Hydrodec Share Discussion Threads

[steptoes yard] 04/12/2013 18:57

Sue You
You worked for the fire brigade and for brokers on the stock market?

[capricious] 04/12/2013 18:26

For what it's worth, when I'd fished my tongue out after swallowing it from the shock, I have been drip buying small amounts as well, I don't know if this is the level it will stay or whether there is more downward pressure to come... patience will be needed to finally come out stronger.

[themariner] 04/12/2013 17:35

And I think there could now be stabilisation in the share price Visibility on insurance we now have. We then need production re-start and any ongoing regulatory/H & S / supply chain & customer issues . Deliver on these, and make progress elsewhere (visibility on break-even etc), and we could see HYR participate in the broader market rally - something it has soundly missed out on of late. If 15p is rough fundamental valuation, in this market HYR could then move to trade at a deserved premium and growth rating.

As always, patience will be required.

[eclair] 04/12/2013 17:33

Thanks cap

Just read the statement in your link. Hopefully my decision to join today's late buying spree is vindicated. I now have the other 40% I didn't get in the original offer.

[capricious] 04/12/2013 17:10

www.hydrodec.com/download/pdf/press-release/Update-on-Canton-incident-4-Dec.pdf


Things look better, very confident statement, and the onsite team are again showing their worth.

I was hoping/wondering if the local authorities would be supportive. Hydrodec have been a good employer for a long time, and if there is one thing Americans are good at, it's rallying around to help.



I was worried for about a day when details were sketchy, but as the company has responded in the manner I've grown used to, that cleared pretty quickly.

[capricious] 04/12/2013 16:42

Not that many will find this of interest right now, but they have appointed a new general manger at OSS

www.ossgroup.uk.com/news.html?nwId=29

[capricious] 04/12/2013 15:11

A couple of cameras and 24hr revolving backup, would come in handy right now... it'd show exactly where the explosion/fire first occurred.

[sueyou1] 04/12/2013 13:54

Letter to shareholders, nothing new.

[capricious] 04/12/2013 09:07

Good post,

As to the business model, putting aside engineering matters, positive EBITDA in Sept/Oct/Nov proves that operationally the business was on a strong sustainable path.



Considering their safety record, I'm not ruling out anything, including sabotage.

Interruption insurance can be for specified events, or have an all eventuality clause. By the sounds of it, the policy is substantial.

[themariner] 04/12/2013 08:49

I for one will be looking to top up now. Yes there has been a setback, and we need to know more about and be reassured as to the accident, but I fail to see how the loss of value here is entirely justified, except if there is material uncertainty as to whether a key plank of the business model is in question. I don't believe it is, and in much the same way I bought into HYR in advance of profitability (because to wait for it would mean you'd be too late, IMHO), I think now is a good entry point for those "believers" wishing to top up or for those who felt they's missed the boat when we were above 14p.

What is frustrating is that HYR is missing out on what is clearly a lot of small company hype generally. I am finding value really hard to find generally, and markets quite frothy generally (although this may be unwinding as we speak, with the FTSE now back to 6500).

[vitamal] 04/12/2013 08:35

Sabotage, shorters not necessarily in that order!

[capricious] 03/12/2013 21:35

Yes agree again, when I meant rebuild the building, that was including the reactor. It was key that the fire didn't spread further.


Positive as I may be, I see no reason why progress can't be made. To me it seems the perfect moment to expand the site in parallel to the repairs. It might accelerate the matter. Currently the expansion is planned over an extended period. They might even move forward the construction at one of G&S sites, makes operational sense to me.


Re: G&S
I don't know how this would work in practice, but Hydrodec have been receiving feedstock from G&S, they have a joint venture, doesn't this mean they get some of the payments through the partnership. What happens to the feedstock that would've been supplied, can G&S sell it for additional profit on their side?



Re: the cause of the incident.
I think it far too early to apportion blame, for all we know it could've been malicious damage by parties unknown. I bow to Sue's greater knowledge in the causes of fire, but the timing of the event leads me to posit it was mechanical failure.

According to reports, there were just two employees onsite and considering the hour, to presumably monitor batch runs during the night/weekend. I.e. in a separate building (thankfully). Part of their IP is the excellent control system they have developed, which may have been running since Friday before the failure.

Besides I don't expect they would leave a new employee without shadowing their work. I'll wait for the updates, realistically it's going to take some patience.

[capricious] 03/12/2013 21:11

Hi Trav,

Can't say whether you should hold or not, but I've been following Hydrodec for many years, and on past performance, they will turn this around. My personal time for rebuild, was 6 months, as Sue mentions, it could be as long as 9 months.

But I'd like to point out, Interruption insurance pays for lost earnings, so that should therefore mean the loss of sales are covered until everything is back as though nothing had happened. Time will be needed to build up the supply chain again, but they have long term customers that use their product because it beats the competition. The majority, certainly the majors, will return.

Purely on an share price front, it's going to and evidently has come under pressure, at least until all uncertainty is removed. It becomes a personal choice whether you close out and try to buy in again at a lower price, or take a final loss.

It also depends on whether you were expecting to or needed to draw down your holding in the short term, or if you had a longer horizon.

[sueyou1] 03/12/2013 21:08

capricious, I can assure you I do read all of everyone's posts, I am not in a hurry, as shown by the fact I have time to research to find answers and am still here now.

As it is the reactor building it will cost a lot to fix it. Just go back and look at the figures HYR were talking about to expand the plant. It has to be a write-off of the reactor as nobody, especially HYR, would look at using a heat damaged reactor again. The other buildings would most likely be one for storage of dirty incoming oil and another for storage of outgoing clean oil. It's a good job the dirty oil building wasn't damaged otherwise there would be serious sh*t about PCB contamination of the site.

Either way HYR is unlikely to make any progress in USA or AUS over the next 6-9 months. Best it focuses all it's efforts on the UK and motor oil opportunity.

[capricious] 03/12/2013 20:53

Hi Sue,

You misunderstood me - I wasn't saying this was a quick clean up with a dustpan and brush. If it were the company would've said very quickly.

I'm fully expecting the building/reactor to be replaced, the pictures were posted to show that the damage was contained in one building without spreading. Saying that, I was also pointing out that damage estimates on the night of the fire tend to be unreliable.

Agree and I did post earlier, that the build time is the quicker part, the sign off will take longer.

Sometimes I think you don't actually read the entirety of my posts, because you often jump to the wrong meaning. I certainly didn't say the building was undamaged, I'd appreciate if you didn't answer something I never posted.

[capricious] 03/12/2013 20:48

You double posted that :) and sadly no, not on the board.


There's no good time for something like this to happen, there are obvious negatives, but to recap some of the positives

- Confirmed Insurance, comprehensive Damages and Interruption policy
- Fire contained in one building, albeit a systemically important one
- Related to this, the safety and emergency procedures set up by the company minimised further damage.
- The above fact is vital to negotiations for triggering payments
- Positive EBITDA for Sept and carried forward into Oct/Nov, I'm sure this feeds into the negotiations.
- The entire site took 9-12 months to reach full commissioning, to put it bluntly the fact that the fire was contained to one unit, is the difference between coming back stronger, as opposed to the end game.
- It's going to be difficult but the board has the Industry experience (BP etc) to fix this.
- The technology has been operating in one form or another, pretty much non-stop since 2006. Even considering this current incident, the control systems, the safety procedures have had an enviable safety record.
- G&S are a strong partner, Mr Black is an ever present supporting force

[sueyou1] 03/12/2013 20:35

capricious, that is far from an undamaged building, imagine what it is like inside, if you can.

As I just said:

"The company said it is working closely with the fire department and the insurance company to determine the cause."

"The plant is currently without power. No oil handling will happen at the plant until power is restored. The plant will not resume processing until the cause of the fire, and its damage, has been fully assessed and repairs have been made, according to the company."

[sueyou1] 03/12/2013 20:28

Trav, I am holding because my plans here have always been long term, especially with the motor oils potential. Sh*t like this happens sometimes, but that is no reason to jump ship, if anything a drop on HYR is an opportunity to top up or average down. Mr Black may well load up if the price drops further, although as a shrewd investor I would expect him to wait for the bottom. He also has better info to go on than we do.

[trav5] 03/12/2013 20:18

I am a new investor and nursing a loss of 22% and facing the difficult decision whether to sell or not as the share price could easily fall further. IMO the one thing markets hate is uncertainty. Whatever the outcome and these things always take longer to resolve than one expects in my experience. What are the feelings of you guys who have been in HYR for sometime?

[sueyou1] 03/12/2013 20:14

capricious, I see nothing but an insurance write-off here. I used to work for the fire brigade so I know the damage that is likely here. Yes the structure is OK, but that is just the shell of the building, everything inside will be heat and/or smoke damaged. The investigators won't let any rebuilding start until they have investigated the cause thoroughly. Then there is the cost of clean-up, disposing of damaged (by heat and/or smoke) equipment, repairs/replacement of any part of the building (doors, air-con, windows, guttering, roof) that was damaged. Then you can look at having to put in a complete plant, get it through fire safety and/or HAZOP checks.

In between that, the Aussie plant will have to be thoroughly checked, as prevention is better than cure.

IMVHO, because the safety record of HYR has been so good for so long, this is most likely down to human error. Chances are they took on a new member of staff that didn't correctly understand the procedures, forgot to do one step in a procedure or got steps the wrong way round.

IMVHO this is a 6-9 months setback for HYR. If insurance pays out then at least it's not a big cost to the business apart from lost sales and growth.

[tr1] 03/12/2013 20:00

Thanks for all the updates Cap.
Are you sure your not on the board!!!!

[tr1] 03/12/2013 20:00

Thanks for all the updates Cap.
Are you sure your not on the board!!!!

[capricious] 03/12/2013 19:51

To correct an earlier post I made, Hydrodec had actually confirmed in an RNS that in Sept they achieved a positive EBITDA run rate, this carried forward into Oct/Nov.


This just shows how well they were doing.

[capricious] 03/12/2013 17:46

Latest update.
www.hydrodec.com/download/pdf/press-release/Shareholder-Letter-re-Canton.pdf


Like the continued updates, and Ian confirms the solid level of insurance. I don't think it can be overstated, that the employees in acting quickly, according to the strict safety procedures, not only saved further damage, but in a very real business sense, was/is vital for insurance purposes.

I imagine it took some nerve to do what was necessary with the thought of further explosions. Well done guys !


Any failure in this aspect would undoubtedly reduce or exempt payout. Assuming payouts are agreed, it will be in the insurers interest to speed things along with this type of policy, as the total payout only adds over time.






Appreciate your comments tongosti

[tongosti] 03/12/2013 15:58

Cheers Cap. I think the next Edison update will be interesting to see what the accident effect would be on their numbers and implied valuations. In addition, some sort of public support from G&S will also do miracles in terms of confidence and sustained support from our key partner in the US. As I said, I will keep a very close look at this and will continue to pop in this board to read you very thoughtful comments and occasionally share my opinions.