Opg Power Ventures Share Discussion Threads

[tim000] 14/12/2022 17:58

The company has said it wants to substitute Indian for imported Indonesian coal, on cost grounds, and Indian coal output is expected to increase significantly next year. I believe one constraint had been the lower cv value of domestic coal, but it seems OPG can reconfigure its boilers to address that. Indian coal seems to be a lot cheaper, and currently accounts for only a tiny proportion of OPG’s consumption. So plenty of scope for cost savings, independent of general coal prices.

[bubbabubbabubba] 14/12/2022 17:47

Coal in australia is getting capped at £70 pound Indonesian never went above $100 dollars and Indian coal wouldn't be surprised if it didnt go above $100Things are coming down only a matter of time

[jailbird] 14/12/2022 13:23

Bubba

what forecasts for coal are you reading?

I just googled this

By the end of 2022, Fitch expects the price of coking coal to reach $370/t. In 2023 and 2024, it will be $200/t and $140/t, respectively.

At the same time, Fitch has lowered its forecast for the price of thermal coal from Australia due to warm weather in Europe, a key consumption region. For 2022, the forecast was reduced from $360/t – to $350/t, for 2023 – from $240/t to $220/t. Analysts expect overall demand for marine thermal coal to remain stable, with supplies from Australia normalizing in 2023.

Analysts at the agency slightly raised their forecast for Chinese thermal coal prices in 2022-2023. It reflected higher prices since the start of 2022, greater dependence on the country’s coal-fired power generation in the near term, supply constraints due to Covid-related measures.

Indonesian 4,200kcal/kg thermal coal around USD60 (10M2022: USD85

[bubbabubbabubba] 14/12/2022 13:18

Don't think they would rollover the debt beats the objective of the deleveraging partThe only reason they are operating at all Is cos tangedco are buying from them at a tarriff at where they can still have a slight bit of profitability Coal never went up to $250 highest it went to was $90 dollars

[gb904150] 14/12/2022 12:00

There seems a lot of focus on the NCD's. If they need to what's to stop them just rolling taking on new debt to pay that off?

There's also a question of adapting and transition. They've just reported on the 6-month period April-September during which the coal price was bouncing between $250-450.

If you believe the cure for high prices is high prices then surely the coal price comes down and OPG returns to good profitability.

OPG in the meantime can adapt - i.e. optimise PLF and find new sources of coal.

"As the prices of international coal and freight have increased significantly, we have taken a conscious decision to operate at low PLF with a focus on profitable operations. This abnormal increase in coal price is likely to affect our PLF, revenue and operating profit significantly for the year ending 31 March 2023.

"However, as a positive measure due to the unprecedented spike in international coal prices, the Government of India has allowed the coal based thermal power plants to pass through these abnormally high coal costs to state owned distribution utilities. This measure covers the quantum of electricity that OPG supplies to the state utility."

While OPG is partially covered from increases in prices due to its fixed price agreements for coal and freight, the Company remains exposed to the unhedged portion of its coal and freight requirements. OPG continues to explore various options of sourcing coal (including domestic sources) to reduce the unit cost of electricity.

GOING CONCERN:
The directors and management have prepared a cash flow forecast to December 2023, 12 months from the date this report has been approved. Based on the business projections, we can conclude that the Group is in a position to go through the current situation caused by very high prices of Coal and going concern is not an issue.

The Group experiences sensitivity in its cash flow forecasts due to the exposure to potential increase in USD denominated coal prices and a decrease in the value of the Indian Rupee.

The Group has taken certain commercial and technical measures to reduce the impact of this adverse development including blending comparatively cheaper coal, modifications to boilers to facilitate different quality coal firing and renegotiation of the tariff and commercial terms of the power sale arrangement with the power consumers.

[bubbabubbabubba] 14/12/2022 11:28

Still no mention of solar assets been sold I think that is what the NCDs are backed by that's why I'm so comfortable buying sharesif they can't pay back the debt they just exchange the solar assets that's my guess

[dave4545] 13/12/2022 19:24

That trade had not been reported or I missed it when I looked.

Clearly the seller that never updates the market of their reduced holding is still at it.

I am tempted to buyback what I sold and of course I'm getting a much cheaper price than 6.5-6.8p too

[bubbabubbabubba] 13/12/2022 18:53

I bought at 5.988 then someone else sold 500k at 5.9 or bought

[dave4545] 13/12/2022 18:14

Crazy when people were paying almost full offer close to 6p earlier somebody sold 350k at 5.51p when it was 5.8p bid.

[bubbabubbabubba] 13/12/2022 16:49

Just bought a bunch more at close still very confident

Coal prices will collapse soon only a matter of time

[tim000] 13/12/2022 10:46

Yes, had a quick look. Unless one knows the outlook for coal and local power prices in Q1 2023, though, it's hard to make any guesses for the current FY. Personally, my focus is more on the longer term outlook, when Indian power demand continues to grow and coal prices normalise.

[cvjr4] 13/12/2022 10:17

Anyone read the new Cenkos note?

[tim000] 08/12/2022 08:17

Tiny sells dictate the market is correct! Well yes, net buys/sells dictate short-term movements in the share price, a tautology. Not a very good definition of long term value though.

[basem1] 08/12/2022 08:13

Dearly me The market was correct Cost me quite a lot this but glad to be out

[tim000] 07/12/2022 22:30

Also note that the Directors have 14 mn stock options that kick in at share prices of 25/30/35p. The Directors are strongly incentivized to realize the true value of the sum of the parts, Florence. It may take some time, but I’m reasonably confident that at least some of those options will be in the money.

[florence141414] 07/12/2022 22:06

I agree that’s the crux of the value proposition here, Tim. However you value the financial assets you’re either getting a small net positive number or a small net negative number. On top of that you have the value of the power plant itself. And most importantly you have the future cash flows of that power plant over say the next 20 years. Are those cash flows 5m a year average for 20 years, 15m a year average for 20 years or somewhere in between?

Whichever it is, it’s hard to see the current market cap at 24m being more than the sum of those parts.

[tim000] 07/12/2022 20:14

Including the £13.6mn book value of the JV solar assets, at 30/9/22 the total market value of OPG’s cash and financial assets was £55mn. That compares with total debt (including the NCD) of £40mn. The accounts state that the company expects to sell the solar assets within the next year.

[tim000] 07/12/2022 18:37

A smallish positive maybe overlooked in the results is that inventories of coal and fuel were just under £13 mn at end-September, which is higher than usual. That reflects higher unit costs, not volumes, but with power generation much lower than normal, that’s probably higher than necessary. That can be converted into cash during H2, either by selling coal at a profit or converting it into power.

[tim000] 07/12/2022 17:41

Depends on coal prices. I agree the book value of the plant is only one indication of the value of the business, but with no debt by end 2024 and profitable power generation, that may well be fair value. The Directors need to be proactive and sort out the balance sheet.

[bubbabubbabubba] 07/12/2022 17:14

You'd be lucky to get a dividend in the next 2 years

[bubbabubbabubba] 07/12/2022 17:13

The coal power plant would never be worth what it says on the tin

[tim000] 07/12/2022 17:03

NAV per share is 45p. Net debt is £4.2 mn. Solar assets have a market value of £13.6mn. If they sold the solar assets just for £10mn, they could clear all their debt with the use of all their investments in short dated mutual funds etc etc and then have no financial issues at all. They certainly wouldn’t want to sell the company then for a discount to NAV.

[tim000] 07/12/2022 15:43

Personally I don't understand how anyone outside the company can convert the rupee accounts to £ accounts, but it's true the 2022 Q3 figures were worse than expected. The company continued to pay down debt even when coal prices were at their peak, cashflow should improve from now on, especially once coal prices fall back, as jailbird says. Finances will be fine once the solar assets are sold. That shouldn't be too long away.

[tim000] 07/12/2022 15:39

Power plant has increased in £ value because the rupee appreciated against £ during the period: each one rupee value of the power plant is worth more £ at 30/9/22. The counterpart to this in the P/L account is contained within the £12.529 mn "Exchange differences on translating foreign operations" line. Why sell assets at 50p in the £? The main shareholders take a longer term view that the assets are worth at least full value, and will generate lots of dividends too.

[bubbabubbabubba] 07/12/2022 14:59

Why don't they just sell the company for atleast half book value surely 20p per share they will be able to find a buyer surely that would be in the best interests of shareholders?