Opg Power Ventures Share Discussion Threads

[igoe104] 06/11/2023 12:36

Good question Rivaldo, might be a good question to ask on the investor meet.

Very strange, to forecast a drop in numbers, as the coal price has dropped over recent months...

[rivaldo] 06/11/2023 11:49

Cavendish (i.e Finncap) in their update today only forecast 0.6p EPS this year to March '24, down from 1.8p EPS last year as reported this morning.

They forecast £133m revenues, up from £58.7m, and £32m gross profit, up from £16.4m, yet EBITDA is heavily down to £11.9m from £16.1m last year.

Adjusted PBT is forecast at £5.6m, well down from £10.4m.

Can anyone explain these figures - I can't see any explanation in the narrative in the note?

Just weighing up whether to invest or not, but this might explain the muted reaction today.

[dave4545] 06/11/2023 10:35

Well I'm adding all the way down so thanks to the sellers and especially the idiots that bought this morning then sold for a loss, they deserve to go bust for being such impatient greedy traders.

[bubbabubbabubba] 06/11/2023 10:09

Sold my last postion today Been good talking to you all Might come back in future if this drops I've moved on to other companies Changed my investing parameters

[igoe104] 06/11/2023 09:11

OPG are doing a investor meet presentation in 2 days, should be a interesting listen..

[dave4545] 06/11/2023 09:09

Stuck in auction 200k of buys orders at 13-13.1p and a tiny 8k sell order at 9.8p messing up the system, sure it's on purpose these things

[dave4545] 06/11/2023 08:55

Big buy order in auction at 13p 150k+

Looks like all dips are being bought into, guess that is the only way to get size
because when limits drop to nothing the price spikes 1-2p quickly

[dave4545] 06/11/2023 08:14

No stock around last 20k buyer paid a 0.5p premium or 12p

[florence141414] 06/11/2023 08:06

Very little that they made in FY23 can really be considered repeatable or sustainable profits as it’s all reversal of impairment, coal trading and an insurance claim. But that’s not the key takeaway for me. Increased tariffs guaranteed throughout FY24 and into Q1 of FY25. Combine that with normalised input costs and it could very well be party time for profit margins.

[tim000] 06/11/2023 07:40

I’ll reiterate my long-standing opinion that, irrespective of how cheap the shares are today, OPG is a strong buy given its position in a high long-term growth industry, in which demand is booming but supply is not. Hence for existing gencos, the outlook for margins and cashflow should be very positive.

[tim000] 06/11/2023 07:34

I didn’t spot anything on the current year, but that is probably because they now have preliminary outturns for the half year and now is not the right time to announce those. A trading update for H1 could be announced soon, followed by the unaudited results next month. That’s my guess anyway.

[dave4545] 06/11/2023 07:27

£0.7 mil profit for half year

£10.4 mil profits full year

So they made £9.7 mil profits before tax in the last 6 months

[ali47fish] 06/11/2023 07:25

all negative numbers

[dave4545] 06/11/2023 07:22

Am I going blind as I cannot see any mention of the current years trading, it might be there it's a long RNS ?

[florence141414] 05/11/2023 08:27

I didn’t even consider that they could monetise future contracts with the bank in such a way. A very good point. Thanks for taking the time while you’re away, it’s much appreciated.

I was lucky that I was at my desk the moment the update came in so was able to get some back on for the price I’d sold. Not as much I had previously because of the increased risk associated with the suspension. Could be interesting tomorrow now that this particular risk has been assuaged.


The whole thing was really strange. The September update contained everything we’d expected to see but hadn’t in the June update/broker note. So why issue the June one at all!?

Anyway, alls well that ends well (hopefully!)

[tim000] 05/11/2023 05:24

One other thought. I wonder whether the new contract with a new state utility required OPG to strengthen its balance sheet, to provide the utility customer with confidence that OPG could readily supply a higher PLF. That might explain why OPG is now so liquid. Given the tightness of the power sector, there must be a chance that supply to this new state utility will rocket in the coming months.

[tim000] 05/11/2023 05:19

Sorry for not replying Florence, I’m in Athens at the moment and haven’t had time to look at this thread or answer your excellent questions. Monetising the end-March receivables book is worth about £27mn (assuming receivables return to normal levels). They’ve taken on a small new NCD recently worth another few million. As you say, they were holding financial assets as security for the big NCD redemption which will have been liquidated. That much we know, but as you say, I don’t think that’s sufficient to pay off the £20mn NCD and still have so much cash. It suggests that the company has been generating further cashflow since March. Cenkos/Cavendish would have us believe in their latest note that the increase in PLF is adding to receivables rather than cash. We know PLF has risen sharply and is generating a lot more accruals. Isn’t it possible that the company is factoring these accruals, ie selling them to a bank at a discount in order to monetise receivables? Since these receivables are with Tangedco, they may be seen as more secure than the rest of OPG’s customers. It’s possible that the new contract with another state utility will also be highly cash generative. It appears the Indian power sector is incredibly tight at the moment, with much more power demand than anticipated. In these circumstances, maybe OPG can monetise its output much quicker than expected - it’s a sellers market. Hope that helps? Are you a holder again, or just watching?

[florence141414] 04/11/2023 12:36

Hi Tim, I'm just refreshing myself on the accounts for Monday. What is your opinion on how they arrived at the 42m cash figure in the TU, if you don't mind me asking? They mention receivables but this doesn't get you close on it's own. As such I think it must be at least 2 of the following 4 things. Either 16m restricted cash became cash, they sold most/all of the 27m short term assets (although this means they did'nt use that money to pay off debentures, which I'd hoped), retained extra 4.8m of gross debt as cash (gross debt at interims was 19m but 23.8m in the TU) or payables have increased significantly.

What are your thoughts?

Thanks,
Matt.

[dave4545] 04/11/2023 11:26

Coal at it's lowest price for years in that link in the header.

All building up for Monday return, already counting down the hours :-))

[tim000] 01/11/2023 10:39

Drax, the UK listed genco, has a current mkt cap of £1.6bn and an EV/EBITDA ratio of ca 3.5 (annualising the 2024 H1 results). Its net debt is £1.3bn and book value £1.6bn, so is currently trading at about book value. DRX is considered to be undervalued. OPG is obviously tiny in comparison. It has a current EV value of just £21mn (based on August’s net cash of nearly £20mn), and a historic EV/EBITDA ratio of about 1.5 (based on Cavendish’s estimated EBITDA for FY23). Its current mkt cap is only about 25% of book value, even though it has nearly 50% of its mkt cap in net cash and is part of a much stronger power market, with booming electricity demand. Compared with DRX, the only thing it lacks is a dividend policy. If OPG introduced a 0.5p dividend it would have a comparable yield to DRX. Based on this comparison, OPG is surely worth at least double its current share price.

[tim000] 01/11/2023 06:20

Wrt coal-fired plants maximising output, the Ministry of Power published the order on 25/10/23, it’s available on their website. OPG is mentioned explicitly as one of just 15 such plants nationally. So OPG might announce in due course further supply contracts, possibly extending the recent contract with a state genco. With generation capacity in short supply, one would imagine “attractive221; pricing is available to OPG.

[tim000] 31/10/2023 20:24

If management can continue to convert high PLFs into cash generation, as they have in H1 FY24, then surely a progressive dividend policy can be announced next Monday? Even a small dividend in relation to net cash would imply a very high yield at the current depressed share price, and would attract new investors.

[tim000] 31/10/2023 20:13

The Economic Times reports that the mandate for coal-importing power plants to maximise output has been extended again, to June 2024! With a shortage of hydro electricity, output of coal-fired power plants is estimated to have risen 30% in the 12 months to October. OPG’s forecast of a 58% PLF in FY24 is surely too low. Maximising PLF spreads fixed costs over greater production, minimising unit costs and maximising margins. This is surely a sign that improved margins are here to stay long term.

[tim000] 31/10/2023 11:55

If there were any accounting issues with the audit, they’d have been announced today.