Opg Power Ventures Share Discussion Threads

[andycapp1] 04/9/2017 13:16

Well lets hope he has enough self aware ness to understand that it needs better management!! Or that if he continues to bumble along his family might not be able continue in the manner to which they have become ...etc etc!!

[igoe104] 04/9/2017 13:13

A change in management seems to always galvanize a company, a new team couldn't do any worse than the current bunch.

But unfortunately gupta holds over 50% of the company, so its just impossible.

[andycapp1] 04/9/2017 13:04

Azalea this share has been a serial underperformer for years and Gupta and the Board has made a whole series of statements that over promise and under deliver. He has lost his institutional following as a result.

The correlation between OPG and what is happening in North Korea is zero. The market needs to be assuaged that this isn't going to breach its covenants and that some serious long term strategy is in place to generate shareholder value. That the NEDs are doing "their thing" and that risks in the business are being considered properly and addressed satisfactorily - they are not at the moment.

Of course I don't know what the 18 results will be but you did say that you are happy to hold the shares for a dividend and I am merely pointing out that as things stand that is a bullish expectation as the dividend is linked to earnings and it looks as though there wont be any in 2018!

So in summary OPG is in the poo and they need to reassure the market that they are going to survive intact. It will take an age for them to restore credibility and that will requirement management change. I guess another way for them to resolve this is to do a buyout but whether they can raise the capital with such - at least on the face of it - poor cashflows is debatable. Mind you although the accounting net assets per share are probably north of 60p I doubt whether they would need to get to that level such is the mood of the poor minorities right now!!

[igoe104] 04/9/2017 13:03

I Totally agree with smithless, you can`t run a business like this,based on the commodity price. I'm not sure how AG can justify his large salary, judging by the poor performance of the share price (record lows)surely its got to be time for a change in senior management ?

[ballychan] 04/9/2017 12:46

IC are still bullish.Shares in Indian power company OPG Power Ventures (OPG) are down more than 20 per cent this morning after the group announced an unexpected increase in the forecast coal price would have an adverse effect on the group's results for the 2018 financial year. Power generation improved in the first quarter of 2018, up 27 per cent to 1.25bn units, and both the Chenna and Gujarat plants were running ahead of expectations. This is a setback, but we still see upside potential. Buy. 

[azalea] 04/9/2017 12:38

IF, is a small word but a lot depends on it. So its pointless you forecasting an Eps of 1p and no dividend, until we see the FY results in 2018. Even IF it turns out to be disappointing, it will be the first major set back OPG has experienced under Mr Gupta's leadership.
I will not bother to comment on you seeming ignorance of the effect of N.K. nuclear tests and US Defense Secretary's recent statement, on world stock markets: except to say that once all the rhetoric dies down and the U.S. engages in direct talks with N.K.(which is the latter's immediate goal), I expect markets to rise steeply. IF you hold shares in OPG, I assume your current distaste for the company must have developed only this year.

[andycapp1] 04/9/2017 11:11

Azalea you are sadly being naïve. If they only make 1p of earnings (or less) in 2018 you wont get a dividend!! And who would be happy to sit here whilst they destroy shareholder value! Lastly, what has the machinations of the tubby cheese eater and Far Eastern markets got to do with OPG? Nowt. So I'm not happy at all to see my shares down another 10% today. I have no intentions of buying any more as I now don't trust Gupta (at all) and I daresay that goes for other institutions. This thing is now utterly dead until they provide significantly greater visibility on covenant cover, a satisfactory hedging strategy, on what they will do with their flawed solar strategy and indeed the whole Company leadership, which is a mess.

[azalea] 04/9/2017 10:43

Apart from Chile and Brazil, Morningstar shows all major stock markets are down again today, as the USA ups the anti against N. Korea and its testing of nuclear weapons. Mr Gupta, holding over 50% of OPG shares, has more to loose than anyone else. To that end, I am quite happy to see the fall in the share price through to better times in FY 2019 and beyond, whilst picking up a dividend along the way.

[smithless] 04/9/2017 10:21

Yes, a personal guarantee is in place - taken from 2016 annual report. I assume the director is Arvind Gupta

"The term loans taken by the Group are fully secured by the property, plant, assets under construction and other current assets of subsidiaries which have availed such loans. All the loans are personally guaranteed by a Director"

I do hope the Gupta's have learnt from their mistakes will and seek better qualified personal to steer it away from the rocks. Time will tell

[smithless] 04/9/2017 08:03

I should have said HAVEN'T panicked.

[smithless] 04/9/2017 07:56

From memory, haven't the Gupta family personally guaranteed the debt, so a default is unlikely. As for Gupta's getting out of this self induced mess, without resorting to an equity raise, it too early to say. As equity holders we just have to prey coal prices collapse and the management panicked and locked in a majority of its forward requirements a spike prices.

[andycapp1] 04/9/2017 06:59

No the most important relationship is debt vs cashflows as they support the debt. So called asset value is merely a function of the NPV of cashflows. What I'm saying is if the mkt ascribes an equity NPV of 20p to the shares - a snapshot as you say - then the cover naturally on the debt is assumed to be lower. So overall debt coverage is lower and so the capital structure is more shaky at 20p than at 100p simply because the EVs cashflows are weaker. Goes back to what I said that the capital is not generating a decent return and hence the debt is weighing.

[jeffian] 03/9/2017 23:59

I have to say I never understood the supposed relationship between debt and 'equity value'. The market cap of a company is simply a snapshot of what the market values a company at on any given day. What has that to do with debt? The important relationship is debt vs. assets, surely?

[andycapp1] 03/9/2017 21:33

The debt is over £200m but is project specific and has no recourse to the Group. But the overall capital structure has some relevance and if the shares hit 20p the mkt cap would be around £75m so dwarfed by debt. I tend to think at that level equity investors and the banks start getting twitchy re debt cover. In other words the EV is dominated by debt and so it's certainly more of a punt at 20p than at 60p. Simply because there isn't much equity cover.

[owenga] 03/9/2017 18:48

Andycapp. What is the issue with the share cap if it hits 20p. I sold out of these at a small loss at 60p. At 20 p I might consider getting back in if they drop that low.

[the original goldbug] 03/9/2017 13:12

Homeshaw,

The 1p is at the bottom end of expectations. Cantor came up with 3p, we won't know who is nearer until we get a firmer sense of the coal price over the course of the full year.

Each $1 increase in coal takes off about £1.3m of EBITDA, so we are looking at least a hit to EBITDA of about £25-30m for full year of coal prices hold or conceivably worse if prices spike much higher.

Interest and depreciation (think of depreciation as an amortisation of the debt) still need to be paid, hence the low net earnings.

As AndyCapp has noted there will be little if any free cash for the current year.

[andycapp1] 03/9/2017 11:26

The 2017 results are irrelevant to the share price we know what they will be. It is how the company deals with 2018, it's hedging policy going forward, the terrible management of the company generally and it's even poorer share price rating. I want them to buy back equity. Well they have trashed their free cash for the next year but they should find an equity partner to recycle their solar capital and either use that to buy back equity or I suppose accelerate debt repayment as the mkt is now worried about their capital structure. But 2017 is utterly irrelevant to the equity story.

[azalea] 03/9/2017 11:11

homshaw
In a year's time, we should all get the answer you seek, from the 2018 FY results. That said, the Interims, could also be very interesting. I also look forward to hear what the IC and financial pundits think of the FY 2017 results.

[homshaw] 03/9/2017 08:57

Can't understand where this esp of 1p comes from. The profit was s supposed to be 34m. The coal prices were to impact this by 3.5m. I would be grateful to know how this works out to esp of 1p.

[turbocharge] 01/9/2017 16:36

Ok, will keep watching....

[john09] 01/9/2017 14:53

At 20p Turbo

[turbocharge] 01/9/2017 14:43

As a non-holder, would somebody let me know when it might be time to take a punt...

[smithless] 01/9/2017 13:35

Well it looks like Shore Cap has an esp of 1p for FY18, so not looking cheap at all on a P/E basis. A radical rethink and new blood at the top (and middle management) is needed. Just hope Gupta, after acting like a bad energy trader, hasn't locked into a hedge at current prices otherwise one can right off any hope of a recovery. Gupta a free msg if your PR boys read these BB, YOU CANN'T RUN A BUSINESS ON GUESSING which way commodity prices will go. It too late now and he and his cronies will have to tough out the spike, but in future hedge contracts once signed. Simple stuff!!!