Opg Power Ventures Share Discussion Threads

[andycapp1] 24/8/2017 16:47

Azalea, happy to be filtered but I'm afraid you spout such unutterable gibberish that I couldn't help a comment or fifty! Anyhow I'm not disgruntled, or bored. I own a lot of shares now and I'm hoping management get it right. If they do the shares will rapidly rerate. If they don't then we will be in the 30's pretty sharpish at which point I'll take a view. After all the assets are the assets and the resultant equity NPV should still be intact barring some odd exogenous issue I haven't figured...I can be a bit thick sometimes! Anyhow, I'm sorry Azalea for my less than polite e mails. Some were slightly in jest but others were somewhat unpleasant. Apologies for the latter. But pse no more comments re volumes and prices...pse!

[azalea] 24/8/2017 14:05

I do not know what andycapp1 has posted as I filtered him some time ago. He/she is on my list of either a disgruntled investor who is either making a significant paper/ real loss, or someone who does not hold and has nothing better to do with his time.

[andycapp1] 24/8/2017 12:58

Flowerhead, a good point re the divi. Look it's project finance and the plants will individually be in SPVs and so the post finance cash will be dividended to the Group. Assuming they have got their spreadsheets rights and the movables - power, coal, O&M, availability etc - are in range then despite the apparently high debt to mkt cap, all should be well. In any case debt is sized against project cashflows and so the debt to EV or to mkt cap is a bit of a red herring really. That unless it all goes wrong!! So I guess fingers crossed that no horror emerges!

[azalea] 24/8/2017 12:07

It's difficult to determine whether posters here who hold and post negative views on OPG without giving a reasoned argument, are in fact holders, or simply have nothing better to do with their time. That said, regardless of the range of views expressed, do they have any influence on trades in the shares and its sp? The latter's valuation of circa 130p by analysts and 'Buy' recommendations given by the IC, both appear to have little influence. So why the huge discrepancies, will the FY results out next week(Tuesday?), reveal what if anything has gone wrong. Yes, coal prices have risen, but the purchase and delivery of a new 64k ton freighter to ship coal from Indonesia should at least balance the overall cost of imports. If there is a debt problem then why pay an expected annual dividend on the 350.5m shares in issue?

[andycapp1] 24/8/2017 07:55

Just because the two players might go bust doesn't mean the plants will cease. They will be bought and continue generation. Agree that the market appears not be be efficient here but that is certainly partly due to management. The move to appoint an Exec chairman utterly flouted city conventions and good governance; the explanation for the accounting changes was muddled and poorly articulated; the appointment of weak non execs etc etc. They have to naturally work harder at governance because of who and what they are - as you rightly point out Chinese and Indian companies have a reputation!! But they don't help themselves frankly.

[the original goldbug] 24/8/2017 00:39

Debt is not the issue here. Chennai debt is being whittled away as per the amortisation schedule. Gujarat debt has an increased payment structure, not because they can't pay, but arranged by the company for greater overall capital flexibility.

Operationally everything is fine and improving over time.

The share price is in the gutter for reasons beyond managements control.

It's the job of the capital market to allocate capital effectively, and it appears to be doing a poor job here as much as it is doing a poor job in terms of over capitalising the likes of Tesla for example.

India moving into a power surplus is another myth. First you have to look into it by a state by state basis. Secondly power demand is growing at 6% and coal and nuclear are the only options for base power. Nuclear is more problematic due to Nimbyism and lead times. Tamil Nadu will be in a power deficit in 18 months again and Gujarat sooner if these two big players are allowed to go bust.

[andycapp1] 23/8/2017 16:17

It may well be that the simple act of considering a share buy back is enough to get a rerating. After all there is limited liquidity so buying back a small number of shares might be enough. The earnings will grow as debt is paid down but more equity value is created by buying back shares on a 20% IRR rather than invest in solar at 10%. Solar generates very little earnings - decent cash yes but little eps. You say it doesn't help NBV but it does as you are, after all, reinvesting excess cash in a better investment so NBV per share will be accelerated.

[smithless] 23/8/2017 15:57

I will wait and see what the results look like before buying anymore - due next week. Issues?

- would like to see what the annualised interest charge is, as it is a cost of doing business and should be included in the free cash flow calculation - not financing. On this basis, it generated £12.5m of free cash flow at the interims. Fully yr £25m?

- current EV £417m, of which debt makes up £282m. Debt is debt whether its project or otherwise. It needs to get this under control, as shareholders are questioning its ability to repay it and are voting by pushing the stock lower. Investors can see India will be in power surplus soon, although this generalises OPG's business model.

- stop investing in solar as the ROCE is too low and is most probably lower than its interest charge.

Anyway some things to think about. Just did a dummy trade and can pick 25/- up a 42p so weak

[the original goldbug] 23/8/2017 15:25

A buy back may help see a lift in the share price, but it is detrimental to the long term compounding of book value as there would be no cash flows to reinvest. A buy back would make sense for a company with limited growth opportunities and access to cheap debt, neither of which apply to OPG.

On the surface these solar projects look less profitable, but the jury is out as the whole sector will likely benefit from cheaper panels once construction is rolled out over the next 24 months.

Have they really undelivered or were consensus numbers skewed by the naïveté of one or two analysts? The uptick in coal has been a major negative as well.

The fact of the matter is that it will probably only take a 2% share purchase to see a rerating to 60p, so the buy back avenue would be a remedial measure at best. So you might say in your hope of a higher share price that they should go for it. Would you then be encouraging them to sell from treasury, the 2% or more, when 'fair' value is reached!? Surely you agree it is an absurd proposition to tinker with their equity for the sake of marginal benefits from capital allocation.

[andycapp1] 23/8/2017 13:11

I'd also add, goldbug, that reducing the shares in issue by allocating capital correctly will enhance the compounding effect you are talking about and so you appear to actually support a buy back!!

[andycapp1] 23/8/2017 13:08

Goldbug you are talking drivel. I say again the management team has spent a huge amount of time trying to persuade investors into OPG's equity with very limited success. That has been compounded by (agree) being tarnished by others but also by general under delivery v expectations. Aside of all of this however, why allocate money to over developed solar on an unlevered IRR of say 10% when they can buy back equity on a prospective 20%. Solar panels are a red herring, the auction out turn is competitive and OPG doesn't have cheaper panels than others. It's not appeasing anyone. It's sound allocation of capital. Nothing more, nothing less.

[the original goldbug] 23/8/2017 11:53

Why do supposedly sophisticated investors need to spend so much negative energy patronising less sophisticated investors?

Buying back their shares is an absurd proposition for a company which has the long term ability to compound equity at 15%.

This company need to grow its book value not shrink it to appease a grumpy investor who is feeling sore about the price he paid for his equity.

OPG have been unfairly lumped together with all the unfavourable Indian dross on the AIM market.

OPG have been severely compromised buy the bull market in coal. Every dollar up or down in coal is about $1.3 of EBITDA.

OPG have been held hostage to some extent by the feed in tariffs in Gujarat. I understand this is changing and a couple of big operators with long term contracts are about to go bust up there.

Solar returns could be better than expected due to anticipated fall of solar panel prices.

The only legitimate gripe is the inefficiency on financial reporting. On that note they have made a new hire and I expect things to improve.

[andycapp1] 17/8/2017 16:43

Oooh yes. Fascinating, truly. Do you suppose a few sellers and buyers perchance?

[azalea] 17/8/2017 16:19

Volume, 3.7 x 90day vol.

[andycapp1] 08/8/2017 12:09

Yes that was one of mine Flowerhead. So what? I don't understand your idiotic ramblings, really I don't.

[azalea] 08/8/2017 08:35

A 69k+ buy @ 43p yesterday, three weeks ahead of Prelims Final results.

[andycapp1] 04/8/2017 14:31

Spent some more money on OPG the last three days. If the make around 7.5p for March 2018 then they are on earnings yield of 18%. Okay gearing is high but it's project finance. So despite the Board's utter inability to sell the story it is cheap!

[andycapp1] 31/7/2017 16:09

Hey Flowerpothead, can you say something negative about the shares on the basis that whenever you say something positive they go down!!

[andycapp1] 28/7/2017 09:19

How can reduced off-take = no reduction in output? They going to store the stuff! Anyhow, it's a red herring to the overall valuation. It's cheap!

[azalea] 27/7/2017 13:29

jeffian
There might be a reduced off take for the next few days, but making no difference to output. Plants operating at normal levels, unaffected by floods.

[jeffian] 27/7/2017 11:01

What about their customers?

[azalea] 27/7/2017 10:39

For the benefit of investors in OPG, who might have concerns over the floods in Gujarat state affecting the two 150MW power plants there; I have been assured by an irrefutably reliable source, that both plants are totally unaffected.

[andycapp1] 25/7/2017 10:33

Flowerpot, are the sales today as fascinating?