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where's all that buying come from all of a sudden
...maybe it's something about companies in India that investor relations aren't seen as an important part of 'business as usual'? I'm slightly shocked that MYT and KSK are worse than OPG (who I thought were as poor as it gets in this regard). I think both OPG and MYT have a very positive story to tell and it would benefit all of us if they'd make more of a fuss about telling everyone their respective stories.....
Oh and definitely agree about poor IR! Is it bad that I thought OPG were much better than MYT?! There are far more news posts on their website in 2017 than on MYT's. KSK definitely come last though. Having said, I think MYT were a little hamstrung this year by the auditors taking their time on the accounts because of the change to the new Indian accounting standards. The auditors didn't give them a timescale so they couldn't even tell us that the results would be out on June X. I'm informed that the results were ready months ago otherwise.
Great to have you join us holycustard! I was tempted to buy into OPG when researching so I'd own both too but, as one of the people said on the OPG message board, it's vanilla. Personally, I don't think it's a good strategy to "reflect the power mix of India" - that's not an actual quote but captures what OPG management have said. Far better IMO to focus - wind and solar are close enough, for me. It also gives MYT a brand. Debt vs. dividend! I agree: pay off the high interest debt rather than an early dividend. I didn't challenge it as I thought I might get called out for "trolling" - I'm aware I was talking up MYT on a competitors message board ;) We agree with you that it might be better if MYT tapped the brakes on the debt / speed of growth. I think it'll happen after the 700MW have been developed this year. IMO last year was more of a risk because it was all wind, which takes time to get the full benefit. This year, at least 500MW (of the 700MW) is solar so that'll start producing cash straight away. The wind assets will get a full run the following year, which means all those MW of wind built last year will have a full monsoon season this year and the total will take us close to $200m EBITDA.
FYI, I had some replies back on the OPG Power message board (when comparing to MYT). In short: OPG share price has followed a similar pattern down to MYT OPG nearly bought a company called Lanco Lanco were badly managed and it didn't help sentiment towards any of our share prices OPG are clearly undervalued like MYT (although more than 4x MYT value) OPG using cash flow to pay off debt and pay a dividend now OPG much slower growth now compared to MYT OPG invested £45m to build 62MW solar! More than our current market cap with 1300MW+ And IMO it seems coal price and coal transport / network creates a much greater risk than wind/solar on long-term PPAs. Now I don't know too much about coal plants but I do know they use a lot of water and so, for me, I want to avoid these kinds of investments as the preciousness of that resource could be a future risk. In comparison wind is as cheap as coal and becoming cheaper as well as more efficient: the taller towers and longer blades mean that we can now capture 2-4 times the wind that the slightly older turbines could - with the same footprint.
Hi Monkf6. I've read your comments over on the OPG page (and thanks for posting). I've been in OPG for almost 6 years and MYT for 6 months! For me, the key issue - and perhaps a little simplistic - is that OPG is profitable. MYT is still struggling to make enough to cover the finance costs. My concerns with OPG are to with their debts (and they've recently restructured their debt i.e. trying to resolve that issue) and the reliance on coal-fired power stations (again, they are beginning to address this by moving into solar). I think the news is positive from OPG although my personal preference would be not for them to pay a divi but to pay down debt more. My other comment would be that the company are hopeless at IR. They seem unable (unwilling?) to keep the newsflow coming....if only they could focus on this as well, it might give more confidence/visibility to a wider range of investors. I confess I know less about MYT (but, as I say, I made a small investment a few months back at 33p and have been drip-feeding funds in ever since). My concern here is that they seem to be growing too fast. Again, I'd almost want them to stop adding MWs and pay down debt. That being said, I'm confident enough to keep putting cash into both as the long-term outlook for both looks positive. Anyhow, enough from my and my 'back of fag packet' approach. GLA and, of course DYOR
Interesting, Hounddog - I'll have a look at Greencoat over the w/e so I can add to your thoughts. The costs of turbines is much cheaper in India (for EXACTLY the same equipment). However the cost of electricity is about 1/3 of the UK and, like you say, the UK has a subsidy than India does not have / need. I'm sure you're right that interest on debt will probably have the biggest impact (India interest rates are 6.25% and I think the debt is closer to 10%). ReNew Power are not listed on any market - they're backed by Goldman Sachs. The $2bn valuation they were given (for 2000MW) was based on a recent finance deal with a Japanese fund. ReNew very similar to Mytrah.
This Irish wind company led me to an existing listed company from the same stable that I did not realise existed - Greencoat UK Wind. NAV £800m, market cap £880m, debt £100m, PAT £61m and 400MW installed capacity. Dividend yield over 5%. They buy into existing wind farms or get someone else to build them. I only had a quick scan but I was trying to work out why profit was so much higher. I presume it must be better prices (incl subsidy) but also in terms of the cost of building the wind farms bought much lower interest cost. Anyway, the market cap is basically at a bit of a premium to NAV and on a sensible 15x p/e. Interestingly they also disclose a Gross Asset Value, which appears to be a DCF valuation. That is in line with market cap. Something MYT may want to look at. MYT trades at a discount to its £55m NAV, has no profits yet to do a p/e but will be miles under its DCF. It is also much more heavily geared than Greencoat UK which has a policy of max 40% leverage. I think there is quite a big discount for that leverage. Monk, I was trying to find ReNew that you mentioned. If it a LSE stock and please could you let me know its ticker. Many thanks.
Those are just my recent buys that I've got lucky with (and didn't expect) - I ended up paying 27p on results day. I've bought everything in between since in the 26s and 25s too. And I'm still happy with my buys at 33p at the back end of last year too. I expect that the differences in price will be insignificant in a few years - and probably as soon as the seller has finished. Of course, I could be wrong - it does happen from time to time ;) - and there are plenty of risks (I think we've covered most of them). But, for me, I'm just letting my logic override my feelings. We'll see - I've been very open on here so will either do well or be embarrassed.
Monkf6 - well done on your buys. I am still out waiting for signs of life!
Oh - and for the record - I have again bought MYT today and yet the screen on this website shows it as a "sell" instead of a buy. What I've been doing every day is setting a buy with a very low purchase price (just in case I can tempt the seller). Yesterday it was 10000 shares at 24p (showed up as a sell). Today it was 10000 shares at 23.5p (showed up as 2x 5000 sells). All of these were actually buys. I actually think most of the trades we see on this website for MYT have been buys - especially when you see a value amount like £999 or a round number quantity like 5000 shares. You can often see looking at the bid/offer and what the transaction actually was too. I use HSBC and the last time I saw my buys actually show up on this website as buys was on the day the results were announced.
Absolutely! I've written on the chat board for OPG to ask anyone on there why they chose OPG over MYT. No-one has replied yet but my guess is that, as we've discussed before, their numbers look better. OPG also pay a dividend now at 800MW and are only just getting into solar. They won't be able to grow like MYT. And the Indian government just cancelled a couple of coal power stations as renewables are now a better option. It seems OPG got a bounce after being featured in Shares Magazine. Just goes to show that it'll only take a little media coverage.
Thanks for your posts Monk - interesting points. I see today Greencoat Renewables is about to admit to AiM. Irish wind plus moving into solar. Current portfolio 137MW (aiming for 4.3GW by 2020). Run by bankers, looks like purchase rather than develop strategy. And anticipated market cap? 219m !! Anyway may do us some good having a comparator on AiM.
The MYT profile page on the FT website shows recent institution buyers and sellers but I don't trust their data as I think I've identified approx. 1.5m shares by one institution that have been sold (TBC) that the FT website does not show. However it could be that they have been sold over May/June and this is the seller we're trying to identify. The FT website does show Premier and Henderson buying this year shares and we know Premier have bought a lot as they're in the top 5 holders of MYT now (shown on MYT website as of end of April 2017). If I keep going the way I am, I'll be breaking into the top 5 soon!
Glad to see you back saintpeter! You must be right - it's got to be a big seller like Capital - I'll see what I can find out.
Monkf6 - thanks for your input. I assume that one of the larger shareholders such as Capital Research & Management Company must have been selling, but I have not been able to discover anything specific.
I'm intrigued that it's not just MYT that has suffered since Oct/Nov last year. The share prices of other Indian power companies, OPG Power and KSK Power, have both fallen over the same time period. The various online chat boards for these companies show people equally puzzled about the fall in these share prices. They also seem to be aware of a big seller in the market - and suspect that the selling has finished. So I wonder whether the seller/s of OPG and KSK are the same as MYT (in my mind, probably). Rather than there being any concerns over MYT, it could just be someone wanting out of India / Indian energy companies. I contacted a hedge fund that had a large stake in MYT and they confirmed that they do still own the shares and did not understand why it was as low as it is. OPG and KSK have often had much lower volume than MYT. June has seen OPG bounce with their results. I think we'll see all 3 recover together but IMO MYT is better managed. For the record, I don't hold (and won't buy) shares in OPG or KSK.
I hadn't heard of Fusionex. It seems very rare for a company to do this - with most delistings due to a takeover or insolvency. My first thought (based on the headlines) was what a disaster. But I looked into the CEO, read the proposal on their website and looked into matched bargain services. I'm now even a little tempted to buy some shares just to see what happens post-delisting! The company does appear to be hugely undervalued. Still, as much as I'm curious to see what happens, I won't buy shares because (a) I haven't followed this company; (b) it's fashion / tech that I don't understand; and (c) I'd rather buy more MYT. Like you say, hopefully it would be unlikely and difficult for MYT to delist in the same way. And the damage to personal and company reputation for doing so is a big risk to take (especially after seeing the fall out of another company doing it). But a hypothetical that they did... I would feel confident that my shares bought over the past few weeks/months would be worth considerably more in a couple of years time through a matched bargain service.
Thanks as always, Hounddog. And great job on GKO. Interestingly, even during that time of uncertainty it sounds like GKO market cap would have bottomed out around £80m - and MYT currently sits at £40m with more MW and assets! I saw a report last summer valuing GKO at $1bn based on the finance that they raised (a bit like Renew being valued at $2bn).
I guess the other point is whether they could do a Fusionex and simply delist or otherwise circumvent Blue Book rules. As you know 75% is the key voting threshold for delisting. Ravi owns a bit over 50% and Esrano 20% or so - just under 75%. You may remember the company was originally called Caparo Energy. It was named that way because a significant investor was Caparo Industries and it was felt that Caparo was a good name in India. Caparo Industries was an Anglo-Indian company owned by the Paul's and run by the son Angad Paul. Esrano is his investment vehicle. Fairly shortly post IPO the name was changed to Mytrah and Angad Paul left the Board. I think there was possibly some falling out but anyway Caparo seemed no longer to be involved operationally. Angad Paul sadly committted suicide in 2015 after Caparo Industries went into administration. My guess therefore would be they would not necessarily act with Ravi. Overall therefore I would hope that we cannot easily be delisted and that we would get the protection of the Blue Book if an offer is made.
Monk, many thanks. I agree with you there are differences and I have looked at it a bit more carefully. I know quite a bit about GKO because I was fortunate to do very well on that, catching the bottom more or less and doubling my money in a very short space of time. I am pondering whether to put more in here but I am already heavily committed and heavily underwater. I would probably be diving in here at this price otherwise. GKO signed up to two bits of mezz finance - the problematic one being the one with GIC, the Singapore sovereign wealth fund. Unbelievably this had only a cap on the price of the shares they were entitled to under the implicit option in the mezz lending but no floor price. The effect of this was that if the share price fell sharply they could dilute existing shareholders out of sight when the option became exercisable. Simon Thompson at IC spotted this and wrote about it triggering a sharp decline in share price. Of course as the price falls it becomes a sort of death spiral. Anyway it sort of bottomed out at 45p or so and GIC eventually made an offer of 98p. Having researched it quite diligently I felt that although GIC had a lot of leverage under Blue Book rules the situation was not quite as extreme as suggested (as you are suggesting here how much downside was there) and took a punt. I was rather annoyed GKO was taken out because I felt it was about to achieve escape velocity. Would be interesting to see how it is doing now. MYT do not appear to have this problem. However, it is worth noting that they do have instruments which do convert into shares (cannot recall at what price) and could dilute shareholders but up to 30%. However, I think the strike price of those arrangements is generally way above the current share price so not an immediate concern.
I'd forgotten about the delisting concern (I think you mentioned it a few months back) and you're right, it's a legitimate concern and I'd agree it's probably the reason for the stubborn share price. MYT share price first started to fall mid 2015 - the same time as the GKO delisting. There are some obvious similarities between MYT and GKO but there are some major differences that lead me to still see way more upside than downside. I've been researching it this morning and here's my amateur assessment... Both GKO and MYT had/have the same structure: London-listed companies that own a subsidiary in Mauritius that owns the Indian operations. There are many reasons this structure makes sense. However MYT owns 100% of its subsidiary in Mauritius, which owns 100% of the Indian company - and always has. So we own 100%. And if there ever was an IPO it would be the Indian business on the Indian market (which we own). The first problem Greenko had was they only owned 68.53% of their Mauritius subsidiary. Both GKO and MYT had/have a similar approach to raising finance: convertible and non-convertible debt (note: I am truly out of my depth now). The vast majority of MYT finance is non-convertible (they paid off their biggest convertible loan last year). GKO had issued a convertible loan to a Singapore company that offered shares in GKO (the company it only owned 68.53% of already). I think this is what got GKO in a mess. It meant (when the share price fell) the Singapore company could convert to equity, dilute the shares massively, and own too much of GKO. Inevitably the share price fell further, which made the situation worse. Check mate! Instead they agreed a deal to delist GKO where the Singapore company would buy them. And get this... even then they paid £160m (100p per share). I don't think MYT would delist for several reasons - Greenko wouldn't have if they weren't tangled up in a financial trap. MYT is bigger (based on MW) and better (operationally) than GKO was then. What happened with GKO 2 years ago can't have gone unnoticed at MYT and I imagine that they've done what they need to (if anything) to avoid a similar trap. Ravi has always been pro investors and seems - more than most - to recognise the importance and value of his reputation so I can't see a situation where MYT unilaterally delist themselves on valuation concerns unless shareholders were fairly compensated. Ravi wouldn't sell and they wouldn't buy themselves as the finance is needed to build wind / solar farms. The Kailas family are a major shareholder + Ravi last bought £250k of shares at 58p so I could never envisage a price to compensate shareholders being less than this (£95m market cap). And this is all hypothetical worst case scenario stuff! Of course I could quite easily be wrong. The biggest sign of confidence to me is if the directors all bought at least £20k+.
Thanks Hounddog - that's great. I agree - someone screening the numbers (with no desire for context) will see declining profit and declining EPS coupled with increasing debt. It doesn't feel good typing that! So we can rule those people out (until profit and EPS jump). As you say, institutions may not be able (or bothered) to buy in at the current market cap and small float. I wonder if some institutions have to sell when the market cap falls below a certain level too? So we rule those people out (until the market cap grows). Moreover the institutions / funds that might be interested in MYT are probably the same ones that were invested in Greenko (GKO) - and so may be sat on the sidelines. It's also worth noting that it's not just MYT that has suffered since Oct/Nov last year. The share prices of other Indian power companies, OPG Power and KSK Power, have both fallen over the same time period.
I should say that I am expecting $5-10m pretax statutory in first half and $15-20m full year. If so a p/e of about 4. It is worth seeing what IC say on these results (although that can be the kiss of death). They have consistently tipped MYT in the past.
Thanks for your posts Monk and SP7. If it's any consolation my average price is c50p odd. I thought it was cheap then. The share price is mystifying and Monk has identified all the various points but I will add a little. I think the company comes across as making not much profit with huge debt. It's profit last year was an underlying number. Combine that with the massive ramp up and accounting policy change makes the 2016 financials very difficult to appraise. The herd probably look at profit and p/es rather than ebitda or cash. The institutions may find it difficult to build a worthwhile stake given tightly held and their mandates may not permit investment. I also think the China frauds on AiM may be impacting. The main concern I have is it being taken off market like Greenko or worse Fusionex style before the value is appreciated. To put it bluntly Asian comapnies are not the best at worrying about UK minority investors. My concern is mitigated by the fact Ravi is London based, he is very driven (I have met him a couple of times) and has an international perspective (Stanford MBA).