Drax Share Discussion Threads

[scotches] 02/4/2015 15:10

If you look at a 10 year chart Drax has always been a volatile investment.

In January there was a report speculating that an EU decision to allow a guaranteed pricing scheme for the Drax third turbine when it is converted to biomass would boost the share price Has this decision ever been made?

Neil Woodford's interest in this share should be a positive. However I cant follow his logic that he wont invest in something like Nat Grid since it is so subject to govt interference and thereby difficult to price accurately as an investor. In what way is Drax free of such issues.

[bookbroker] 02/4/2015 14:45

This will be taken over at some point, it's a great asset coal or biomass, take a look at CNA. £5bln. in the red, and little sign of a turn in outlook, the Rough gas field on its last legs and gas contracts all over the shop, Drx. is a strong co. financially, that will stand it good stead despite short term pressures. We know from a week or two back that new Cfd contracts will be issued not before October now!

[nick rubens] 02/4/2015 14:38

Only a takeover will stop this falling further IMO and even that looks unlikely, unless they get it really cheap which is probably why no one has tried yet.

[salpara111] 01/4/2015 14:19

Just like a miner or oil producer, they cannot say "screw you" to any particular government who is screwing them, they have made long term investment decisions on assets which cannot be moved or easily closed down.
Look at what countries like S. Africa and Zimbabwe are doing to the miners in their countries.
I can't imagine how much worse things might become under a Labour government given their open hostility to the energy industry.
Broker targets are utter BS! as mentioned by others their primary function is to generate trading in that particular stock.
I own a couple of stocks where the lowest of several broker targets is at least 30% higher than their current share prices but that does not mean that I expect them to rise to even the lowest target.

[nick rubens] 01/4/2015 13:03

Kind of damned if they do, damned if they don't.

[nick rubens] 01/4/2015 13:02

"only a few weeks ago Goldman and others had this as a conviction buy with a decent target price."

These broker price targets are BS. I think they are designed to get trading boosted to churn commissions, a bit like when a retail store says 'Sale now on' or 'Sale today only' etc

If Drax is oversold then it will bounce back. My own opinion is clear over earnings and dividends shrinking continuously for five years and now the biomass government u turn has thrown a real spanner in the works as Drax have committed to three biomass stations and said they may NOT proceed with the fourth, that shows a real concern to me on what DRX thinks about the future without government aid.

[careful] 01/4/2015 12:54

I am underwater here.
The trouble is i do not understand the company.
At the last report they said there was an erosion of 'dark green spread'.

Such Bullsh*t is worrying.
Warren Buffett makes everything sound simple.
Only idiots hide behind jargon.

and as for these complicated green subsidies etc, I can safely assume that political corruption is widespread.
I will hang on here, but it seems like a mistake.

Who understands this lot, only a few weeks ago Goldman and others had this as a conviction buy with a decent target price.

[nick rubens] 01/4/2015 12:24

" be better to simply stop generating electricity via the coal based turbines full stop"

Bookbroker If I was the sole owner and CEO then I would do exactly that.

[nick rubens] 01/4/2015 12:21

This government is effectively handcuffed to and busy paying out non work benefits and public sector bonanza's that the last Labour Government managed to expand out of control.

[bookbroker] 01/4/2015 12:20

I kinda wonder if the co. would not be better to simply stop generating electricity via the coal based turbines full stop, they must be almost at the point of unprofitability with the carbon tax, it would provide some respite, and then issue a force-majeure notice on their contracts with the end users! Off course it is far more complicated than that suggestion, but with falling prices where and when does it become unviable.

[nick rubens] 01/4/2015 12:18

a reduced 7.2p dividend going xd 23rd April for investing at todays price 350p.

Things need to be clarified on Drax's existing biomass conversions (investment) on whether they will still receive the subsidy.

[bookbroker] 01/4/2015 12:14

Is this wretched Govt. trying to drive this co. out of business, and what sort of message does it give to investors?

[bookbroker] 01/4/2015 12:12

I understand like any utility it is a yield play, but the co. is not playing on a level playing field, you have renewable energy that is being heavily subsidised, and to an extent this nuclear project at Hinckley Point if it ever gets completed, and although DRX is receiving some sort of intervention payment via the Cfd on one of its biomass conversions the others are not, this not acceptable when it is bing hammered via the carbon tax, I understand this is one way of ensuring that the co. complies with new regulations, but it is an onerous penalty that makes it very hard for the co. to generate a meaningful return in order to re-invest in further conversions!

[salpara111] 01/4/2015 11:32

The way I see it DRAX is a yield play and as Nick Rubens points out above it has cut its divi for the past 5 years which means that there really is only one direction that the share price can go in.
If it gets to the £3 area I would probably be tempted but not at the current price.

[mike740] 01/4/2015 08:56

Well said, indeed indeed.

[bookbroker] 01/4/2015 08:46

A ten year low nearly, well we know commodity prices are weak, I still hold the faith here as I believe in the asset and its determined efforts to re-invent itself to a low carbon producer, I think this Govt. frankly has failed in our energy policy, it fails to respect that cos. such as this are endeavouring, at their own cost, to change with little cost to the taxpayer unlike the subsidies dished out to wind farms, etc and these solar subsidies that a precious few are benefitting at every taxpayers expense! £3.4bln is the cost to the taxpayer in wind renewables or somewhere in that region.

[bookbroker] 31/3/2015 09:41

Josh, would you like to elaborate and provide details on how many twh. solar actually produces, and is it consistent all year round to provide the necessary spikes in demand, planning laws on solar farms are tightening, I think houses would be better to build than solar farms, and Nick we are getting to the point where nearly half of Drx's production will be from low carbon energy, Neil Woodford holds the faith, so my money is on him!

[nick rubens] 31/3/2015 09:36

bookbroker

"That is the most ridiculous remark about closing it down, this co. is essential to UK energy security,"

That's a good point, but what's the point of owning it, if it's profits and dividends are declining year after year.

Those changes to becoming a low carbon provider are not without huge cost and are not being helped by the government which is aiding all the other alternative so called low carbon schemes despite probably being uneconomical in many cases.

"You are buying the asset here, it is still worth more than the share price"

An asset that has been cutting the dividend five continuous years. How can it's 'worth' be realised? cheers NR

[joshuam] 30/3/2015 17:14

Solar is expanding across the country at a rapid rate. The no1 green energy, little maintenance,no transport costs, a free energy.

[bookbroker] 30/3/2015 16:52

You are buying the asset here, it is still worth more than the share price, with little debt and a changing landscape. Remember this co. still provides 8% of UK electricity, that can not be replaced in the short term, and hopefully the changes DRX. is making to become a low carbon energy provider is taking place. That is the most ridiculous remark about closing it down, this co. is essential to UK energy security, the Rough gas caverns out in the North Sea are coming to the end of their lifespan gradually, CNA already reducing capacity to carry out essential maintenance, no new nuclear power on the near term horizon, and an ageing existing nuclear bank of stations, wind and solar will not replace the existing framework, as for wave power this all bluster at the moment.

[nick rubens] 30/3/2015 15:01

The dividend has continuously been cut for the last five years. Not even income funds will be attracted to this track record.

[joshuam] 27/3/2015 17:01

With no uk coal or goverment energy policy this makes drax profits vulnerable

[nick rubens] 27/3/2015 14:17

What would be the attractions of a takeover? Close it down and redevelop the land?

[bookbroker] 27/3/2015 09:46

Having said the above, I'm still surprised that this co. can lose half its value in the course of one year, energy price falls and the green lobby taken into account, it is still a valuable asset, and looking at the accounts, depreciation included, it is trading at net asset value with comparatively little debt, is this a possible take over target or is energy too much of a political hot potato!