules (in no particular order):
  • Adaptive Nano Plating II
  • Small Armor Repairer II
  • Small Capacitor Booster II
  • Hammerhead II
  • Hobgoblin II
  • 1 MN Afterburner II
  • Damage Control II
  • 150mm Railgun II
  • Light Ion Blaster II
  • Light Neutron Blaster II
  • Warp Scrambler II
This list was very unscientifically constructed from a scan several months ago based on volume over a six month period.  In other words, I picked some tech II PvP materials which had fairly stable prices and which had no trouble moving in the market.  This means, barring over-production or serious competition in the market, I should have no trouble moving this stock.  Of course, all of that depends on being able to produce my stock efficiently enough that there is margin left over.

Let's take a deeper dive into the production of Hobgoblin II's, which are a regular source of profit for the 100 Billion Corp.  Excluding the lucky few that somehow got themselves tech II blueprint originals, production of all tech II items goes something like this:
  1. Make a copy of a tech I blueprint original.
  2. Use invention to produce tech II blueprint copies from tech I blueprint copies.
  3. Produce, mine or buy tech II production materials.
  4. Produce your tech II item.
Given this process, the first major decision is which components will be purchased on the market, versus built from raw materials, or mined (including Planetary Interaction).  This is where a spreadsheet comes in handy.  I started building a spreadsheet for this by hand, but then decided I could do a lot better by automating the breakdown of a component into all constituent parts, including the production processes for each part.  This would give us a chance to analyze buy vs. build at all stages.  So in the interest of getting this post out in a timely fashion, I'm going to summarize the big choices and main results, and post my sheet in a follow up blog entry.

The first two parts of tech II production require making a tech I blueprint copy (BPC), then attempting to convert that copy to a tech II blueprint copy.  Producing a tech I BPC only requires the blueprint original and a place to run the job.  This is "free" in your POS, otherwise you have to pay the cost of installing the job at an NPC station.  Of course, running in a POS is not really free as you have to pay for fuel.  More on that later.  When producing copies, it's important to produce copies with the maximum number of runs.  If you don't, then you won't max out the number of runs in your tech II invented copies.

Converting your tech I BPC to a tech II BPC is done by "invention" which requires one or more input materials and a roll of the dice: not all invention attempts succeed.  In the case of a Hobgoblin II BPC, the invention process consumes:
  • one Datacore - Electronic Engineering; and 
  • one Datacore - Graviton Physics.  
You can either buy these materials, or get them for free (other than time) from research agents.  Going the research agent route is slow because the production rate is very slow.  Therefore, I simply buy these data cores and occasionally harvest from my research agents to top off my stock.

The probability of an invention job succeeding depends on numerous factors which are nicely summarized on the wiki here.  You can find invention success calculators on the same page.  A successful invention run on a tech I BPC with max runs will produce a tech II BPC with 10 runs.  If the probability of success is X, then on average we'd expect to yield X * 10 Hobgoblin IIs out of each invention attempt  If the total cost of the data cores for one invention run is D, then invention cost of each Hobgoblin II is D / (X * 10).  This is the base cost of a Hobgoblin II before we include all the other materials needed to produce the final product.

Once we have the tech II BPC, the materials required to produce a Hobgoblin II are as follows:
  • 1 Morphite
  • 1 R.A.M. - Robotics
  • 1 Particle Accelerator Unit
  • 1 Hobgoblin I
  • 1 Guidance Systems
  • 1 Robotics

For the 100 Billion Corp, we've chosen to build everything except for Morphite, which we buy on the market.  We build Hobgoblin I's and R.A.M. components from minerals we recycle from mission running.  Although we build Particle Accelerator Units, we buy the raw materials (which are moon materials) from the market.  Guidance Systems and Robotics we build through Planetary Interaction (PI).  In summary, our expenses for production amount to the invention cost (see above), the price of Morphite, and the price of the raw materials for producing Particle Accelerator Units.

At time of writing, our expenses per Hobgoblin II are about ISK 75000.  This gives us a margin of about ISK 200000 depending on the market.  A more interesting question is whether we'd make more by selling the raw materials or production products which go into making a Hobgoblin II.  A quick spot check shows this is not the case mainly because there is still a hefty margin if we simply bought all the main components.  In particular, including the cost of invention, we'd still have a margin of at least ISK 50000 if we simply bought the six components above and sold the result.  Yes, Hobgoblin II's are good business.

What about the cost of running a POS we alluded to above?  Prior to the Crius expansion, it was almost mandatory to run copying and invention jobs in your own POS as there were typically very long waits for these slots in NPC stations.  After Crius, the limit on slots disappeared.  Instead, jobs will have variable cost depending on how active a station is.  There's also the inconvenience of having to move jobs to a station with the appropriate facilities.

For the 100 Billion Corp, we run a small Caldari POS which burns 10 fuel blocks an hour or about 7200 blocks/month.  At time of writing, a Caldari fuel block cost ISK 15929.  So the monthly cost of this POS is about ISK 114M.  That's a pretty serious drag on operations, about 7% of our total profit for a recent month.  It's about time to generate another round of blueprint copies and invention, so it may be a good time to experiment with running these jobs elsewhere and letting our POS shut down.  Stay tuned.