Harmony Energy Income Share Discussion Threads

[williamcooper104] 01/2/2024 11:14

What is it with investment trusts paying a dividend when they are close to insolvency

[topvest] 01/2/2024 11:10

I've exited my small position here. I will stick to safer alternatives from now on. They really should be having an RNS here.

[spectoacc] 01/2/2024 11:05

Another question would be - why no profit warning?

They also paid a 2p dividend in December.

[nickrl] 01/2/2024 11:03

HEITs assets generate a better return per MW than GRIDs as they are all long duration. This should make them more valuable to the ESO but until the 15m restriction is removed which is later in the year there not getting the instructions tgey should. Bessanalytics.com shoes plainly they are getting skipped despite being more cost effective over gas. OFGEM should be investigating whether the ESI are acting in consumer interests.
In the long run a net zero system needs lots of storage but whether they can survive us another matter. Divi will be suspended is likely immediate action.

[williamcooper104] 01/2/2024 10:56

Yep - if there's NAV left I think shareholders are going to want that realised rather than put in more money So only question is if the liquidation happens through management or an administrator

[74tom] 01/2/2024 10:54

The most obvious red flag was when they tried to raise £130m and got £15m... who will give them huge money now given the market factors at play? And similarly, who is going to pay fair value for an asset being sold by a distressed fund with a market that is currently under the cosh with no quick fix?

[spectoacc] 01/2/2024 10:46

Can't help but read #210 & recall that famous dotcom era broker note:

Cannot
Recommend
A
Purchase.


Analyst lost his job over it, would love to know what became of him :)

[williamcooper104] 01/2/2024 10:33

Feels like they've two options Dilute equity hugely to raise money to straighten the balance sheet Go to their lender to restructure debt on basis that they'll liquidate the assets so no need to appoint an administrator

[74tom] 01/2/2024 10:05

Looks like the below was spot on, the FCA needs to regulate the IT/REIT sector as some of the reporting behaviour is beyond the pale. As per Jefferies note, I'll be surprised if this survives without significant luck


"74tom8 Dec '22 - 13:02 - 74 of 209 Edit
0 1 0
Curious to see this trading 25% above the placing price paid in October, particularly given they appear to have been looking to raise £130m and had to make do with just ~£14.9m pre placing costs...

So to summarise what's happened here since IPO;

They raised gross capital of £224m (likely £215m net) and used it to buy 6 BESS projects which are at various stages of completion, plus another 3 projects which they've reserved pending the need for more funding to build them...

In just over 12 months this work has turned the ~£215m into a NAV of £277m...so they've booked an unrealised gain of £62m.

As lurker5 pointed our earlier in this thread there appears to be very little publicly available information with which to reconcile this gain, however I would be very sceptical indeed at that kind of NAV change in such a short period of time.

The biggest issue is that these are very long term revenue streams, I think we can all be assured that the current European energy crisis will result in market reforms which ensure it's like never happens again. They will take a few years to implement, however it will mean energy costs will mean revert to historic averages in the medium term.

Furthermore, given this company intends to give away ~10p a year in dividends, I can't see the merit in it trading at such a huge premium to deployed cash, certainly not before it actually generates tangible revenues.

It will be interesting to see how it develops, but it all feels a bit 'ponzi' to me."

[williamcooper104] 01/2/2024 08:34

Sounds like needs a rescue rights issue

[nickrl] 31/1/2024 08:47

@CC2014 new additions to wind are slowing down this year but there are big build outs coming on line in 25/26 and there certainly is reasonable correlation between wind generation levels and BESS. The other big driver is that Solar is constantly pushing upwards and that ought to increase demand for ancillary services come the summer.

[cc2014] 30/1/2024 22:59

We've talked before about the amount of batteries coming on line

For info for wind for peak generation over a half hour period.
Date 20Gw achieved 02/11/22
Date 21Gw achieved 10/01/23

We have not yet reached 22Gw. The highest to date is 21.81Gw on 21/12/23

[nickrl] 30/1/2024 20:15

@1tommyt yes the capacity market income is guaranteed for the tenure of the contract. They will receive it from Oct 23 to Sept 24 for four assets after that its back to zero until Oct 26. However, they have prequalified these assets for the next T-1 delivery year

Bumpers 1 ESS
Bumpers 2 ESS
Hawthorn Pitt BESS
Little Raith ESS
PILLSWOOD
PILLSWOOD 2
Rusholme BESS
Wormald Green BESS

so may get more contracts if they've bid low enough but pretty well every BESS has prequalified so like ancillary services i suspect the price is going to get pushed down as its effectively free income.

[1tommyt] 30/1/2024 17:30

Assume capacity market as locked in revenue is valued higher in the NAV??

[nickrl] 30/1/2024 15:41

@CC2014 argh yes good point so did some digging and four assets have a T-1 which started paying out last Oct at 1m pa although could be less if they use the derated figure to calculate the amount on. Other assets bid into the T-4 also have an income stream but that doesn't pay out till Oct 26. So not sure how the higher figure is arrived at i'd say it was nearer £7/MWhr but it all depends on how much the battery is used.

[cc2014] 30/1/2024 09:43

#194

@nickrl.

I think (but am not sure) the revenue is about 50% higher than the £32MW/hr because this excludes the capacity market contracts. This would take it up to £49MW/hr

[james2019] 29/1/2024 18:52

Great this is back up it went offline.

[tr2020] 29/1/2024 18:22

Nice agree

[nickrl] 29/1/2024 18:17

@TR2020 my ramble at #186 gives the background my assessment on whats driving income then on #151 i reckoned they need 13m for the current divi but have 8m also needed for a loan then the inv mgr wants a cut currently 4m. Using BESSanalytics data they are generating 15m pa currently including capacity mkt payments that they are now receiving across the visible assets but also a few aren't trading in the BM so maybe c17-18m so c5m short. Inv mgr could be generous at a cut back a bit but divi will be main source of any short term savings but down at this share price level even a 50% cover leaves a reasonable yield.

Im interested in this but really want to see these or GRID respond to the significant mkt movement first as my assessment could be wildy out either way so DYOR.

[tr2020] 29/1/2024 17:55

Agreed so what's you view?Buy hold sell ??

[nickrl] 29/1/2024 17:52

@TR2020 ive certainly got my detailed understanding of the background to these assets and how the market works from MODO. In fact not many investments where there is so much transparency on the data that drives income if you have time to manipulate it.

[tr2020] 29/1/2024 17:24

Very good tool, MODO, is also great. They release free content on social media, but their paid offerings can be quite expensive.I think BESS has had a tough year but long term it looks positive... Good buy still

[nickrl] 29/1/2024 16:48

@TR2020 they had disappeared a while back so good to see back online. Just hit the 365 button and compare to last 30 days you can see how reduced income is. HEIT showing as top last 30 days but at 32k/MW that generates 11m pa the divi is 8m the loan is 8m and the inv mgr want something so divi has to give.
Edit not all assets are necessarily being valued by bessanalytics as they only have visibility of units registered to the Balancing Mechanism.