Opg Power Ventures Share Discussion Threads

[the original goldbug] 26/10/2023 09:52

Indeed, Sri Lanka was always known as the pearl of India. For an enjoyable and relaxing holiday it has a lot offer as well as a rich cultural heritage.

[gb904150] 26/10/2023 08:52

Thanks gents for your excellent posts on OPG. I've built a decent stake here over the last couple of years so hoping for some good news when results are out, hopefully in the next 3 working days!

In terms of suggestions of places to visit, Bangalore is the tech capital / silicon valley of India so quite nice to explore. My wife recently visited and recommended it. You can fly direct from LHR.

Otherwise, if you fancy a cleaner version of India I'd recommend Sri Lanka. Works quite well to fly Emirates via Dubai. I found some of the friendliest people there and many that spoke really good English.

[the original goldbug] 25/10/2023 21:01

The market maker system kills liquidity because of the spreads. There is no money in for the brokers so companies are pretty much orphaned from the get go.

I don’t know much about cricket but did have dinner in the Bombay Cricket Club in South Mumbai. This was some time ago. There was no cricket on but they kind of outdid even the MCC with their sense of rules and etiquette. It was an enjoyable evening and Mumbai is a pretty fascinating city though I suspect it has lost a lot of its charm since I was last there.

[tim000] 25/10/2023 20:42

Off topic, I’m a cricket fan and would like to watch some cricket in India one day. Presuming you know India well, any advice on where to visit?

[tim000] 25/10/2023 20:38

You’re right AIM needs reform. Too many fraudsters pretending to be entrepreneurs and raking in exorbitant remuneration packages. Politicians don’t understand financial markets, so do nothing, and regulators are either useless or indifferent. There are good companies on AIM which achieve success, but they’re far outnumbered by scoundrels. AIM seems to be unique in this respect.

[the original goldbug] 25/10/2023 20:27

I don’t think that is viable. No one will give them equity and the family wont finance it by themselves.

India is too far down on Maslow’s pyramid to be worried about climate change. They still have to lift hundreds of millions out of relative poverty.

I think the family will be tempted to buy it back with debt or try and grow again if they get lucky on a deal.

If they go for growth shareholders won’t see anything material for years, though the share price might rise especially if they list in India.

AIM is a cemetery.

[tim000] 25/10/2023 20:16

You’re absolutely right about ESG hysteria. The coincidence of the power of social media and the totalitarian climate agenda has resulted in people and businesses being too afraid to push back against this quackery. India is sensibly avoiding most of the West’s delusions concerning climate change, wokeism etc. Your comments about bank valuations of mothballed plants are interesting. If OPG is patient and can build a cash war chest, and get the share price up so equity finance becomes viable, maybe there are deals to be done?

[the original goldbug] 25/10/2023 19:57

Well the dream is still alive as they make mention of buying mothballed plants from the banks. My understanding is that the banks are not keen to sell at current prices (10-15% of book value) as everyone knows the power sector will do well over the next few years.

So they can either possibly pay a sensible price and go for growth. Shrink their equity or merge with a larger entity which is listed in India.

Besides their poor judgement or misfortune they are victims of the ESG hysteria in London.

For example I was watching Bloomberg news the other day and the TV anchor asked the fund manager whether he felt guilty investing in European oil majors…

[tim000] 25/10/2023 19:39

You’re obviously well informed, but whether or not Gujarat was their fault, they have a history of making poor investment decisions. If they have a neurosis, it’s understandable. The Gupta dream of creating an empire in the power sector (reading their early ambitions after the IPO) looks to be dead now, and they’ve lost the confidence of institutional investors.

[the original goldbug] 25/10/2023 19:30

Depends whether they are cheaper than their equity!

These businesses should be able to support quite a lot of debt in my view. So I think they have developed a neurosis after Gujarat. I don’t think the disaster at Gujarat was their fault either.

[tim000] 25/10/2023 19:25

The decision to deleverage was a very good one, as was their management of covid followed by the Ukraine war, eg their coal trading profits and management of PLF were impressive imho. Also their current monetisation of the receivables book. Their expansion strategy (Gujarat and solar) has been awful and in my view explains the current lack of investor confidence. Returning surplus capital to shareholders makes a lot more sense than speculative investments, though I think Goldbug you are a fan of acquiring mothballed power plants cheaply?

[the original goldbug] 25/10/2023 19:12

They could buyback their entire equity with 18 months of projected forward cash flow at the current share price.

It will be interesting to see whether they do anything. It must be embarrassing for them to see the equity trade at these prices. Contrary to what some of you think I think they are responsible to some extent for this deep malaise and are certainly in the position to do something about it.

[tim000] 25/10/2023 19:09

I understand your frustration, Dave, but in the current world, cash is king and debt is death - save for day trading of course. I’m continually rebalancing my portfolio into stocks with high cash generation and little or no debt. OPG is perfect as it’s exposed to one of the most rapidly growing sectors in the world - Indian power demand.

[tim000] 25/10/2023 18:55

At the current share price, I agree with you that a buyback would improve shareholder value. In many cases though, management are far too biased about their own abilities and overpay for the equity they manage. In general, it’s not the job of management to pretend they’re fund managers - especially when buying their own shares. Shareholder communications often suffer the same problem - excessive optimism.
I should add however that I wouldn’t expect a buyback policy to harvest a meaningful proportion of the equity at around the current share price, but there’s no harm in trying I suppose.

[the original goldbug] 25/10/2023 18:40

Please do attend the meeting and make your point. It will be a worthwhile experience I’m sure.

[the original goldbug] 25/10/2023 18:39

They should do a buyback. Buying their own equity at an 80% discount to book is a no brainer.

You can’t compare this to major companies who do buy backs where their shares trade on giddy multiples.

[tim000] 25/10/2023 18:13

I agree with you. Occasionally buybacks can support the share price, but they’re overused, often reducing shareholder value. Shareholder communications likewise. As part owners of the business, we should be entitled to question management. Unfortunately, OPG are bad at this, but I can live with that. I might attend the AGM this year to make this point face to face.

[jeffian] 25/10/2023 17:57

By the way, I was being a bit tongue-in-cheek in #942 in reaction to all the other "highs" in your post, but I absolutely agree with your #943 and is an argument I've often promoted myself. The levers available to Boards and Managements are revenues, costs, margins, profits and dividends and they should focus on those. Get those right, and the share price will follow in due course.

[tim000] 25/10/2023 17:22

The maiden dividend paid in Feb 2017 was cash (with a scrip option), but you’re right, the rest were scrip dividends.

[jeffian] 25/10/2023 15:59

Not that they ever actually paid out a dividend. Share issues, wasn't it?

[tim000] 25/10/2023 15:55

Of course. But the company can only control its business, not the share price. No doubt a higher share price will arise eventually. The company has rightly prioritized reducing indebtedness in recent years, and has dramatically achieved that. The share price completely ignored that progress. Perhaps reinstatement of the dividend this year might improve sentiment.

[jeffian] 25/10/2023 15:37

High share price would be nice!