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Hi, here is something I thought you might find interesting: -
https://uk.investing.com/news/commodities-news/china-india-lead-asias-biggest-hydropower-crunch-in-decades-3163744
India has cut daytime power outages to nearly zero this year despite record demand, mainly because of its renewables build-up over the years. Still, it was forced to seek imports of more expensive natural gas in a bid to reduce pressure on its coal power fleet.
"The main utility of hydro is to support wind and solar. If hydro itself becomes unreliable, India may have to think of alternatives including addition of more coal-fired power," said Victor Vanya, director at power analytics firm EMA Solutions.
To april 2023 EPS =5p not bad for a share trading at 8.5p when operateing at such a low PLF
can not wait for the interim results in Decmber
6months from april at a 70-90% PFL with energy prices up 35% on last year.
Should finally see the true value being added here
Supposed by an annual report out , but cannot find it on their website
Anyone have link ?..TIA
Looks like from yesterdays fall, it may not have been great ,if indeed it was related to this
The other alternative is that with strong electricity demand, a bounce back in PLF requires additional working capital in the short term, to finance the extra output. Remember PLFs were very low until recently. It’s likely though that the sharp fall in coal prices, hike in electricity prices and high PLFs will produce good profits and cashflow over the FY.
I was hoping there would be no need for this if the company is cashflow positive
Just rolling over the debt
Taken from A D V F N poster. Thanks Tim000
It seems that OPG is issuing a new, BSE listed, 50 crore (ca £5 mn) NCD, with the same maturity date (Aug 2026) as the existing 75 crore NCD. We will have to wait to hear what the proceeds will be used for, but in view of the company’s strategy of deleveraging, my best guess would be to repay some of its existing bank term loans.
The bond ISIN number is INE0D8F07048
Newcastle at $142, up from lows of around $1.24 in June
Natural gas now around $3, up from $2 in April
Oil at $87, up from $64 in June
ICI 4 steady at $51, where it's been for a few months now! Let the low Indonesian coal prices continue!
Good news Tim should see a break above 10p this week
Indian production of non-coking coal increased by about 100mn tonnes to 830mn tonnes in FY 2023 and is targeted to increase by another 100mn tonnes this year; the extra output will be targeted at meeting the needs of gencos. Further large increases in production are planned for the medium term. By contrast, there is currently a ban on new coal power plants. So the domestic power market is rapidly transitioning to one of excess coal supply and sharply falling production costs, leading to cheaper energy. OPG should be a major beneficiary, in terms of high PLFs and cheap inputs.
The June NCI was published today. The full release can be found on the Coal Ministry website under the National Authority section. Middle grade non-coking coal prices declined 10% from April to June. Auction prices (which OPG hopefully is participating in) will have declined more sharply.
Let’s hope that there are further Director purchases so the numbers become more meaningful. I wouldn’t object to an eventual offer from the Gupta family, I doubt the institutional shareholders would accept a lowball offer.
I agree this particular transaction was just an individual director buying shares, and 75000 is not a significant number either at the current SP.
True, many companies allocate surplus capital to buybacks as well as dividends, especially in situations where they can utilise historical losses to avoid paying any corporation tax - so shareholder distributions via buybacks incur no tax at all. However, surely that doesn’t apply here as it’s not a buyback but a shareholder purchase? You could argue that a majority shareholder buying more shares cheaply reduces the cost of taking the business private, but that’s not a tax issue. I don’t know enough about the tax system to know how share purchases by the Gupta family are tax efficient.
There is no tax on buybacks. With divis most people will pay tax.
Tax ?
More likely to be tax
I don’t think they’ll buy back shares prior to an announcement of such a policy, likely to be in the annual results in September. It’s not certain they’ll do anything even then, but the trading update was surely a hint that some investor friendly policies are imminent. I imagine the new activist institutional shareholder has been talking to management. Wish we had the same opportunity!
Guptas takink advantage of a way undervalued shareprice
I would prefer the company was buying back shares but either way it reflects the true potential on offer here
I mentioned a sharp decline in prices in April. Worth pointing out that is based on CIL auction prices (OPG sources its domestic coal from such auctions), source Coalmint, whereas the broader NCI (calculated from fuel supply agreements, imports and auctions) showed a slight increase in April. That’s because auction prices (the source of marginal coal supplies) are falling very sharply indeed due to excess supply. By contrast FSAs are more like short term fixed price contracts. So the May NCI figures are likely to be an underestimate of the decline in prices faced by OPG when purchasing domestic (and imported?) coal.
Fantastic news Tim, looking forward to the first 6months trading update with a drastically revised forecast for full year 23-24
NCI for May has been published. The aggregate index for the average market mine price of imported and domestic non-coking coal declined nearly 7% in the month to May, and by over one third in the 12 months to May. April had already seen a sharp decline on March. This should result in profitable margins for all power generation, and hence sustained high PLFs. So the new FY has started incredibly well.
I don’t think Cenkos is the least bit interested in OPG, there are almost no institutional investors in the company. You’re right, the latest report didn’t even take account of known events, including a very sharp decline in domestic and Indonesian coal prices, and the government mandate to imported coal gencos. I’m thinking seriously about attending the AGM this year and spending as much time as I can questioning management. There is much to learn about the company’s operations.
Haha almost
If i was Cenkos i would be looking to replace the author, way off with his research and the forecasts
I emailed the author of the latest report with some queries, but he was unable to answer them as Cenkos isn’t regulated to engage with private investors!! That tells you a lot about how the system is rigged. Is your monikor related to President Reagan by any chance?
I wouldn't be surprised if that was the intention, now OPG is so close to delivering good results, a misleading report can help create an even better entry point wiping 20% off a previously accelerating shareprice, delivery of report timed perfectly to slam on the breaks and stick it in reverse.
Its a shame because the government had already issued section 11 so you would have expected whoever wrote the report would have known PLF and profit was going to be alot higher than what they reported.