Hydrodec Share Discussion Threads

[brucie5] 10/2/2017 13:34

People get out, others get in. For every buyer... etc. Sometimes long term holders who have been left in a falling trend use any excuse to liberate themselves from a long term losing position.

Who knows? In the end, the chart will show you most clearly the balance of buys to sells, and give you a steer for the chart going forward.

[wild billy boy] 10/2/2017 13:30

Strange someone dumping 2%.

[1gw] 10/2/2017 13:29

If you look at the advfn trade reporting for 27th January you can see what I presume is the original trade at trade number 8.

[capricious] 10/2/2017 13:25

And that discount premium is not inline with the previous large sells by one of the II(s). They were all within 0.0005-0.0025p of the underlying price, so cannot be recent.


Ah yes, now I note mention of the 27th.

[1gw] 10/2/2017 13:23

wbb - according to the London South East reporting that 14m trade looks like a deletion from the 27th January, so nothing to do with current trading.

[wild billy boy] 10/2/2017 13:18

I do not think the 13.4m sell is reported on advfn yet.

Here it's.

[brucie5] 10/2/2017 13:17

Happy to be proven wrong. I may well be. Just saying how I read it.

NAI.

[jhhh] 10/2/2017 13:13

Really?

why did someone sell 13.8m shares at 1.8p? That's about 2% of the company was sold off. Firesale.

what about there are more sells in the pipeline or to be reported?

More like 2.0p is coming

[brucie5] 10/2/2017 13:09

Looks like a gap to 4p, on basis of last failed BO.

[capricious] 10/2/2017 12:50

Yes, I think it's just the MM managing it's risk.. the pace of change meant it was caught short, literally, and needed takers selling as they dropped the price, or absorbing volume at a discount.

[dark energy] 10/2/2017 12:46

STAMPEDE IS COMING I think.

[dark energy] 10/2/2017 12:44

13.8M delayed sell .

[brucie5] 10/2/2017 12:37

Yes. These retraces are the buying opportunities for those that are looking to get involved. The chart has to be tested before it can progress. I think it's been tested, and having been so, it may well start its upwards path.

NAI.

[vitamal] 10/2/2017 12:24

On Barclays you can sell 250k shares at 2.6 & the only quote I could get to buy was for 10k at 2.65As I write the bid so has nudged up a tad The share price is being walked down for whatever reason

[brucie5] 10/2/2017 11:44

Concerning the tech:

[gimmetheloot] 10/2/2017 11:06

This is the game changer

Commen ng on the approval, Chris Ellis, Chief Execu ve Officer of Hydrodec said: "ACR approval means that Hydrodec now produces the only oil globally which generates a carbon credit. It is a further demonstra on of the world leading nature of our technology and product and reinforces the sustainability element of it to the primary users of transformer oil. Although the ini al direct financial contribu on of trading the credits may be modest, strategically I expect that over me this will enable Hydrodec to further develop commercial rela onships with key transformer manufacturers and u li es in our target markets."

[capricious] 10/2/2017 11:02

Whilst I back up your enthusiasm, I might add that they have carried out a number of placings to raise funds for capital expenditure, or during the global recession 7-8 years ago. Historically they do not jump to placings, unless it's the best solution.

An original 1% stake, without keeping up with purchases, would see a very much smaller fraction.


I'd also see a lot of potential in the transformer market. It's a different dynamic to engine lubes etc, as whatever the power generation (wind/solar/nuke/gas etc), for the long foreseeable future, they'll need transformers, and therefore transformer oil (with a small % of synthetic esters).

I feel the future is further expansion in the US (with stable feedstock channel), growing the AUS business (although due to market makeup and wide regional dispersion, this is harder)

Secondly, a licensing of their tech in different geological zones... China is obviously a very large market but as many non-Chinese companies have found, breaking into that market is often a pyrrhic victory... and protecting IP is easier said than done.

I'd have other regions at the top of the list first.

[yump] 10/2/2017 10:41

1gw

I don't think there is much point in trying to debate fundamentals with someone who is clearly copy and pasting generic 'exciting' technical information in an attempt to run the shares up, but who has no clue at all about financials.

The desperate ramping for a few quid is so transparent.

Assuming they get to EBITDA positive, there would still be some way to go to get to PBT.

There may well be fireworks once EBITDA positive happens, as some proper investors anticipate PBT, but that's some way off.

[gimmetheloot] 10/2/2017 10:04

Sinopec to build 20 smokeless cities in China
“Sinopec will build 20 smokeless cities by use of geothermal technologies in China during the 13th Five-Year Plan period, increasing 100 million square meters of geothermal heating & cooling area and 500 MW of installed geothermal capacity,” Wang Zizong, Deputy Chief Engineer of Sinopec Group, said at the 2016 Energy Meeting ＆ the 8th Chinese Energy Enterprises Forum held in Beijing on November 11.

Sinopec built China’s first smokeless city using geothermal power in Xiong county, Baoding city, Hebei province, making it a replicable and sustainable demonstration project. At present Sinopec has expanded its geothermal development projects to 14 provinces and cities in China, with geothermal heating area exceeding 40 million square meters.

A main function of transformer oil is to provide good electrical insulation performance. Through strict linkage control in manufacturing, transporting and using of transformer oil, the oil provides extremely low conductivity and high breakdown voltage, thus reducing power loss of electrical equipment. Electrical equipment will generate plenty of heat during power transmission and transformation process, so the transformer oil is required to provide good heat-transmission capability. Through hot and cold convection and circulating reflux, transformer oil with proper viscosity and low pour point can send heat out in time to avoid over temperature of electrical equipment like transformer. In addition, transformer is mainly composed of copper wire, iron core and non- conductive cellulose etc. To ensure a long service life of transformer, transformer oil must provide good antioxidant capacity.

We will be taken out by the Chinese. I am sure they would like to go green per and get carbon credit approved.

[capricious] 10/2/2017 09:54

I imagine if they are short stock, the MMs will nudge a drop (which they did pretty fast yesterday, as those for a quick buck took the cue) to hunt for stock as they equalise position/risk.

[gimmetheloot] 10/2/2017 09:50

1GW,

Stop deramping because you are clutching at straws , you totally discount the payments they will receive for carbon credits, additional feedstock andThis update confirms significant progress in the turnaround of the Company over the past twelve months. Whilst the general operating environment for oil related businesses has improved recently, positively impacting the Group's pricing and margins, challenges still remain. 2017 has begun strongly in terms of sales orders in the US and Australia. Whilst the Australian feedstock position remains robust, the feedstock position in the US is tighter. Higher margin transformer oil sales currently represent c. 60% of total Group oil sales, with scope for further improvement through the year.

In 2017, the Group remains focused on continued progress from its positive Q4 2016 performance, which will be driven by strengthening margins as the Group continues to grow market share and deliver further cost reductions and efficiencies where appropriate. This should enable Hydrodec to deliver positive Group EBITDA for 2017 as a whole.

Chris Ellis, Chief Executive Officer of Hydrodec, commented: "I am pleased to report a move into positive Group EBITDA in the last quarter of 2016, as much of our recent hard work begins to pay dividends in terms of Canton's strong operational performance, our increasing penetration of the transformer oil market, and the impact of cost cutting measures over central corporate expenditure. Despite continuing challenges in a still volatile market, I am confident that 2017 will see a move for the Group towards full year positive EBITDA and look forward to reporting further progress. With record production with further scope for growth. That to me is not a business in decline but a business which is on the up. Dress it how you like but you don't get many companies on Aim who has never diluted in 10 years and is in a position where it has the world leading technology to produce clean green oil and get rewarded and paid in cash as well as carbon credits.

Now moving on from here, Sinopec of China produces hundreds of millions of barrels of transformer oil!! Imagine how much revenue they would get if they had Hydrodecs technology which is approved and accredited by the Carbon credit scheme??

This is a sitting duck for a takeover target and the Americans who are investing here know this very well. Watch this space!

[1gw] 10/2/2017 09:29

On the edge.

GTL - my logic for saying "on the edge" in the 27th Sept post below, which was an analysis of the cash position in the interims. Since then they have had a bit of help from the additional investment by G&S Investment - post from 30th Jan also below.
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1gw 27 Sep '16 - 21:31 - 3596 of 3993 1 0 Edit

Hmmm. If you look at the detail though they reported:

$2.0m operating cash outflow
$2.4m working capital outflow
$1.7m cash inflows from disposal
$2.5m cash inflows from financing (mainly proceeds from loans & borrowings)

So net $0.2m out, but clearly the disposal proceeds and financing inflows are not sustainable in the long term.

$0.6m cash on the balance sheet and $1.4m headroom for wc vs operating cash outflow in the first half of $2.0m and $2.4m wc outflow.

So if they can get to "profitability" in 2H hopefully the operating cash outflow stops and they still have some wc headroom to expand the business.

But it all looks pretty tight in my opinion and they can't afford too much going wrong on the cashflow front in 2H.

Still, I think perhaps that's why the shares are at such a low price and I feel comfortable adding at this price, given the recent run of relatively positive news.
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1gw 30 Jan '17 - 11:43 - 3888 of 3993 0 0 Edit

sleveen - I'm not sure it's clear-cut on the near-term need for funding, but I agree it must be very tight.

In the interims they reported $0.6m cash and $1.4m headroom under wc facilities.

In October they announced the additional investment by G&S Investment ($1.37m feedstock + $0.33m cash), which also reduced Hydrodec's ownership of Hydrodec of North America (and consequent share of liabilities there).

So it does seem to be a race to get to cash breakeven and beyond, but I think it is still credible that they could get there without needing more investment (depending largely I think on how wc has grown as they ramped up sales).

On the other hand, I am somewhat disappointed that their earlier-declared "focus on delivering a profitable 2016" seems to have turned into just 1 quarter of positive EBITDA.

[gimmetheloot] 10/2/2017 09:12

1gw

They sold this to Andrew Black. The non exec director. How much do you think he sold it for?

This is not a business on the edge try that again you numpty! This is a clean oil technology that get awardedcarbin credits for every drop of oil it produces an it's producing millions of litres and making money.

The business is running out of cash?? What rubbish you write, this company has never done a placing since listing and their non exec director Mr Andrew Black has 26% of this company and a loan facilty to the company should they need it. The update confirms significant progress in the turnaround of the Company over the past twelve months

. Whilst the general operating environment for oil related businesses has improved recently, positively impacting the Group's pricing and margins, challenges still remain. 2017 has begun strongly in terms of sales orders in the US and Australia. Whilst the Australian feedstock position remains robust, the feedstock position in the US is tighter. Higher margin transformer oil sales currently represent c. 60% of total Group oil sales, with scope for further improvement through the year.

In 2017, the Group remains focused on continued progress from its positive Q4 2016 performance, which will be driven by strengthening margins as the Group continues to grow market share and deliver further cost reductions and efficiencies where appropriate. This should enable Hydrodec to deliver positive Group EBITDA for 2017 as a whole.

Chris Ellis, Chief Executive Officer of Hydrodec, commented: "I am pleased to report a move into positive Group EBITDA in the last quarter of 2016, as much of our recent hard work begins to pay dividends in terms of Canton's strong operational performance, our increasing penetration of the transformer oil market, and the impact of cost cutting measures over central corporate expenditure.

Yes 3 yrs ago the business suffered due to a fire at one of their plants and the drop in the price of oil but this business is a robust as ever and making very good progress and continues to become EBITBA positive in the coming months.

[1gw] 10/2/2017 08:39

But, as I'm sure you know if you've done your research, "the Group disposed of Hydrodec's UK operations, including borrowings of approx. £1.2m, in March 2016 for £1...".

So they had to say goodbye to their proposed UK lubricant oil re-refining project - an area that had previously been seen as an important source of growth for the business.

The business also appears perilously close to running out of cash.

So it's a business that is on the edge. Personally I am holding because I think there is a reasonable chance things are running in its favour now and it will survive through to profitability without needing major new funding. In which case there seems to me to be scope for a significant re-rating. But there are very definitely, in my opinion, real risks to equity-holders here, even at the current share price.