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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!
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
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)
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.
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.
Any chance you can send a link to justify the 18% industry standard lurker?
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?
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)
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.
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.
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?
"Fantasy speculation"???? Seriously what planet are you on???
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.
Thank you everyone who has responded to my question. Difficult to value exactly with so many unknowns but nevertheless exciting and increasingly relevant piece of strategic energy storage. Especially without Rough, the Interconnector Pipeline and nuclear power stations!!!! GLAH.