Hydrodec Share Discussion Threads

[1gw] 07/3/2016 08:00

UK gone to Andrew Black.

Profitability still on the cards for 2016, although down to working capital gains on shrinking the business.

"The working capital released as a consequence of the disposal of the UK Operations positions the Company to deliver its plan of profitable trading in 2016"

£3m ebitda loss on UK operations in 2015 not good news but at least it should now be "discontinued business"

[capricious] 04/3/2016 11:45

I had the same thought, MMs do try to generate volume, the norm has been to do it on the down but this is a nice change.

No doubt we'll find out soon enough whether it is to kick up transactions, or due to the recent uptick in oil prices, or that the MMs are moving in the direction due to getting wind of something (or combination thereof).

[1gw] 04/3/2016 11:39

...and now the offer goes up from 4.25 to 4.5. Still on (apparently) pitiful volume though.

[1gw] 03/3/2016 16:25

...nice to see the bid move up from 3.5 to 4.0. Market makers getting bored?

[kattatogaru] 22/2/2016 15:39

...tumbleweed rolls slowly by.....

[yump] 26/1/2016 14:44

I'm not sure where I saw it, but it was an investment manager for a fund talking on a video recently, who was explaining why they are buying some oil-related stocks. Basically, investment capital has been being taken out of the industry for some time, which means damage is being done to supply capacity, which will lead, as it has in the past, to recovery in price and service compay business.

There was also some stuff about growing demand in Asia / India and that an inventory stockpile is like work in progress. Once you clear it, you expect some more materials coming in the front end of the process or there will suddenly be a production crisis.

In theory.

[capricious] 26/1/2016 13:34

Oil trades have also been exhibiting interesting behaviuor... going lower is always on the cards but it looks like the market is now thinking about the potential of a turn sometime this year.

[capricious] 26/1/2016 13:30

It's interesting that each time the mm has dropped the share price and widened the spread, to generate some volume, there were few takers on the downside. At the moment there are not many on the upside, the share price is around fair value based on current risks I guess.

[yump] 26/1/2016 10:53

Yes, it seems unlikely that its a misuse of the word profitable, seeing as its in amongst other financial terms. Not like 'we had a profitable meeting'...

[1gw] 26/1/2016 10:31

Just bought some more at 4.0p. I'm a little underwater again after the recent pullback but I thought that last RNS with its reference to a profitable 2016 was a bit of a game-changer...

"...This is the first step in management's focus across the Group on execution, delivering improved operational performance and efficiencies and driving the Company to a profitable 2016"

[sheeza] 20/1/2016 09:56

Seems to me the business hangs on what HYR can sell the processed oil back to the market for. No doubt there are contracts at prices fixed in better times, but these don't last for ever. There's been no management comment on prices directly for a while; statements seem to suggest stable prices, but this seems unlikely. The co is also in hock to Mr Black - if he pulls his loans, the business goes bankrupt, and he pockets it for nothing. Being so cheerful keeps me going.

[1gw] 13/1/2016 13:11

Well my order to buy at 5.0p was taken this morning, whereas it wasn't yesterday or the day before (first placed mid-morning on 11th).

[vitamal] 13/1/2016 12:03

You can now sell above the mid price so I wonder why the mms give a mis leading view

[vitamal] 12/1/2016 23:59

Thanks for the comments V interesting

[yump] 12/1/2016 16:20

Thanks for the thoughts.

I've taken a somewhat simplistic view, in that, assuming there is an average reasonable end market for the processed oil and that their basic strategy is OK, the amount of bad news over the last year or so amounts to a pretty nasty 'perfect storm'. From which, if there is any truth in stuff being cyclical, there should be a significant recovery.

Reading over the half-year comments I make it 4 'nasties'...

"The ramp up of key projects has been slower than expected. In the UK, the Company continues to face, and react to, oil price volatility and difficult market conditions."

1. Oil price volatility
2. Generally difficult market conditions
3. Key projects slower
4. Canton - counting that separately as its a biggy

[capricious] 12/1/2016 15:15

To put the US in simple terms

On current output projections, they should be generating between 500k per month of free cash, with upside later in the year (as they maximise utilisation, pre-fire rates were 90%+) to around $1million.

Nothing is definite and there are obviously things that can go wrong, the current share price reflects that fact, and that theoretical performance needs proving in the real-world.

[capricious] 12/1/2016 14:53

Concentrating on the UK.

There is some good news, the rules on oil burners are set to change in April 2016, effectively meaning most current operational users will not sign up for the new legislation. This 'should' mean 100s of millions of litres of potential oil coming to the market.

In very simple terms, better availablilty of oil, means better plant utilisation, and therefore profitability.

[capricious] 12/1/2016 14:45

I think we should prepare to expect some 'bad' 2015 numbers, high capital/cash burn and suppressed UK margins and volumes. It's 2016 which is set for a complete volte face in fortunes, in the US and maybe even (but to a lesser degree) in the UK.


My personal US estimates

The current daily rate is below the theoretical maximum but my output ranges are

Lower bound = 30 million litres
Maximum = 44 million (so realistically tops out at 38-40)

There is also the added complication of G&S holding 25%


Gross profit range @ 0.25c margin (factoring a 25% reduction from previous levels)

Including revenue from royalties (AUS tolling, US 5% license)

$6.5-8.5 million

@ 0.30c (apprx 10% below previous full production figures)

$7.5-10.

Not counting depreciation/amortization etc, the bottomline could look a lot healthier.

*The joint venture was for one payment of $1.7 million for the first 25%

Then two more payments, each representing about 12.5% of the business (total 49.9%) with a final payment based on 6.5 times the difference between 2012 and 2013 (thankfully before the fire). The final stages are tied to increasing capacity to 65million litres with 10 trains.

[vitamal] 12/1/2016 12:21

Last year there was a trading update on 19th JanWill this years update underpin the recovery in sh price or an excuse to re trace

[capricious] 12/1/2016 11:15

Assuming we are now getting a bout of profit taking.

[yump] 11/1/2016 13:45

Looks like the drop from 7p could have been one of those capitulation plummets, that corrects itself.

[capricious] 11/1/2016 12:23

Bad luck 1gw but well done to those that managed to time it for this latest move, and spike, you're right it would be rude to let Mr Black do all the heavy lifting :)

[spike_1] 11/1/2016 11:54

increased my holding again this morning - now double what I had before last week.
Best wishes - Mike

[1gw] 11/1/2016 11:45

Very quiet here considering today's price action! Any new news/recommendations out or is it just catchup with last week's RNS news?

I tried to top up with a limit order at 5p to celebrate being back in profit, but looks like I may have missed the boat with that one.

[spike_1] 08/1/2016 12:10

Yes I increased my holding by 66% yesterday as it was such a poor market and the price was so pathetic, and with Andrew Black keep increasing his stake, it seemed churlish not to ;0), and as for going up gradually - well it's certainly made a good start this morning up 14% (edit: 17%)
Best wishes - Mike