The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
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A couple of quotes from the annual report
Off takers
"We are further exploring the option of putting together a consortium of offtake partners if this will enhance the value proposition for the Company and our shareholders"
Equity partners
"Clearly, we need to choose an equity partner who shares a common vision of the Company becoming a leader in energy infrastructure over the next few years."
A leader in energy infrastructure, I'm quite excited by that tbf
Hints of new board members were made recently, it will be telling who joins imo
The business has spent £13.5m developing the project to this point in time. Add current cash and it's closer to the current MCap of £15.8m.
Basically means the future potential of the business is priced at zero in my eyes. MCap of £30m not unreasonable considering it's such a large infrastructure project. When funding arrives, it will derisk the project massively. The reason you can make such good money is because none of it is certain, and is high risk. No risk, no reward.
"Fantasy speculation"???? Seriously what planet are you on???
Lurker - if "The 'jam' is too far ahead and so are the shares" then why are you wasting so much of your time posting about Infa?
O&W tidd - You don't think investors are going to pay up at the moment do you, for what is a fantasy speculation a long way ahead ? You say yourselves the Dec presentation is all we can go on, and the calcs are based on it. The co isn't going to say any differently and won't be agreeing with my forecast of at least 1.5bn shares in issue by first meaningful income so there's no point asking them. Have you ever known a company to admit what a sensible, cautious, investor should be anticipating ? I stick with my first impression. The 'jam' is too far ahead and so are the shares.
Re 18%. That's what I roughly estimate is the proportion of the £100m equity (35% of total project cost) that INFAs past and FEED spending will 'buy'. If it has more than that, the other funders' returns on their investment will be lower than the project return, so they will in effect have to agree to give some of their expected 'profit' to INFA. Its not likely, and never happens with eg power plants. (Don't confuse with 'free carries' given to farm-in partners on exploration projects. They make sense there because scope increasing a resource. There's no such scope in this case). If there is some form of extra 'reward' to INFA, it can't be very much - so 18% is a conservative estimate. My full calcs based on the cash flow chart (more accurate than any NPV base) will be you know where.
Thanks Nobby! I respect your history with the company Arun Raman did touch on intrinsic and extrinsic factors during December presentation. I believe the intraday price volatility provides the extrinsic value and the seasonal spread provides the intrinsic value??
Sorry Google “Standard Bundled Units” not Storage Bundled Units !
If anyone on the thread would like to understand more about how space is sold in storage facilities like this then to start off I suggest you might Google the title SBU.
The value of the space is driven by the three key parameters of injection, storage and withdrawal rates. Each SBU have an intrinsic value driven by this “geometry” in the way the asset is constructed.
Valuing storage is based on intrinsic and extrinsic factors but there is a lot of information and data on the web if you wish to get into the details.
hi Snowman ...message received ..just back from seeing Stan and Ollie ..great film ..need to spend some of my future profits here ...will phone tomorrow afternoon and have a chat ..sleep well all of you !!!
OK I think I know what happened....because I just had it happen again!
Somehow I must have pressed the wrong button and got into a site labelled 'Infrastrata Plc Share Chat (INFA.GB.PL) '
instead of the usual 'INFA'
What the hell IS that site?...what is it's purpose?.....it's like the normal web site but mutated!....it's in the drop down box labelled ;share price search' in the top left corner of this page.
A very similar question was asked by a very experienced investor at the presentation O&W I believe the readers benefit from any spike in spot price, infas income is fairly constant (apart from any charges to traders for increased cycling of IM)
Anyone noticed something weird going on with the administration of this chat site between 19:10 and 21:45?
My chat site disappeared...I tried 3 new test posts onto a blank site and now they have disappeared and the old chat site has reappeared but with no posts after 19:10.
Really weird !....is it just my computer?....Just as the posts at 19:00 ish were beginning to get very very interesting
By the way, about the 26p/therm gas storage fee assumption, does anyone know how this works? If the turnover of the gas storage ramps up, during volatile weather and spot gas pricing, how does IM benefit from that if there is simply a flat gas storage fee? Shouldn't fees charged also be based on turnover of gas under storage?
I'm hoping soon enough is Monday, a birthday present from the BOD :) My predictions are a retained equity of 65 / 35 in our favour. Shall we open up a spreadbet??
Not sure if it's industry standard to have 4 Investors competing for a stake in your project? We will all see soon enough Carry Project management Facility management Retained equity The 4 ways infa have stated various projects will provide income
Any chance you can send a link to justify the 18% industry standard lurker?
Lurker, all we have to go on right now is available on page 19 of the December presentation.
I note the following:
1. Yes, based on a fully diluted share count, and the NPV10 value of £144mn, 100% ownership of IM is 11.6p.
But that is for the first 8 caverns, in Project1.
Infa has already identified, and is starting concept studies on, 15 additional caverns at the IM site (page 9).
With economies of scale and a degree of commonality with the first 8 caverns, it is not difficult to guesstimate a further NPV10 of circa £288mn. 18% of that net to Infa (an assumption only for this calculation), which is 4.3p per Infa share. Additional NPV/share!
2. In this low inflation, steady income generating, very long-lived infrastructure asset case, a consortium of lenders might consider a lower DR, hence the £222mn NPV8 figure included on page 19 as well.
18% carried interest at NPV8 results in a per share value of 3.3p (first 8 caverns), with an additional 6.66p for the extra 15 caverns.
So, the projected NPV net to Infa shareholders, assuming a carried 18% interest, ranges from a low-ball 2p, to 6.3p (NPV10 and 23 caverns), and 10p (NPV8 and 23 caverns).
Impossible for anyone to state categorically yet, what is full value here, but it isn't your 2p figure.
Lurker well you can knock your estimate right on the head. The initial project is potentially for 23 caverns so your target SP valuation increases and that again is just for one project. INFA will become cash generative as part of the development if they are strategically setup to PM the operation so well ahead of any of your supposed, finger in the air target construction deadlines anyway. The £40m grant which has been applied for will also play a factor in % retained at project level. The same £40m which you stupidly believe is irrelevant. You were asked to contact the company with your findings and post your responses, I see you have not done so. Rather than be sad that you missed out and made a wrong call accept it and move on, or - take a seat at the table, being bitter will get you no where.
The cash flow profile gives you the best guide to a likely share price - once you've settled the % project ownership. Outside investors (being discussed now) will take the majority. I estimtate INFA will have 18% (based on industry practice) That means 11.6p x 18% = 2p based on that NPV - except that share prices never achieve an NPV based price for perfectly logical reasons - and is not before full revenues in 2026. (All based on situation as at shareholder presentation)
When I heard on Channel 4 News last night that Hitachi is the latest international EPC company likely to pull out of building a nuclear power station in Anglesey for the next generation of the UK's nuclear energy capacity, I just think that we've lost it. Or rather, the UK government has lost the plot, presumably blaming Brexit for this key project falling between the cracks.
The UK's choices for long-lived, secure domestic energy sources is becoming slimmer by the day. There is NO credible long term strategy any longer.
I realise that Infa's IslandMagee project can't solve all the island's energy problems, but if ever there was a time for it to be supported and built, and scaled up to 23 caverns, THIS IS IT.
I can begin to see a rising crescendo of good publicity surrounding this project, over the coming months, and much kudos to JW in being able to garner larger partners with deep pockets to support the dream.
Whether the eventual financial offer by the prospective equity partner is revealed in full, to Lurker's satisfaction, I am doubtful. Confidentiality will overrule that. But I am confident that we shareholders will get enough information on which to project realistic net NPVs to Infa, based on a 20-year life, or longer.
mcadder, in your last few posts. INFA looks to be on the verge of great things. Great for all of us. Viva JW!
that is a very good question and actually difficult to answer at this stage,
The NPV of the project is on the presentation with a note :
26p/therm Gas Storage Fee (Indexed), 75% Opex reimbursement, 65% project finance leverage with a 3+10 year tenor and a 40% balloon, 11.6p share assuming 100% ownership of project.
https://www.infrastrataplc.com/wp-content/uploads/2018/12/Investor-Slides-051218-Upload-1.pdf
New to this share. Can some of the people following this give me an idea what the project could be worth if they manage to secure their equity funders/gas offtake agreement etc or whatever they need to proceed with a storage development. This seems the place to be at the moment!
likely 5.7 m warrants done- likely presold. Should get a notification Tues/Wed. Great strength to be continuing to rise on the back of these.