Greenko Share Discussion Threads

[hutch_pod] 08/5/2015 17:35

My understanding is that two of the previous fundings (GEF from 2009 and GIC from 2013) become convertible from subsidiary equity into GKO equity at a fixed value. Hence the lower the share price, the higher the dilution. This was arguably sensible with a rising share price but less so at 70p. Even after dilution though, the PE/PEG ratios seem attractive given the huge drop in share price.

It seems that more recent funding eg the $550m debt from last year does not have this issue, but there surely is confusion/concern over the fairly complex financing structures in place. Which is a shame, as they seem to be delivering (very) well operationally and the debt financing was a smart move to improve profitability.

[marvelman] 08/5/2015 16:42

“We have adequate funds which we had raised and if necessary, we would look at
various options. At present, I would not like to comment on the funding aspect.”

Placing coming?

www.greenkogroup.com/docs/press/2015/Business%20Line%2004-05-2015.pdf

[scrutable] 06/5/2015 17:36

SP does not seem to reflect value with some small Asian shares. The Chinese software service JQW for instance dropped from 70p to 6p over a year whilst growing sales, and profits, and cash, like mad - whilst holding cash equal to double the cap and paid a 5p dividend when the share price was 12p. It is probably hugely undervalued - perhaps by a factor of x10 times.

BUT DYOR. This is not a ramp of JQW or of JKO. Just an attempt to describe the workings of counter-intuitive crowd psychology.

GKO looks terribly undervalued as well - which doesn't stop it falling a lot further

When a share is as little followed as with GKO any selling, however unconnected with bad news, triggers the suspicion that something is rotten - a factor which then feeds on itself and generates more fear, more sales and a further twist to the downward screw. JQW shares trebled last week to 24p and just as quickly collapsed - the Bulls and the Bears stampeding on alternate days.
The smaller th company the more emotions are in control,, particularly when facts are in short supply.

[marvelman] 05/5/2015 10:16

Does anybody have any clue has to why the nosedive. A very big seller is my own take.

[hutch_pod] 20/4/2015 12:24

Maybe.. It is noticeable how MYT has held up quite well compared to GKO, especially over the last 3 months (MYT almost flat, whilst GKO down 30%).

[ben gunn] 16/4/2015 10:58

Has the worm turned at last?

[paleje] 01/4/2015 14:19

Wouldn't disagree Hutch, just the sentiment that's missing.

[hutch_pod] 01/4/2015 09:44

Agree that it could take time for sentiment to change. India is quite different though in terms of its structural need for power, as well as long-standing policy of renewables competing on a full cost basis with conventional coal, nuclear or gas generation.

While oil gets all the attention, I actually think it's a bit of a red herring for GKO's business model - and indeed GKO continues to deliver outstanding results (though much less than outstanding share price performance).

[paleje] 01/4/2015 08:39

Might be a while before sentiment changes in favour of renewable energy, it seems some are anticipating a longer run of low oil prices than originally thought, even lower than now and for a few years. While dirty energy stays cheap, alternatives could struggle a bit. Had these on watch for ages, ST gave them a positive writeup yesterday.

[dr_smith] 31/3/2015 22:32

I am not aware of any major changes as a PI.
- Possibly the buy/sell share price spread will be tighter which I like to see.
Until I have clarity that the side projects/sister co's won't undermine EPS growth I'm monitoring them but not investing.

[hutch_pod] 31/3/2015 17:05

Agreed. So what do you think of the possible move off AIM?

[dr_smith] 31/3/2015 16:56

Looking back at my spreadsheet records saved Jan 2014 implies same ball park figure, so have to leave it as unexplained oddity.

[hutch_pod] 31/3/2015 16:08

The DL figure is quite odd. But as you say I can actually get close if I use the 2009 shares in issue figure of 68m (according to Stockopedia). So PAT attributable of 9.3m / 68m = 13.67c. But 68m is a very old figure. (It's been 151m since 2013).

[dr_smith] 31/3/2015 15:26

Thank-you, I follow precisely now.
DL gives y/e 31/12/12 as EPS 13.43c, shown as historical figure, rather than speculative 'forecast'.
I'm more inclined to take RNS as correct, but possible DL figure was done at a time when fewer shares were in issue, which would mean higher EPS for a given profit, which is possible and would mean both figures DL and RNS whilst different are correct.

[hutch_pod] 31/3/2015 14:44

Yes, EPS purely as you mentioned the dilution point.

So the prelims have 5.8c for 12 months to Mar 14, and 6.1c for 9 months to Dec 14.
Grossing up the 6.1c to 12 months worth gives 8.1c. So 8.1c is 40% higher than 5.8c.

[dr_smith] 31/3/2015 12:27

Cheers Huth Pod. I believe you are referring to EPS growth - but not sure if you are looking at same historicals as me and some figures in cents and some in pounds, so couldn't see how 40% was derived, but point taken.

[hutch_pod] 31/3/2015 10:25

Hi, no when you apply 12/9 to the eps, you get the 40% increase over the prior 12 months. The sense check is that if 9months to Dec 14 delivers slightly more than the 12 to March 14, then 12 months to March 15 would have delivered at least 3/9 more, in this case 40%.

[dr_smith] 31/3/2015 09:12

Hi Huth Pod, 5% over 9 months = (5/9*12) = 6.67% over 12 months not 40%?
If fixed overheads are considered to be paid first and last 3 months is all profit, then I can understand a higher percentage, but I would expect accounts reflecting a changed reporting year would also apportion fixed overheads.

[hutch_pod] 30/3/2015 23:53

Hi Dr Smith, the 40% is just extrapolating the 9 months eps to compare with prior full year. GKO is delivering pretty substantial eps growth for shareholders on that basis.

The move off AIM would be quite exciting I think as it could remove any 'dodgy' discount.

[dr_smith] 30/3/2015 19:47

Fair comment Hutch Pod, though don't understand what the 40% reference is?
I am not knocking attractions, but highlighting the need to be aware of appleas and pears comparison.

[hutch_pod] 30/3/2015 16:47

I personally think they are fairly upfront by the need for equity financing - "There is a substantial and exciting portfolio of future projects of which a significant part can be financed from the enhanced free cash flow from the sectors referred to above, but will also require further financing for the larger projects if they are to proceed following approval by the Board."

Even still, EPS has increased by 5% for the 9months versus 12months prior. On a pro-rata basis, this is a 40% increase. Impressive.

Surely the attraction is that the share price has not reflected progress and is probably more reflecting negative sentiment on renewables and the complexity of the GKO model - though i think today's RNS makes a good stab at simplifying, but am sure it can be made even clearer!

[dr_smith] 30/3/2015 15:47

Hi Scrutable - I thought the same 2 years ago.
Against that share price has gone down from circa £1.70 to circa £1.10, yet they are 1-2 years further down the line, with renewable energies now even more cost effective, and political drive for renewables more entrenched, which I would expect psoitive impact on SP, yet it has dropped dramatically.

They keep speaking of increasing output by so many gazillion watts and their objective wattage-wise, but don't mention that being watered down by new share issues and/or side projects with sister co's being merged in.
This potentially means less EPS.

Looking at the share price 12-24 months ago, with similar prospects and seeing the chart and it's share price today, would you invest?

I am not commenting as a bitter ex-holder - just trying to keep perspective on risk and hope fellow forum users make informed decisions :-)

[scrutable] 30/3/2015 14:37

Can't be many companies in the power industry that are throwing off cash as increasingly fast(currently $54m/pa as GKO nor which are erecting profitable new production assets on an accelerating basis now at +40%/pa. The idea of fitting solar farms onto land used for wind energy brings to mind the phrase "having your cake and eating it.

Today's results point to a continuing long term, low risk, increasing growth plan without equal anywhere. Capitalised at x4.5 times cash flow in 9 months surely annualises to 3.5 - dirt cheap, fairly secure, and predictable

[hutch_pod] 27/3/2015 10:00

Re the forecasts, comparing Stockopedia's average of broker forecasts, and Investec from Dec, I can see:

2015 (i believe 31/3 y/e)

Stockopedia Stockopedia Investec
as at March as at Dec as at Dec
$ Euro Euro
Revenue 106.8 103.2 110.4
EPS 0.094 0.12 0.084

2016

Stockopedia Stockopedia Investec
as at March as at Dec as at Dec
$ Euro Euro
Revenue 191.8 167.6 189.4
EPS 0.19 0.19 0.154


I do see strange spikes up for forecasts as at Jan and as at Feb on Stockopedia, and I'll be much more comfortable when all is updated for $ and the new year end.

(sorry for formatting!)

[bcockrell] 27/3/2015 09:48

Interesting article and interview with Anil Chalamalasett, published on Wednesday.

Excerpt:

"Chalamalasetty said the company has set itself a target of achieving 5,000MW capacity across wind, hydro and solar portfolios by 2020, which would need an equity infusion of $750 million. “We have a history of raising such capital and a track record of project deliverables; so raising capital isn’t going to be a problem,” Chalamasetty said. He said the company is contemplating migrating from AIM to a mainstream exchange, such as the London Stock Exchange, as and when the company hits operational capacity of 1,000MW. “AIM helped us as a growth company, but we became bigger for an AIM exchange,” Chalamalasetty said."

Read more at:

Interested to hear peoples thoughts on the implications. I presume if they decide to list on the LSE then everything just moves over but it could be more complex if they choose another exchange? Is it likely they could go for something other than LSE listing?