Opg Power Ventures Share Discussion Threads

[dave4545] 30/6/2023 13:59

100k buy order in auction at 9p.

Should get filled at that price maybe around 8.8p

99k sell order 8.6p

[tim000] 30/6/2023 09:50

Historically, OPG has relied on imported coal from Indonesia. I don’t know why it chose that business model, I would guess because of security of supply with domestic coal hard to procure. However, domestic e auctions now sell around 100mn tons per annum, and India plans to greatly expand coal production over the next few years. That must be to avoid being reliant on expensive imported coal in future and avoid a rerun of 2022. That makes OPGs historical business model out of date; it’s clear from the latest update that it plans to procure much more coal domestically in future. And Tamil Nadu is a major mining province I believe. So not only will OPG’s generating costs decline due to a much softer global coal market, but equally important it should benefit greatly by having unlimited future access to cheap domestic coal. As I mentioned, Coal India is currently pricing thermal coal in its e auctions at cR2000/t.

[tim000] 30/6/2023 09:36

Agreed, the quantum of a buy back is most important. Maybe British Steel pension fund would like to exit, and a deal can be agreed? I’ve never seen a buy back at a substantial premium to the share price, that suggests they can’t happen. One reason of course is that managements might have financial incentives to inflate their company’s share price in the short term, eg exercising and selling options. However, there’s no reason why a combination of good operating performance and generous dividends etc shouldn’t inflate the share price to a level where a large off market buyback would be acceptable to the seller.

[the original goldbug] 30/6/2023 08:50

It’s academic really if they do the buyback at a premium or a discount. The key question is how much they do.

Of course if they do it at a premium it sends a signal to ‘arb’ the price up to the level of the buyback. Of course it could then fall again after. I would hope they would do it with a message that there will be buybacks until the discount to NAV is closed somewhat.

Possibly there are rules governing the price they can do it but I wouldn’t go far to suggest manipulation.

[tim000] 30/6/2023 08:40

Hopefully the next quarterly accounts will be published on bse in late August.

[tim000] 30/6/2023 08:37

Goldbug is hopeful of a share buyback. I don’t know the rules concerning buy backs, but I don’t think they would allow share price manipulation; even off market buy backs would I guess need to be somewhere near the then market price. The company has stated explicitly that its focus is on enhancing shareholder value, so it must have some strategy planned for utilising its cash for the benefit of shareholders.

[tim000] 30/6/2023 08:30

Looking at the OPG operating subsidiary balance sheet at end-March 2023, and then allowing for the subsequent NCD repayment, the business had net current assets of c£30mn at end-May. At end March, that was mostly trade receivables arising from the hike in PLF in March. Those will have been progressively turned into cash during the current quarter. With debt levels now at desired levels and maturities extending over the next five years, the obvious question is what will the business do with all this cash?

[tim000] 29/6/2023 12:33

All the evidence I’ve seen of sharply falling coal prices since the start of the new FY, with no contrary indicators at all, points to the Cenkos forecast being hopelessly wrong.

[tim000] 29/6/2023 11:48

In the same article, analysts Nuvama Institutional Equities forecast average e auction prices of R2700/t in FY24, falling to just over R2000/t next year. Consistent with OPG’s statements that the coal market is normalising, and that EBITDA should normalise too.

[tim000] 29/6/2023 11:33

Business today.India reports that the e auction premium declined to 55% in mid June compared with 137% in April. Not only is that a massive reduction in coal prices, but it also implies a much looser market in which coal is much more readily available to e auction participants.

[dave4545] 29/6/2023 10:48

Better off saying they are in trouble and need desperate funding otherwise curtains.

Amte down to 3p yesterday on that very news, today hits 9.5p bid.

Stocks with fundamentals are not floating pi boats, it's all about a fast buck

Also these mm's in OPG they never want to play do they, decent buy yesterday and 12500 at 9p today you'd think one of them might go 8.25p or 8.5p bid and give it a push naah all of them sit at 8-9p and kill it like they have done for ages

[tim000] 29/6/2023 10:21

To see Coal India's latest "notified prices" (G9 grade being the grade OPG purchases), google Coal India notified prices 31 May 2023 and go to the coalindia website. G9 notified price is currently R1240/t. The 78% premium being paid in e-auctions in May still gives a price way below $50/t, assuming OPG can access e-auctions.

[tim000] 28/6/2023 07:45

Coal accounts for c75% of power generation in India. The government’s net zero target is 2070. It has stopped new coal-power projects for the next five years, but in the meantime is rapidly increasing domestic coal production so that the nation becomes a net exporter and coal is then a reliably cheap source of power generation. So coal power will continue to be dominant for the foreseeable future.

[nathandc] 28/6/2023 06:59

Elon Musk in India this week Meeting with the PM. He said they would be making announcements soon. Does Tesla kill coal power generation-thoughts? I personally think it in addition too for the next 10 years plus. Technology and Politics opposing it ...

[the original goldbug] 27/6/2023 19:59

Interesting comments from Barry Norris who runs Argonaut. Hendry is a contrarian for the sake of it but Norris has a detached professionalism to him.

The part on renewables versus fossil fuels starts at minute 37. The numbers are insane.

[tim000] 27/6/2023 19:47

CoalMint reports today that CIL’s e-auctions for thermal coal in May attracted the lowest bid premium (of 78% over notified prices) for 18 months, and that the quantity of coal available for sale was not fully bid for, reflecting already high inventory levels at power stations. So it appears that domestic thermal coal prices are continuing to fall as supply outstrips demand. If OPG is sourcing a growing amount of its coal from domestic suppliers, its average price should now be comfortably under $50/t.

[dave4545] 26/6/2023 19:06

No trade since 9.15am wow.

[tim000] 26/6/2023 17:31

The website CoalMint has published a chart today with the history of ICI4 prices over the past year. Today’s price of $51.67/t compares with c$70/t at end-March, $90/t at end-Dec 22 and $60/t a year ago.

[tim000] 26/6/2023 13:42

ICI4 down to $51.67/t

[the original goldbug] 25/6/2023 15:22

The family would obviously have to sell. It would be done as a tender offer at a healthy premium to encourage people to tender.

[tim000] 25/6/2023 15:16

Wouldn’t they struggle to find 40mn shares to be bought back though? I like buybacks, but the family holdings make that a challenge surely?

[the original goldbug] 25/6/2023 14:01

I am hoping they buy back 10% of their equity. Not only do shareholders get the equivalent of a 10% dividend but it is very earnings accretive going forward.

[tim000] 25/6/2023 13:33

They talk about enhancing shareholder value. A small dividend announced at the time of the annual results would cost peanuts, and wouldn’t be paid until near the end of the following FY! That would be a good start to recovery.

[the original goldbug] 25/6/2023 10:29

Yes there are no institutions besides British Steel pension fund left in this.

It is indeed conceivable that they wrote this without management guidance.

It’s lip service.

[tim000] 25/6/2023 10:07

The government policy to extend the directive for importing coal gencos to maximise output until end September was announced on 12 June. So clearly the Cenkos FY2024 forecast was prepared before then, the 36% PLF forecast isn’t tenable. In fact it’s hard to believe it even allowed for the initial policy of maximizing output from mid March to June. Given one quarter operating at 75%, that forecast implies operating at 23% the rest of the year. The Cenkos forecast certainly doesn’t make allowance for the recent sharp fall in coal prices. Indonesian ICI4 prices are published weekly on Mondays I believe.

I suspect Cenkos put very little effort into OPG notes as there are very few institutional shareholders that might be clients.