Helius Eng Share Discussion Threads

[julcester] 27/4/2010 14:43

Look Julcester, Hegy's major shareholder have inceased their holding by 2.3%...

"really Julcester? thats encouraging!"

[julcester] 23/4/2010 11:01

Julcester, another 350k gone through, impressive volume again.

"Indeed Julcester, very encouraging"

[julcester] 23/4/2010 09:59

Great to see a tick up.

"yes Julcester, it is"

Great, I thought I was the only one here.

"No Julcester, I'm here too".

[julcester] 22/4/2010 16:54

Wow... 6m sells today!!!!

[julcester] 16/4/2010 15:36

Nice 200k buy.

[mdchand] 09/4/2010 08:53

Our buyer is still around sniffing stock at 30p and 31p. One MM's offering at 32.25 with our seller happy to sell 25k blocks at 32.5p.

[mdchand] 08/4/2010 15:11

Looks like 725k sales today so far - all absorbed by a buyer and not an MM. If there is a stock overhang, I'm hoping that the upwards price action is a sign that the amount of stock left to shift is finally coming to an end.

[mdchand] 06/4/2010 11:01

Looking at L2 atm, it looks like a PI is trying to pick up 50k at 30p. Another PI looking to offload in 25k chunks at 31.50p.

Anyway, have tried to do some more detailed analysis on Helius just to get some comfort on their current prospects.

Market Cap - £25.6m (based on circa 85.2m shares, excluding options etc)
Current Cash - £15m (although cash burn circa £2m pa)
Deferred Profit based on existing future revenue sharing agreements with RWE - £12m

Let's assume future revenue assumptions are nil - leaving us with a £10m value which we can attribute to all of Helius's other operations including the recent RNS covering the 100mw deal.

The last major deal announced with RWE was for an upfront £28m cash payment for a 75MW biomass plant. The deal also covered a revenue split with RWE (once the biomass plant is running) of 13% over 24 years, and has been given a notional £12m value in Helius's accounts. I suspect that this may be widely conservative, but as the accounts state (worth reading the most recent ones), this figure is subject to multiple variables outside Helius's control.

Anyway, lets assume on a like for like basis, RWE want to buy Helius's 100mw plant (which would be entirely consistent with RWE's strategy stated at the time of investing into circa 500mw of electricity from biomass type deals) by 2011.

We're looking at a cash value of circa £37m (or circa 1.5 times the current market capitalisation), plus any split of any ongoing revenue sharing agreements. Again, doing a simple linear equation, I get a notional future cash revenue value of circa of £16m.

So for an enterprise value of circa £10m, we're looking at a near term 'cash' upside of circa £37m, plus a conservative share of future revenues equal to some £28m. If anything, with additional clarity now being given by the government over ROC obligations for Biomass fuelled power plants, the initial cash consideration could be considerably higher.

[mjcrockett] 01/4/2010 15:56

There's a piece on HEGY in the April edition of Aimzine. You need to register to read it but registration is easy and free. The Helius section is in the 'Snippet' article.

[mdchand] 01/4/2010 12:35

80k looking for stock, 150k trying to find a home. Tight spread shows increased demand from punters, but where is this excess stock coming from, and more to the point, why sell now after planning permission has been received?

[mikeja] 31/3/2010 06:36

Thanks mdc.
Bt another 100k at 29.Wonder if that is linked to option issuance.

[mdchand] 30/3/2010 14:14

Mikej - a lot of that '40%' income was derived from ROC agreements. Looking at the RNS's issued at the time and the intended future ROC obligations for biomass plants....I think RWE will get 1.5 - 2 ROCS per MWh (or an extra £55 - £70) per MWh based on current ROC prices (all subject to change etc etc). Current electricity prices are circa £20MWh.

If they can break even on the 'electricity generation' component alone, then the ROCs will provide pure upside (assuming the ROCs are considered part of the yearly profit).

I'll try to work some numbers once after the tax year end.

[mikeja] 30/3/2010 10:44

Thank you mdc.One has to take advantage of these opportunies to buy stock.
My reading of the situation is that RWE are using HEGY to achieve their biomass targets which means more announcements are likely over the next 12 months.That profit margin of 40% looks a bit hopeful.If it does prove right the potential is huge.

[mdchand] 30/3/2010 10:17

Hi Mikeja - this stock has always been subject to weird overhangs which perhaps were due to sudden changes in the previous management. Looks like we have a reasonably sized seller in the market. Perhaps your broker knows who it is?

This stock is very much an undiscovered gem. The quantum of the income stream from the operation of the underlying biomass plants is very much an unknown quantity. But, having looked at the financial dynamics of similar deals for our own clients, the profit carry can be substantial (ie 40% return on capital) per annum once these plants are running at full capacity.

[mikeja] 30/3/2010 08:45

Plenty of stock around atm,just bt 150k at 32.5

[asparks] 29/3/2010 13:55

100K sell did not cause price to dip....must be a buyer around?

[mdchand] 29/3/2010 13:21

I suspect the market hasn't fully factored in the cash value of this announcement.

Remember they sold the previous 65 MW plant to RWE for a combined cash value of 28m plus a 13% carry (on profits) once the biomass plant is built for a further 24 years. This could be worth ten's of millions to Helius if they get the embedded value of any ROC obligations. I know Helius have included a number in their accounts, but I suspect they might be ultra conservative.

This plant is for 100MW. Rough rule of thumb would equate this to approx 40m initial cash value plus a similar share of profits moving forward.

Now, it took 3 months from planning consent to announce the RWE contract. Bearing in mind RWE's announcement at the time.....

'"This transaction enables us to enter the British biomass market successfully. Overall, we intend to increase the generation of electricity and heat from solid biomass almost five-fold to 600 MWe by 2011. Great Britain is an extremely important market for these growth plans. This is why I am particularly happy that we have found a competent and experienced local partner with Helius Energy."

I would bet that RWE are the prime buyers of this site. They need the capacity, have the ability to fund it and consider Helius a competent operation.

Based on a current £28m market cap, a £40m initial cash deal would place the company at say £68m, which equates to circa 75p, and this excludes any future carry.

So, imo, we have an arbitrage situation. 2-3 months to achieve a 70p price based on RWE agreeing to purchase this latest site? I'm waiting to buy in early May me thinks.......unless they pop an announcement out of the hat sooner.....

[asparks] 29/3/2010 12:54

I think this will rise much more once partners for the contruction are announced.

[imabastard] 29/3/2010 12:27

What is the considered new fair value after the Avonmouth consent ?

[ambuchanan12] 29/3/2010 12:09

people dont understand it...Mchand has a very good take on it..

[cool_hand] 29/3/2010 11:40

I thought the same. There doesn't seem to be much interest in this stock.

[asparks] 29/3/2010 11:39

I was expecting a bigger rise on the back of Fridays news. Any idea why response has been rather muted?

[greenisgood] 26/3/2010 21:17

Another article about todays announcement;

[asparks] 26/3/2010 14:27

TIDMHEGY

RNS Number : 2607J
Helius Energy Plc
26 March 2010

?

Date: 26 March 2010

For Immediate Release


Consent Granted for Avonmouth Biomass Power Plant


Helius Energy plc, the company established to develop, install and operate
biomass fired renewable electricity generation plants, welcomes today's consent,
under Section 36 of The Electricity Act 1989, by the Department for Energy and
Climate Change, for the construction of a 100MWe biomass-fuelled electricity
generating station located at Avonmouth Dock, on the Bristol Channel.

The power station will produce enough renewable electricity for around 200,000
homes, and will save over 720,000 tonnes of carbon dioxide a year when compared
to a similarly sized coal-fired power station. The electricity produced at the
plant will be fed into the local electricity grid, and Helius has already
secured grid access rights.

Dr Adrian Bowles, CEO of Helius Energy, welcomed the news, saying:

"We are pleased that the Avonmouth project has been granted consent by the
Secretary of State and we look forward to producing renewable electricity from
sustainably sourced biomass in Bristol. This consent builds on the success of
our projects at Stallingborough and Rothes and will enable Helius Energy to play
a crucial part in delivering a future energy supply which is reliable, renewable
and sustainable."

The biomass power plant will require up to 850,000 tonnes of sustainably sourced
feedstock each year, primarily wood-based material. Construction of the plant is
expected to start following conclusion of the engineering procurement programme.

[asparks] 26/3/2010 14:26

TIDMHEGY

RNS Number : 2607J
Helius Energy Plc
26 March 2010

?

Date: 26 March 2010

For Immediate Release


Consent Granted for Avonmouth Biomass Power Plant


Helius Energy plc, the company established to develop, install and operate
biomass fired renewable electricity generation plants, welcomes today's consent,
under Section 36 of The Electricity Act 1989, by the Department for Energy and
Climate Change, for the construction of a 100MWe biomass-fuelled electricity
generating station located at Avonmouth Dock, on the Bristol Channel.

The power station will produce enough renewable electricity for around 200,000
homes, and will save over 720,000 tonnes of carbon dioxide a year when compared
to a similarly sized coal-fired power station. The electricity produced at the
plant will be fed into the local electricity grid, and Helius has already
secured grid access rights.

Dr Adrian Bowles, CEO of Helius Energy, welcomed the news, saying:

"We are pleased that the Avonmouth project has been granted consent by the
Secretary of State and we look forward to producing renewable electricity from
sustainably sourced biomass in Bristol. This consent builds on the success of
our projects at Stallingborough and Rothes and will enable Helius Energy to play
a crucial part in delivering a future energy supply which is reliable, renewable
and sustainable."

The biomass power plant will require up to 850,000 tonnes of sustainably sourced
feedstock each year, primarily wood-based material. Construction of the plant is
expected to start following conclusion of the engineering procurement programme.