Opg Power Ventures Share Discussion Threads

[tim000] 25/10/2023 13:24

Of my latest post? High plant load factors, high profit margins, high cashflow, high dividends. For the long term.

[ali47fish] 25/10/2023 12:26

tim what the consequence on opg

[tim000] 25/10/2023 09:22

Interesting article in The Economic Times about India’s demand for electricity to power air conditioning. That currently accounts for 10% of total electricity consumption, but demand volumes are forecast to increase nine-fold (!) by 2050. Growth of the economy obviously will further add to the growth of electricity demand. It’s hard to see power generation capacity keeping up with such rapid demand growth, meaning electricity prices will outpace general inflation.

[tim000] 07/10/2023 10:44

The trading update mentions that electricity consumption in India has increased by nearly 9% in the current FY. In fact, adding the subsequently published figures for September, coal-fired power output has increased 14% April-September on the same months of the previous year. For five months of the second half of the FY, OPG has signed a contract to supply a State utility up to two-thirds of its daily capacity - subject of course to the State utility’s demand and OPG’s uncontracted spare capacity. In practice, therefore, I imagine the actual take-up will be substantially less. However, the company’s estimated output of 58% of capacity in FY24 does look conservative given these facts, especially as the Indian power market is very tight - reflected in the various government mandates for gencos to maximise output. I would hope OPG will beat this figure, exceed market expectations for cashflow and give the share price further momentum over the next 12 months.

[tim000] 06/10/2023 11:30

At the end of March the company had trade receivables about £27mn higher than normal, which equals the improvement in net debt reported from 31/3 to 31/8. But the strongly recovering PLF in the current FY will have further increased receivables. So it looks like the monetisation of underlying EBITDA during FY 2024 will further increase net cash in the rest of the year, though probably not to the same extent as in the first five months of the year. The monetisation of receivables to date has been very impressive.

[tim000] 03/10/2023 12:34

The Coal Ministry has published its September statistics compendium today. Of note, coal dispatches to the power utilities sector were up 14.2% in the 12 months to September, while power generation by coal-fired utilities was up 22.3% units over the same period (suggesting OPG maintained a high PLF in the month).

[tim000] 03/10/2023 07:47

The Indian rupee continues to strengthen against £, so profits convert into more £ and the rupee book value of net assets converts into more £ as well, resulting in an exchange rate gain in the P/L account. I expect this trend to continue long term as growth in the Indian economy far exceeds that in the UK.

[tim000] 02/10/2023 08:29

You could well be correct. The company is bound to give a cautious deadline to ensure it can deliver the results as announced. Any new info in the trading outlook will be the most interesting part of the results, now that we know the turnaround in net debt.

[the original goldbug] 02/10/2023 08:23

I don’t think it will be suspended for more than two to three weeks.

[dave4545] 02/10/2023 07:33

Guess you are not keeping up with current events ali

Read trading update

[ali47fish] 02/10/2023 07:32

suspended listing with no reason given-shame on them

[tim000] 29/9/2023 12:48

OPG sale must end 4:30pm Friday. Bringing out the buyers.

[the original goldbug] 28/9/2023 08:41

Over the next two years Indian domestic coal production will increase by 200m tonnes taking the same amount of demand away from the global seaborne coal market of 1.4bn tonnes. That should have quite a chilling effect on seaborne prices and serve OPG well.

I don’t see any reason why we can’t have 4-5 years of EBIT in the £40m + region.

Personally I hope they do buybacks rather than dividends given the very low share price valuation. Cash is returned to shareholders while the equity shrinks hence juicing future returns.

I wonder what the endgame is and how they will use cash. I suspect they will be tempted to grow is they can buy an asset out of receivership at the right price. Longer term they should try and list in India. AIM is moribund graveyard of a market.

[tim000] 28/9/2023 07:58

Yes, we can expect the share price to rerate as net cash continues to accumulate. But there should be no end-point to this rerating, good cashflow should be fairly permanent. India is probably the fastest growing economy in the world, resulting in rapid demand growth for power. New power supply capacity is not keeping up, hence government edicts to coal power gencos to maximise output. Basic economics suggests persistent excess demand will sustain high margins for gencos, necessary to increase capex in new capacity.

[nathandc] 28/9/2023 07:06

Some great insight as usual - thanks Tim000Next 12 months a head hopefully finally recognises the value of OPG.

[tim000] 27/9/2023 16:59

Worth noting that the sterling/rupee exchange rate is falling again. That’s good because a weak rupee devalues the (sterling) book value of the group.

[tim000] 27/9/2023 16:56

Goldbug says the Indian power sector is not consolidating, because profits aren’t currently secure enough to incentivise acquisitions. There is no end game on the horizon for OPG at the moment. Their goal is to return to consistent profitability, pay consistent dividends and hence get the share price back to historical levels. That will suffice for investors. Personally I don’t want them speculating in acquisitions themselves, they don’t have a good record. It’s why the share price has been so low.

[nathandc] 27/9/2023 16:40

Speculating Accounts are published Share price re- rates Predictable revenue and profits are demonstrable Do they get acquiredWhat is the end game for OPG ?

[dave4545] 25/9/2023 08:56

10.94-11.24p

Think the mm's will be happy to see all this 2 way trade all week long.

Still extremely well bid atm

[dave4545] 25/9/2023 07:18

£5000 buys are quite relentless, was loads on Friday and they have already started this morning.

People are clearly not put off by the suspension coming and think it's worth the risk to get such a low price knowing if/when it returns it will be double this level at least imo

[dave4545] 24/9/2023 13:47

Thanks Tim

[tim000] 24/9/2023 09:17

The finance team has been kept busy in recent months by the repayment of the £20mn NCD, arrangement of new bank facilities and repayment of all project debt, the latest NCD issue, and the new short-term contract with a discom, in addition to day-to-day managing all the subsidiaries within the group. It’s not altogether surprising they are behind with closing the consolidated accounts of the whole group.

[tim000] 24/9/2023 09:08

I’ve mentioned before that the company issued another NCD, I think in late August and in fact for ca £3mn, not the £5mn I had thought. This should have been included in the company’s reported gross cash and debt figures for 31 August announced Friday, and which explains why gross debt was higher than my estimated £20mn following the maturity of the £20mn NCD in May. The reason for the latest small NCD remains uncertain, but the gross and net cash figures are now outstanding, given the steady monetisation of its receivables book at end-March. Note of course that high PLFs in recent months will have resulted in new receivables, and hence the half-year results are likely to show continued above-average receivables at end-September, with thus further scope for high cash generation in the rest of the FY.

[tim000] 24/9/2023 08:58

Dave, the only market expectations that exist are the forecasts of its broker, Cavendish, ex-Cenkos (whose forecasts for FY2024 are discredited but whose estimates for FY2023 will have been informed by discussions with OPG’s management). They have adjusted EBITDA of £14mn and pre-tax profits of £5.5mn.