Opg Power Ventures Share Discussion Threads

[big jim5] 09/12/2016 12:01

Source, apologies, not sure I fully understand your question. Basically, they are now charging all interest paid through the income statement. Previously the only interest costs you saw in the income statement related to the debt on the Chennai plant. Interest on the loans used to build Gujarat was being capitalised into fixed assets, but this changes from the beginning of the current financial year.

This is completely standard accounting practice.

[source] 09/12/2016 11:41

Thanks Big Jim. So would that charge stop holding back put once cleared? (Maybe next year?)Regards,Source.

[big jim5] 09/12/2016 10:11

If I can add to the debate on finance costs, these have gone up to a run rate of 13% or so due to Gujarat plant being fully commissioned. Finance costs which were being capitalised into fixed assets now being charged through the income statement. Note 14 in the March 16 annual report states that £17.6m were capitalised last year, i.e an additional £9m or so now going into the H1 income statement.

[andycapp1] 09/12/2016 09:18

I don't know how you will sell out as there are no buyers at the moment. Maybe flowerpothead can relieve you of your mis'.

[owenga] 08/12/2016 19:01

Unfortunately I decided to sell out today at about a 20% loss.. I think I've got better chance of making more money elsewhere.All that extra revenue and only slightly higher pbt. With extra £7 m coal costs expected, may even make a loss for next 6 month period.Good luck to those that decide to stay put.

[rivaldo] 08/12/2016 11:28

Cheers - here's a link:



"OPG Power boosts electricity output

A growing economy means that demand for electricity in India will continue to accelerate. And that's good news for OPG Power Ventures (OPG), where a two-thirds increase in electricity generation in the six months to September saw revenue more than double, while cash profits jumped 81 per cent to £42.1m.

At the Chennai plant, output grew by 16 per cent over the previous six months, while the PLF ratio - that's actual output as a percentage of total possible out - reached 80 per cent. Output at the Gujarat plant was nearly doubled, having been fully commissioned in February, and the average PLF ratio was around 70 per cent compared with a national average for similar thermal plants of 62 per cent.

Higher coal prices in the first half were mitigated to some extent as a result of advanced purchase orders at the start of the year. Around two-thirds of second-half requirements have already been purchased, although this will entail additional costs of around £7m. Looking ahead, the group has secured, in principle, finance for its 62 megawatt solar projects, which should enable it to start onsite works in the second half.

Shareholders were also rewarded with a maiden half-year dividend, with the annual proposed payout of 15 per cent of net earnings split between one-third at the half-year stage and the balance comprising a final dividend.

Analysts at Macquarie expect adjusted profit of £30.8m for the 12 months to March 2017 and EPS of 9p a share (from £18.6m and 5p in FY2016).

IC VIEW:

OPG's shares trade at eight times forward earnings. With strong growth in output and a move into solar generation, they retain their attraction. Buy."

[ballychan] 08/12/2016 10:57

Cheers Souce.'OPG's shares trade at eight times forward earnings. With strong growth in output and a move into solar generation, they retain their attraction. Buy.'

[source] 08/12/2016 09:54

Investors Chronicle coverage today on the results. Recommend as a buy...Regards,Source.

[andycapp1] 08/12/2016 09:39

Again Flowerpothead you don't understand. Wind is not valued on per as it suffers heavy finance costs and depreciation. And of course it's intermittent but what has that got to do with it. It is dispatched first and has a marginal cost of nothing as the fuel is free. Wind is a DCF of the cash flows and if your PPA is baked in as are your finance costs and your wind (revenue is right) then you squeeze out a secure equity cash flow which you might put on say 9x as per the UK RO. Dunno what the Indian equity wind IRR is but higher than coal if everything is locked down. That's the point which is coal might be 5x EBITDA, wind 9x and solar possibly higher - longer asset life and no moving parts. Come on Flowerpothead, try harder!

[azalea] 08/12/2016 08:57

Mytrah Interims 12/9 reported ptx losses widened to USD6.8m from USD3m. Revenues rose to USD49.7m from USD32.6m. Since that date the share price has fallen from 58p to 43p.

OPG ptx rose from GBP15m to GPB17.9m. Revenues rose from GPB56.6m to GPB117.7m.

The availability of coal is guaranteed, whereas wind power is inconsistent.

[andycapp1] 07/12/2016 19:53

All of those points are very well made. Trouble is OPG has fuel and PPA risk and renewables, with a short run marginal cost of naff all, and which attract long term PPAs - so you can squeeze out a very secure equity IRR - will gradually undermine OPG's coal plants. Anyhow we will wait for a take private maybe but only after the shares go lower.

[eddie1980] 07/12/2016 19:02

Why are people so bothered about debt here. It is asset backed, used to create long term cashflows, its not being used for working capital purposes. Debt cost is 10.5%, assets financed by debt producing about 35% ebitda margins.

So long as margins secure, then there is no problem. In theory, the more debt taken on, the more capacity is created earning the higher margins to pay the debt down.

Perhaps that is the biggest risk to OPG - are margins secure? Cost of producing solar is now equal to thermal, without the exposure to input costs(coal) and is expected to be 10% lower by 2020 - which will only drive down electricity prices. Then there is the fact thermal power is only taken when not an excess of renewable - so long term - price driven downwards, focus on renewables, input cost risk... ouch doesn't sound good. Maybe less debt is sensible.

Long term assets should be matched with long term financing. The only problem here is the cost OPG pay.

Look at what they are about to get into with renewables. The cost to build per MW is much higher, so they will either need a lot of equity, or a lot more debt. (But of course renewable doesn't have coal cost, which is nearly 60% of OPGs turnover).

Look at Mytrah - their gross debts are crazy, but they keep getting more and backed by some serious players because its backed by assets which give off long term cashflows.

The growth ambitions pale as well - Mytrah targeting 300MW a year, whereas OPG are hoping for 300MW over 3 years. Given the shift to renewable focus in India, OPG need scale and fast, and they don't seem to moving quick enough.

[andycapp1] 07/12/2016 13:37

I agree that they do not want to invest £ in huge share buy backs, but that gives them a better return than investing in solar. So they should take out 10% buyback powers and use them. A miserable 12% levered return from solar is trumped by their own equity IRR. So this would demonstrate fiscal discipline.

[ballychan] 07/12/2016 10:36

Source, I presumed the 1billion rupee repayment (circa £11m) sits in the Financing costs hence why it's so high...

[ballychan] 07/12/2016 10:34

Andy, they've mentioned a couple of times they've looked at refinancing but it brings no savings - there current deal is the best one.They also want to get their ebitda to net debt ratio down from 5x to 4x so cash will be used to lower debt, not on buying shares. Move to main listing has gone awfully quiet.

[andycapp1] 07/12/2016 10:22

Ah so Flowerpothead is the common link of disaster and doom. Well he certainly has absolutely no idea how to value an equity that is for sure. Anyhow, I'm still here with a few shares so although I'm a moaning git I'm still hoping they surprise us on the upside, something they have utterly failed to achieve so far. But yes I agree that culturally they leave a lot to be desired. The most annoying thing recently was the CEO/Chairman role which flouts every convention going in the UK. On the one hand they say they want to be good citizens but then they do this. Hey ho, whinge over but the shares will go lower I fear.

[marvelman] 07/12/2016 09:43

Andy

"In short I'm utterly p'd off with this management and this company. Dreadful articulation of strategy, corporate governance woeful and strategically flawed"

You may be aware I was invested here but I was also invested in SPL another Indian company trying to build a port in India. Its incredible how these two Indian companies are so similar in their disregard for shareholder communication. I would put it down to two things; An Indian culture which is unlike our own and which does not seem to recognise "correctness" and also the fact that both companies are dominated by controlling interests in the governance of their company. In effect they put their family interests way above us mugs. I sold out of SPL quite some time ago and have since seen the share price fall to confetti levels. One other thing commmon to both companies is an investor called Azalea who is still pretending that he/she is stillin profit and confident that all is well....you couldn't make it up. Regards.

[source] 07/12/2016 09:18

Thanks Ballychan. I too like that they are paying down their high debts. Any idea why finance costs have shot up so much? (& hence damaged pbt performance)I thought the cfo Swami was touting he was going to drop their finance costs recently?Regards,Source.

[ballychan] 07/12/2016 08:40

Source I wouldn't class them as having profit problems. They maintained a very good margin at 36%.Their finance costs were £18m compared to only £6m last year, hence the net profit isn't spectacularly higher.Repaying debt is the sensible option for longterm prospects rather than leaving debt high and banking more profit.

[andycapp1] 07/12/2016 08:38

And I'd add:

When are they moving to main mkt? Not.
When are they refinancing their debt? Not.
Where are the share buy back powers? Not.

In short I'm utterly p'd off with this management and this company. Dreadful articulation of strategy, corporate governance woeful and strategically flawed. It's just an ego exercise sadly. Aargh. I'll stop whinging now!!

[andycapp1] 07/12/2016 08:24

Price target downgrade coming from cantors. And I can't sell my balance!! Flowerpot do you want my shares? 65 and I'm out!!

[source] 06/12/2016 18:17

Thanks for the helpful read out of the call Ballychan. Afraid I could not join the call myself. W.r.t. Your takeovers point - personally I was hoping it referred to OPG being taken over (& putting us out of our misery! :). But think you refer to them talking about their ability to takeover other firms?I'd much prefer they sort their own poor profit and debt problem out before adding to the problem! :)Regards,Source.

[ballychan] 06/12/2016 15:24

Just got off the investor talk.They're in a position where they can be very selective about takeovers. They've rejected a lot of deals due to lower profit margins than what they'd like. They continue to investigate all opportunities.Was noted they're discounted by 30%-50% compared to other companies in uk and India. Big effort to reduce gearing, underlying debt reduced by 1 billion rupees in the last 6 months. Interest costs were 11.3%, now 10.8%, expected to drop to 10.5%. Dividend ratio starting at 15% increasing to 33%. The 0.26p is from FY16 earnings.The final two thirds div will be from FY17 earnings, so should hit 1p+.

[igoe104] 06/12/2016 14:53

OPG Power Ventures PLC (LON:OPG) paid its first ever dividend after ... OPG has performed well with a strong ramp up of power plant

[andycapp1] 06/12/2016 14:00

Flowerhead, I'm still holding a few shares and wondered if you had any scintillating observations on the results apart from "wow revenues are off the chart" and "golly the shares are hugely cheap". Enlighten us please do?