Hydrodec Share Discussion Threads

[kendonagasaki] 08/6/2016 11:35

Well that didn't last long?Back below 2p already.Delicious I've not read those slides....I might just give them a fleeting glance to see if they still have a chance of leaving the ICU unit!

[capricious] 07/6/2016 10:02

The slides are good, certainly a finance man's approach.


Australia saw a huge increase, and a similar increase in the proportion of PCB feedstock, which achieve better margins.

[capricious] 07/6/2016 09:47

That's a refreshingly concise and honest statement. I like Chris' style of detail over fluff.

Seems those comments a while back about a CEO with a finance background, rather than a purely an oil one, were misplaced. I did actually hear from people in the industry who know him, and he is highly rated. Probably exactly who we need in an operational sense. Any how, I'm pleased with the progress, the share price is more to do with the MMs strategy/risk management, rather than Hydrodec fundamentals.


The reduction in HQ costs are impressive.


I think the statements about profit whether EBITDA or overall profitability, boils down to the fact that there was a slow start to the year, they were processing lower margin baseoil, and cost spill-overs from the annus horribilis.


Read: It's going to take more, i.e. consistently above 80% transformer oil processing, getting closer to max output, and the cost reductions showing up on the balance sheet.


My thoughts are that it'll be within 4Q that the numbers start to line up. It's a good launchpad to 2017, as they need to show the market and their partner, that they are essentially clear of the problems and operationally profitable.

[1gw] 07/6/2016 08:14

Yes, I'm fairly happy with that. Some guidance on costs and while maybe not strictly "guidance" I think the following statement, together with the comment on "significant progress against all of our key objectives" is about as close as you can get:

"I also stated that the next stage of that plan would be focused on delivering increased operational performance, reduced costs and ultimately the achievement of a profitable 2016. "

Still got to decide what "profitable" means - I would guess they are thinking of "operating EBITDA".

[kendonagasaki] 07/6/2016 08:03

Some encouraging news I see!May see a sharp incline to the current share price today.Price may increase just due to lack of psychical stock available to buy IMO.

[capricious] 06/6/2016 21:03

Good post

I think traditionally this is what they have done before, or at least a number of times in the past.


They try not to have expectations elevated for something like the AGM, which is mostly a business function rather than an anticipated news release. Sometimes when there are official updates with more actionable facts and figures (not general progress on the strategy) they do roll it into an AGM statement but essentially the recent update tells us about the continuing trend.


Also they do listen to investor concerns, and it must've been noted that we see the sp, which is acting contrary to what is actually happening on the business side, so make an effort to provide the odd update. Releasing it via the website is basically cost free compared to an RNS and doesn't come with the same regulatory framework.


I also think it's part of the new approach, a lot less fanfare, more emphasis on delivery and concrete facts when they have them.



Regarding the guidance, I imagine thinking about it, it'll be further down the recovery road, and more likely (first) via Canaccord, since this should be seen as independent. Canaccord guidance is not just released to the public. It could be sooner, the last note was a while ago but for a full case review, probably further progress is needed to make it worthwhile.

[1gw] 06/6/2016 18:15

Agree any statement might not amount to much, given the relatively recent updates. Curious that the latest Canton update did not go via RNS.

However, I hold out a faint hope that they might offer actual and specific guidance (e.g. Operating EBITDA of c. $xm), at least for the half-year if not for the full year.

[capricious] 06/6/2016 16:34

Well they've already released an update statement via their website (not RNS) about the progress, so the AGM statement might concentrate on a few words from the CEO/Chairman, the business of the AGM but not necessarily any new additional progress reports (apart from reiterating the info again).

[1gw] 06/6/2016 16:21

AGM statement to look forward to (gulp) tomorrow...

[capricious] 06/6/2016 13:45

To put some numbers to the run rate.

US
Assuming 2.82 million litres is a baseline, this number equates to almost 34 ml/year. Using a margin of around 0.25c, gives cash generation of $700+/month and nearing $9 million gross for the year.

I'd say that at least provides good evidence of the kind of cash generating machine the new reactors can provide, once they reach maximal* output. It also corroborates with the projections outlined by Canaccord.


Now the caveats are

1) We don't get a repeat of the oil route, which does seem more unlikely as time goes by, especially as the markets did not react even as Opec meetings come and go with the same problems.

2) The percentage of base oil to transformer oil production, also continues it's trend.

3) The amount of revenue sharing and royalties from the G&S venture.

4) I'm not even going to mention the unmentionable unforeseen factors.



Borrowing a famous line, even with the known knowns, the known unknowns and the unknown unknowns, things are looking decidedly better.



* Without going back to check the output for the trains, I believe max production is around 38million litres. They might be able to push beyond as they did with the old reactors as they built on the process. If you add the revenue growth from Australia, a previously under-scale contribution, I can see that their words of profitability are not misplaced.

[capricious] 06/6/2016 12:08

Has anyone seen this?

hxxp://www.hydrodec.com/~/media/Files/H/Hydrodec/news-releases/canton-update-02-06-2016-v2.pdf


I think you know where you can stick your 6p (which I note is an increase from your last offer)


They've done a great job, current market prices seem not to reflect the medium/long term position of the company.

[kendonagasaki] 02/6/2016 23:11

6p.....Lock, Stock and Barrel seems more than fair I think!

[kendonagasaki] 02/6/2016 23:10

Why say anything!You lot keep your gob's shut and let them continue to pay themselves a healthy wage by Aim standards and award themselves with a hearty pat on their backs for being so clever.Andy Black must be ready to sweep this lot up for a pittance very soon IMO!?

[capricious] 02/6/2016 10:28

Yeah, they have never released any figures (apart from percentage up/down) for margin or other market sensitive trade info.

What would be good is if they say something along the lines that at current trends, profitability can be achieved with the capacity they have.


In 'theory', as has been pointed out by Canaccord, production can be a cash generating machine. At current output levels around $500k/mnth gross was mooted as a figure, with upside to $1m/mnth as they reach top percentile utilisation.

Of course this is dependent on upward production trends and improving margins. We know that production has been going in the right direction but not a lot about margins. I'd be surprised if the improving market hasn't translated to better margins, especially now they can go after the 500hour oil sector.

On paper it looks like they shouldn't have difficulty covering debt financing, so I cannot understand why the MMs have dropped this on very little selling and good buying. I know they put transactions on the mid price to disguise trades but buying has outweighed sells pretty consistently.


Their last rns mentioned that there is still work to be done on cost reductions, personally I took this to mean that the first part of the year the margins were depressed, and therefore two things needed to happen. One you can control the other you can't. Hence why the cost reduction comment, the other is the hope that margins improve, not just based on a better overall market but also having the muscle of large production runs to get the bigger business.

[yump] 02/6/2016 08:31

I was hoping for a statement like:

"If we hold costs at X and the oil price stays at Y and the processes continue to work at level Z, then we will have a profitable 2016/2017.

Rather than the believing and monitorting waffle.

But to be fair, I can't remember any company issuing a statement like that when they've had problems.

[capricious] 01/6/2016 10:10

May was a healthy month for naphthenic baseoil transactions with supply tightening. June is reported to be shaping up for another strong month, with players finding it difficult to keep up with orders.

[capricious] 01/6/2016 10:01

You're right in that the statements are about a forward goal rather than current fact but their position must be a difficult one. They are finally out of the damage that was the fire and then the oil price rout, they see the path to profitability but are still in the middle of a capacity ramp up and improving margins. So they have to say something, it's damned if you do and damned if you don't.


The profitability hinges around continuing to increase output and the margins, which based on a better market outlook, should also go in the right direction.


We'll have a clearer picture when they release some notes in conjunction with the AGM.

[yump] 31/5/2016 18:29

Its a problem that with many companies you get statements that sound OK, but in fact are much like some of the statements about Brexit:

"However, I believe that with Canton's ongoing performance and a growing penetration of the US transformer oil market, we can now focus on delivering a profitable 2016."

So just to break that down:

"we can focus on delivering a profitable 2016" - but will it be profitable ?...
"I belive (blah,blah) that we can focus" - so the focus itself is not nailed on...

and the next one is more complex:

"our strategy to deliver a profitable company in 2016" - well I should bloody well hope that is the strategy...
"the execution of our strategy" - well it would be odd if a strategy was not to be executed
"the Board are closely monitoring the execution of the strategy"...

Now look here you bunch of PhD-in-Euphemism holders, this is getting a bit removed from the actual delivery of a profitable company...

So my question is:

Can we rely on the close monitoring of the belief in the focus on delivering a strategy to deliver a profitable company in 2016... to deliver one ??

Or will there be more 'volatility' in the share price...?

[capricious] 31/5/2016 17:30

Strong buying sees the same bullet proof share price cap. The MMs are running this like the one way valves that make sure blood circulates in one direction. People are just not selling in quantity, even from the drop down from 6p. I can't see what the overall game plan is here, unless they are driving it down for a much larger event.

[kendonagasaki] 30/5/2016 20:15

Andrew Black should take this private and of aim for 4p a share and then the torture of the never ending revolving door of non profits will cease to stop spinning.This company knows how to spin.....running out of spinning tops IMO.Tick Tock?

[capricious] 26/5/2016 16:06

We'll have the AGM on the 7th of June. It should be the first time for the CEO to give a more substantial statement and some words from Collin.

Things I'm watching out for

Continued upward trend in output
G&S having paid the next tranche of money, which according to the last release, was delayed.

Also any comments about the overall market they are playing in... from what market insiders have said, looks to be much improved.

[capricious] 26/5/2016 15:59

Yeah, although this has followed the same pattern for a while when the price is dropped. I think there must be more than one MM now competing because some of the prices are starkly different within a small amount of volume. Certainly makes it harder on occasion to see what is buying and what is selling, without taking the time to dig further.

[kendonagasaki] 26/5/2016 15:52

I'm surprised to see a lot of buying today? Looks like we have some believers still onboard!

[capricious] 26/5/2016 15:14

Hah, well better than Hydrodec's share price that's for sure!

[kendonagasaki] 26/5/2016 14:54

Hello delicious!!!How's it hanging?