Opg Power Ventures Share Discussion Threads

[eddie1980] 05/4/2017 21:14

I still receive ADVFN notifications on this - I read that the company, by having to align economic and voting rights, has to give 26% of the value of the impacted plants - how this is not earnings dilutive as there is now a minority interest I do not know.

Quite a terrible result...

[andycapp1] 05/4/2017 16:58

Flowerhead, further dividends! Ooh well there isn't much else going for it! You do spout bilge.

[azalea] 05/4/2017 16:31

Q3 results and outlook thereafter are positive -increasing PLF and earnings. Further dividends in 2017 and 2018.

[gscrawler] 05/4/2017 15:24

Now they are struggling to collect debt. Also they have a legal obligation to give up 26% to their customers.
Surprises here are never ending. Will we ever get a positive news here?

[piedro] 05/4/2017 12:35

thanks not ... for the lively discussions

trolls tea party ?

[azalea] 05/4/2017 12:23

Buyers moving in on the cheap @ 48.79p+

[andycapp1] 31/3/2017 14:53

Flowerhead, your comments on OPG, of which there are many, are almost exclusively ill-formed tripe. Look, if the management of OPG had any regard for the minorities, they would start buying in their own equity. They have free cash after dividends and capex/opex and they should show willing and enhance the returns to the residual equity by buying in and cancelling their own shares. That they are not is evidence of poor governance and their basic lack of understanding. If the intrinsic value of their shares, as you seem to think it is, is say 100p then if they can buy that value at, say, 55p and cancel it, it is permanently enhancing for the residual equity. The only problem that could result is if they use debt to fund the buybacks where any intrinsic value gain or book value gain is wiped out by a derating associated with excessive gearing. But I'm not advocating that. I'm saying use the free cash. They prefer solar with its measly return to their own equity. That is poor capital allocation and poor management.

[azalea] 28/3/2017 13:41

Who let you out?

[andycapp1] 27/3/2017 21:37

Hey Flowerhead! You still spouting utter b0ll0cks? Yup you are! Really please go do some homework.

[azalea] 23/3/2017 16:02

You make a profit when you sell your shares for more than you bought them for(including costs).

[polythene] 23/3/2017 14:10

You only make profits if you buy low and sell high. You must be a Master Trader Azalea.

[azalea] 23/3/2017 10:33

Taking profits at the relatively higher levels and making a profit trading on the dips prepares me for the next big rise. Buyers today could be looking at a profit of 50% in 2018. An Aim listed company whose consumers and profits are totally unaffected by UK businesses and politics.

[polythene] 22/3/2017 19:00

Anyway Azalea, you are unremittingly positive as you were at £1 (and over), 90p, 80p, 70p and 60p. Thanks for your thoughts.

[azalea] 22/3/2017 11:23

Volume so far today is three times the 90day average. The 365k trade is the largest for some time, if it was a sell, I would have expected a lower price, so it could be an II topping up on the cheap. Time will tell.

[azalea] 20/3/2017 13:44

No information flowing between members of the BoD and a number of shareholders in recent conversations/presentations should have contained price sensitive information unless it was already in the public domain. So it should not surprise anyone about any reticence by the BoD to talk of absolutes. To that end, we will have to wait for FY Results - end of July.

[samped] 20/3/2017 07:54

Financial investors joining hands with utilities to acquire power projects!?

hxxp://www.livemint.com/Industry/Z5qQRZ3lXW65pLBsN8qNlK/Financial-investors-joining-hands-with-utilities-to-acquire.html

[samped] 20/3/2017 07:53

Financial investors joining hands with utilities to acquire power projects !?

hxxp://www.livemint.com/Industry/Z5qQRZ3lXW65pLBsN8qNlK/Financial-investors-joining-hands-with-utilities-to-acquire.html

[the original goldbug] 17/3/2017 21:49

Good point Oldboffy. I think I have to go with the £27m number being correct, given that the half year results show earnings at 4.8pence. Additionally there was reference to earnings being little changed next year at £30m.

So maybe I misheard the 6.5 as being million in terms of opportunity loss of earnings this year due to the cyclone etc. I'm afraid the catch up was over a breakfast in a noisy venue and I was not able to take notes. I hope that clarifies things.

[oldboffy1] 17/3/2017 20:34

The Original Goldbug. A question. You were given an indication that earnings this year will be circa 6.5p. This equates to about £22.75 million. But you also indicated that net earnings are forecast to be circa £27 million. If so this would give earnings per share of 7.7p. Which figure do we think is right?

[oldboffy1] 17/3/2017 20:11

The Original Goldbug. A vote of thanks is in order for your contribution to this board. So often comments have had little to do with information and more to do with hope or pessimism depending on which side of the fence one was sitting.

[the original goldbug] 17/3/2017 17:50

My understanding is that the contribution to net earning from solar for year end March 2018 would be marginal, maybe £1m if that. I would guess that once their two projects are up and running they will contribute circa 6-8m net depending on how they account for debt amortisation.

I would add they were cognisant that earnings expectations had been paired back considerably and I think they want to be comfortable in beating next year. For starters they sort of suggested that the politicians death and the cyclone cost £6m from this year's earnings. I tried to push and say therefore next year's earnings would be considerably better and got an inconclusive answer before the conversation moved on.

My personal thoughts, for what it's worth, is that the stock is cheap at current levels but not wildly so and some of my more bullish price forecasts will take longer to play out. The stock currently trades at book value and I think a more reasonable price for a stock with a ROE of 15% in India is about 1.4x book so a price of 70-75p seems reasonable.

Of course longer term the ROE should creep up to nearer 20% and there is the added optionality that they do a great deal. Longer term there has to be more profitability for the whole industry if the government is going to have its power requirements met and OPG as one of the lowest cost producers, will be in a position to capitalise on India's inevitable demand for more power.

[ballychan] 17/3/2017 16:40

Original, thanks for sharing, very interesting. Can you clarify on the point about solar adding to earnings in year end March 2019 - I was under the impression some solar will be operational in 2017 so should have a good handful of months adding to March 2018?

[the original goldbug] 17/3/2017 14:49

I had an open and friendly discussion with Arvind Gupta and co this morning.

Firstly earnings will be roughly 6.5 p for current financial year and they will only grow slightly in the year ahead. Apparently the reason for the more bullish numbers floating around was non company brokers putting out aggressive buy recommendations without consulting management. I've been back in the stock since June or so of last year and didn't feel it was right to push them too hard on this issue.

So net earnings this year will be £27 and £30m next year. I was more interested to learn what earnings could be when everything is hunky dory at Gujarat. The load factors are at about 68% rising to 70% next year. Theoretically they could get to circa 90%. What is stopping this is permission to lay more transmission. They are being stifled by local government who also operate and own power producers in Gujarat and don't wish to see more power enter an already over supplied local market. This process can be stalled not stopped and they will likely have their transmission issues rectified within 18 months. They will then be looking to sell power into neighbouring states. With no cyclones and Gujarat at 80%+ net earnings could grow to nearer £40m given the operational leverage inherent in the business.

On some level it is amazing that they make any profit at all given 80% of power is supplied by local government who are subsidised by state government. In the private sector OPG enjoy higher margins and therefore higher returns than their competition, so they have to be given credit for that!

Longer term the subsidy regime might change. What will really be the kicker is if we get a bear market in coal prices.

The solar business works on long term offtakes and is a competitive tender process. I understood them to have tendered on 700MW and they have been successful on 200MW. Debt equity is 70/30. They maintain the equity IRR is 18% given borrowing rates at 11%. We shall see...! Load factors will be 20%. Some people are bidding for less, so it will be a tough business to grow with a guaranteed return profile. I felt they were doing to tip their toe and give green credentials to the business and in the scheme of things the equity investment is quite marginal. Solar will contribute earnings the year after next, that is to say March end 2019.

They clearly want to grow the business and they maintain they could further gear the current balance sheet to bring £150m to the table. Clearly lots of private operators are in all sorts of trouble. What they will not be doing is buying superficially large MW capacity which is locked to provide power to local government at unprofitable rates. They are not going to jeopardise their status as one of the few private sector operators who actually make a decent return on capital ~ 15%+.

[the original goldbug] 16/3/2017 23:06

Chalky

Respectfully I disagree with your thoughts. The interest payments actually rise, as free cash is not being used to pay down debt, thus negatively impacting upon the p&l. However it frees up cash allowing for new investments, which over time build earnings, provided the return on capital from new investments is greater than the interest rate they are paying on their debt.

[azalea] 16/3/2017 12:28

Polythene.
As you well know,you only lose money when you sell your shares for less than what you paid for them. Between Oct and Dec 2016 I sold a significant number of shares all at a profit; some were on a quick buy & sell basis, which I expect others to have done and are doing so of late. Others have simply sold and taken the loss. What I now hold are making a paper loss, but I will hold these until they return to profit. The numbers in Ballychan's post illustrate the potential.

Trading the shares are now getting to be risky as those who have sold more recently at a quick profit are finding having to pay notably more to get back in as the share price continues to rise.