Opg Power Ventures Share Discussion Threads

[rivaldo] 12/9/2024 10:13

Good to see a move up on 561k shares traded already today.

Looks terrific value to me, but WDIK!

[king suarez] 10/9/2024 15:39

Thanks, Tim. Helpful and informative!

I have kept tabs on OPG for a couple of years, but never invested. Now seems as good a time as any, as the debt is almost repaid and profits are growing - as you say, depends what they do with the cash though - if frittered away on ill-advised projects it becomes uninvestable, but if a sustainable and growing dividend policy is announced, then it becomes a bargain.

What you say about the family ownership etc reminds me of ALTN..

[tim000] 10/9/2024 15:36

OPG is an example of a UK listed company run and majority-owned by a foreign family. It’s not always clear whether the listing is maintained as a status symbol, and whether the family are the most dynamic people to grow the business. And what their ultimate objectives are, for both themselves and their minority shareholders. Such businesses usually seem to be marked down in terms of share prices, because of these uncertainties. If you get to meet the family members though at AGMs and trust them to work in your interests, they can be excellent investments. I have others like that. I never got to meet this particular family cos the AGMs are on the Isle of Man. But maybe I will one day!

[tim000] 10/9/2024 15:24

That may even be a retail price, it’s not trustworthy. OPG usually gives info on its coal prices paid in its trading updates. I don’t expect there has been any coal price inflation this year, as I say. A positive for OPG investors is that it’s something of a counter-cyclical stock and hence provides useful portfolio diversification. Indian demand for power is always high, meaning producers always have high capacity utilization of their plants. By contrast, input costs (ie costs of thermal coal) are cyclical and so margins and profits should be counter cyclical.
The company has been opaque in the last couple of years about its true ambitions - does it wish to be a growth company (past forays into renewables and geographical diversification away from Chennai have failed and had to be reversed), or a safe dividend stock? It has mentioned buying coal mining assets if I remember correctly, but fortunately nothing has come to pass on that. They’ll be much better off with a strategy of deleveraging and returning capital to shareholders. As mentioned, that would see a much higher share price.

[king suarez] 10/9/2024 15:06

Hi Tim,

Thanks, very helpful, I was just looking at this website:



I'm guessing this is more of a composite index, and not indicative of the type of coal (nor prices) used in power generation then?

It does look like OPG will soon have a decent growing cash pile - so am interested in whether or not they will begin dividend distrubitions as you say, or there are other plans afoot..?

[tim000] 10/9/2024 15:00

PS: They don’t hedge.

[tim000] 10/9/2024 14:59

KS, what’s the source of your figures? The Ministry of Coal publishes a monthly coal index (NCI). OPG consumes middle-grade non coking coal, mostly imported from Indonesia (grade ICI4, which you can find weekly prices for on the internet), prices of which have been pretty static I believe for some time. The global markets for both coking and thermal coal have been weak recently, reflecting a slowdown in Chinese steel making and construction, and weaker global growth. The aforementioned NCI shows no such increase for either domestic nor imported coal.
I have been a significant shareholder of OPG in the past but am out currently, mostly because the board is being too conservative wrt returning capital to shareholders. But I continue to monitor the company and I’m sure a more friendly shareholder policy will be instated at some point in the next year or two. The fundamentals of the business are indeed very strong, as is well documented here in historical posts. A slight drawback is that power station margins and output prices are regulated by government policy, with utility bills for consumers a major political issue. The problem is that margins need to increase to incentivise increased investment in additional capacity, whereas political expediency argues for price controls.

[king suarez] 10/9/2024 14:10

Hello,

Been looking at this as it appears v cheap on fundamentals and latest financials, HOWEVER I note coal prices in India have risen massively..

From 225INR in Jan 2023 to 522INR in July 2024.

To what degree is this already factored into forward earnings guidance? Have they hedged much and/or can they pass this input cost increase onto customers easily?

Thanks

[gb904150] 29/8/2024 13:12

To be fair, until OPG show a willingness to distribute profits then the share price is perfectly correct in languishing where it is.

It's not enough to be cheap but hopefully OPG will soon have so much cash it will be embarrassing not to distribute it.

They've made hints at a willingness to do so in previous RNS's but nothing yet.

From the 2023 Annual Report:

Dividend policy
One of the OPG’s paramount objectives is to
maximise stakeholders’ long-term value. Keeping
in mind, the disruptions and uncertainty caused by
the extraordinary volatility in coal prices and related
freight, the management, in consonance with the
Board believes that it is in the best interests of the
Group and its stakeholders to conserve cash. The cash
thus accumulated will be used to maintain a strong
and resilient balance sheet to withstand turbulent
times. Therefore, the Board decided not to declare a
dividend for FY 23. The Board will revisit the Group’s
dividend policy in due course.

Dividends
Due to the disruptions caused by the extraordinary
volatility in coal prices and freight, the Board has made
the decision in the best interests of the Group and its
stakeholders to conserve cash. This cash conservation
will be allocated for debt repayment, funding growth
in ESG-focused projects, and ensuring a strong
and resilient balance sheet capable of withstanding
turbulent times. Consequently, the Board has chosen
not to declare a dividend for FY 23.
The Board plans to review the Company’s dividend
policy at a later date, once coal prices and electricity
tariffs stabilise.

The real question is what does Arvind Gupta want?

When he decides he wants dividends he will get them.

One of the reasons the share price also stays so low is the lack of balance to ownership. A majority stake is never good.

It was healthier when there were lots of ii's holding stakes. But they all sold out following the CSR/ESG/EDI/net zero edicts.

[dave4545] 29/8/2024 13:02

I def feel it's a sign of these new style of markets where almost everybody has become a day trader and wants momentum in a stock and nobody cares if a £40 mil stock is making £20 mil or losing £20 mil a year if it's not moving up.

"the buying the dip" seems to have become extinct

However a trading update might change that.

I'm getting a 4 fold return on a value stock soon CMB, yes it's suspended but I would not have been selling if it was not.

Value outs in the end

[basem1] 29/8/2024 12:15

Bored and no further buying Buyers have dried up Not enough aware of the potential and value on offer

[dave4545] 29/8/2024 11:30

Why on earth are people selling this every day ?

[dave4545] 23/8/2024 12:19

Wins go 11p bid needs volume

[dave4545] 23/8/2024 07:09

11.5p paid at open

11.33p online now so the cheapies at 11.17p are gone.

It's turning

[philjeans] 22/8/2024 10:55

I would expect to see a P/E of at least 12 for such a profitable, cash generative business in a strong growth economy like India.

[dave4545] 22/8/2024 08:35

These 1 share trades are a pain eh !

[nathandc] 22/8/2024 07:49

What would a comparable PE be?

[philjeans] 22/8/2024 07:39

On to 12p this week.

Bargain rating on a P/E of 2 !!

[dave4545] 21/8/2024 13:53

Only someone selling to trade something else would sell this now through pure impatience.

[rivaldo] 21/8/2024 08:15

Great to see the share price finally starting to move back up - agree that an overhang has probably been cleared.

Given the results already published in India the potential is here for anything from a one-bagger to a four or five-bagger from here in a relatively short timeframe if all goes well and once the rest of the market becomes fully aware of the turnaround in profitability and debt reduction.

[philjeans] 20/8/2024 14:39

Miles to go here now - 20p by Christmas - and that's just for starters!

When they declare a div, add another 10p.

[dave4545] 20/8/2024 14:26

Think a long standing overhang has been cleared.

Even on the this jump up there is just 50k online at 11.695p normally it's 100-250k available easily.

[dave4545] 20/8/2024 14:21

Most overdue correction on this stock market imo

And it's only just started