Opg Power Ventures Share Discussion Threads

[florence141414] 06/11/2023 21:29

Hi Tim, fortunately the impairment was actually much more straightforward than that. It was from the solar asset. It made a profit this year so they added some of the carrying value back (from an impairment in either 21 or 22) to reflect the increased prospects.

[dave4545] 06/11/2023 20:41

They should use some of the surplus cash to buyback stock if pi's are selling this low.

This market is the most backward I have seen in 30 years, stocks with no money massive losses and on the brink of going under are being chased and bought up like they are good things, seeing huge % rises. Meanwhile as always good value is being ignore although saying that the mm's have played a blinder today, there's been some delayed decent buys and the mm's have sold it, waited and sure enough other traders lose patience and sell back stock they bought this morning.

But anyway a share buyback would work wonders here

[tim000] 06/11/2023 20:37

I haven’t had a chance to study the results yet, but Florence/Matt has made an interesting observation about the reversal of impairments. My understanding is that most state utilities (but especially Tangedco) have weak balance sheets due to electricity price freezes. As a result, they have been slow to pay gencos. It’s possible this is why OPG has impaired revenues in the past that were long overdue settlement. The government has allowed discoms to repay overdue debts over a four year period, while price increases have been allowed so as to improve discoms’ finances. My point is that if impairment reversals are accrued over this four year period, they might not be a one-off at all.

[rivaldo] 06/11/2023 15:50

Mnay thanks Florence (and Tim), that's extremely useful.

[dave4545] 06/11/2023 13:48

Better to smash a low forecast than come in below a sky high forecast then the shares soar.

So when opg tell the markets they are going to smash cenkos lowly target the price should recover spectacularly I hope

[the original goldbug] 06/11/2023 13:23

The full year numbers looks way behind the curve. Back of the envelope I think we are looking at £17- 20m net on the underlying business, no funny stuff included. That included a so so first half when the forecast was made.

Don’t forget the early Chennai units are coming to the enes of their depreciation at least as far as the accounts are involved.

[florence141414] 06/11/2023 12:44

Hi Rivaldo, I think I may be able to shed some light. All the profits for FY23 were a combination of 2.2m forward selling coal, a 3m insurance settlement and 3.7m positive reversal of a previous impairment. The core operation of turning coal into electricity and selling it on was actually loss making in FY23 thanks to extremely unfavourable market conditions. These conditions have now improved greatly.

The broker note for FY24 assumes none of these non core profits will repeat. As such the core operations of the business are forecast to go from a small loss to a 5.6m profit before tax. A vast improvement. One that I suspect they will outperform but that’s just my opinion.

[tim000] 06/11/2023 12:43

We’ve discussed their poor forecasts. Personally I think they’re worthless. I don’t think Cavendish make any money from OPG, eg there are almost no institutional shareholders to pay for research, so the analyst (who I’ve emailed) puts little/no effort imho into forecasting their financials. For example, I don’t believe the forecasts take into account the latest trading update on net cash holdings, nor government announcements that mandate OPG to maximise PLF for the whole of FY24 and Q1 FY25.

[igoe104] 06/11/2023 12:36

Good question Rivaldo, might be a good question to ask on the investor meet.

Very strange, to forecast a drop in numbers, as the coal price has dropped over recent months...

[rivaldo] 06/11/2023 11:49

Cavendish (i.e Finncap) in their update today only forecast 0.6p EPS this year to March '24, down from 1.8p EPS last year as reported this morning.

They forecast £133m revenues, up from £58.7m, and £32m gross profit, up from £16.4m, yet EBITDA is heavily down to £11.9m from £16.1m last year.

Adjusted PBT is forecast at £5.6m, well down from £10.4m.

Can anyone explain these figures - I can't see any explanation in the narrative in the note?

Just weighing up whether to invest or not, but this might explain the muted reaction today.

[dave4545] 06/11/2023 10:35

Well I'm adding all the way down so thanks to the sellers and especially the idiots that bought this morning then sold for a loss, they deserve to go bust for being such impatient greedy traders.

[bubbabubbabubba] 06/11/2023 10:09

Sold my last postion today Been good talking to you all Might come back in future if this drops I've moved on to other companies Changed my investing parameters

[igoe104] 06/11/2023 09:11

OPG are doing a investor meet presentation in 2 days, should be a interesting listen..

[dave4545] 06/11/2023 09:09

Stuck in auction 200k of buys orders at 13-13.1p and a tiny 8k sell order at 9.8p messing up the system, sure it's on purpose these things

[dave4545] 06/11/2023 08:55

Big buy order in auction at 13p 150k+

Looks like all dips are being bought into, guess that is the only way to get size
because when limits drop to nothing the price spikes 1-2p quickly

[dave4545] 06/11/2023 08:14

No stock around last 20k buyer paid a 0.5p premium or 12p

[florence141414] 06/11/2023 08:06

Very little that they made in FY23 can really be considered repeatable or sustainable profits as it’s all reversal of impairment, coal trading and an insurance claim. But that’s not the key takeaway for me. Increased tariffs guaranteed throughout FY24 and into Q1 of FY25. Combine that with normalised input costs and it could very well be party time for profit margins.

[tim000] 06/11/2023 07:40

I’ll reiterate my long-standing opinion that, irrespective of how cheap the shares are today, OPG is a strong buy given its position in a high long-term growth industry, in which demand is booming but supply is not. Hence for existing gencos, the outlook for margins and cashflow should be very positive.

[tim000] 06/11/2023 07:34

I didn’t spot anything on the current year, but that is probably because they now have preliminary outturns for the half year and now is not the right time to announce those. A trading update for H1 could be announced soon, followed by the unaudited results next month. That’s my guess anyway.

[dave4545] 06/11/2023 07:27

£0.7 mil profit for half year

£10.4 mil profits full year

So they made £9.7 mil profits before tax in the last 6 months

[ali47fish] 06/11/2023 07:25

all negative numbers

[dave4545] 06/11/2023 07:22

Am I going blind as I cannot see any mention of the current years trading, it might be there it's a long RNS ?

[florence141414] 05/11/2023 08:27

I didn’t even consider that they could monetise future contracts with the bank in such a way. A very good point. Thanks for taking the time while you’re away, it’s much appreciated.

I was lucky that I was at my desk the moment the update came in so was able to get some back on for the price I’d sold. Not as much I had previously because of the increased risk associated with the suspension. Could be interesting tomorrow now that this particular risk has been assuaged.


The whole thing was really strange. The September update contained everything we’d expected to see but hadn’t in the June update/broker note. So why issue the June one at all!?

Anyway, alls well that ends well (hopefully!)

[tim000] 05/11/2023 05:24

One other thought. I wonder whether the new contract with a new state utility required OPG to strengthen its balance sheet, to provide the utility customer with confidence that OPG could readily supply a higher PLF. That might explain why OPG is now so liquid. Given the tightness of the power sector, there must be a chance that supply to this new state utility will rocket in the coming months.