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Unloved Greenko Aim-traded shares in Greenko (GKO: 104p), the Indian developer, owner and operator of clean energy projects, have endured a roller coaster ride since I initiated coverage at 138p a couple of years ago ('Buy signal flashing green', 18 March 2013), but operationally the company continues to hit its milestones. Following a change of financial year-end, power generation of 1,565GWh in the nine months to end December 2014 was 46 per cent higher than in the previous 12-month period to produce an increase in revenues from $71m to $100m, slightly better than analysts had anticipated. There was an earnings beat, too: adjusted pre-tax profit of $35m (£23.6m) was $5m ahead of forecast even though a net finance charge of $40m was $6m higher than predicted, a consequence of the board’s decision to sensibly hedge out the currency risk on its US dollar denominated debt. Last year, Greenko successfully raised $550m (£369m) though a five-year bond issued on the Singapore Stock Exchange and secured a US$125m (£84m) six-year credit line from EIG Global Energy Partners. Importantly, the company looks set fair for the year ahead with the board reiterating guidance yesterday to hit operating generating capacity of 1GW during 2015, up from 715MW at the end of last year. The company currently has 550MW of wind and hydro projects under construction, and a further 1,350 MW at the development stage. But there are a few negatives, too. Firstly, shareholders will have to wait for an inaugural dividend as the board now intend to consider a cash return at the time of the interim results in September. Analyst Adam Forsyth at Arden Partners had forecast a 2.5c a share dividend alongside this week's figures. Secondly, factoring in slightly higher operating costs, cash profits for the 2015 fiscal year have been pared back a few percentage points to $121m, albeit this still represents a hefty increase on the $80m announced for the nine month reporting period in 2014. However, the hit to the pre-tax line is far greater. That’s because after accounting for the impact of higher net interest charges, and stripping out a $6.3m non-cash gain on acquisitions, Arden have sliced their 2015 pre-tax profit estimate by a quarter to $44.4m on revenues 85 per cent higher to $185m. Mr Forsyth has also adjusted his post-tax earnings estimates to account for a high minorities’ charge which means that Greenko is now expected to make net profits this year of $28.3m, rather than $47m previously forecast. That’s a big difference and on an EPS basis the downgrade is even greater partly due to dilution from the EIG warrants issued on the above fundraise, but also taking into account shares to be issued from previous fundraises.
".....In 2013 we were pleased to welcome the Government of Singapore (GIC) as new investors in our subsidiary holding company Greenko Mauritius (GM) with an investment of £100 million in Exchangeable shares. Both GIC and Global Environment Emerging Markets (GEEMF), who invested in 2009, have the opportunity to exchange their investment in GM for shares in the Company in the period 2015 to 2017, which when exchanged will significantly increase the equity capital base of the Company." So GIC exchange is at £2.60 which will give them 38,461,539 shares between 2015 and 2017 Regarding GEEMF from 2009 RNS when they invested $46m (£31.2m)...."The preference shares being issued are, in certain circumstances, convertible into approximately 29.99% of the enlarged share capital of Greenko at an effective price of 98p. A 98p conversion would give them 31,836,734 shares between 2015 and 2017. From DigitalLook Currently 155,760,000 shares in issue. So am i reading this right? By 2017 if GIC and GEEMF take up all these new shares we will have a minimum total equity of 155,760,000 + 31,836,734 + 38,461,539 = 226,058,273 shares?? Is anyone able to confirm if this is correct? Also if so what will the revised EPS and PE and PEG ratios be based on the profit projections on Digital look and the newly inflated amount of shares? Could this equity dilution between 2015 and 2017 be another reason for the sell off in recent months?
I've noted the ramping up in fear last few days, particularly from 'new' posters witht very few posts. I live in hope but have mentally written this off and put it down to one of life's lessons.
I'm still here. No point selling when your 80% down. Oh I do love investing!
High hopes for OPAY this year. Looks promising on so many levels. The market will appreciate its true value in due course, question is which market will that be ? Love the cryptic reference to now having a FTSE quality board in the latest announcement. Can't see this still being on AIM in 2016.
As you say could be a rocky ride until the full implications of the new Oil price normal are fully understood. Never topped up in the end, May do later this week. Roll on the next update. Any idea when the next announcement is due?
To answer my own question regarding use of the euro....is it because we are incorporated in Luxembourg?
Any other holders out there? Pretty quiet on here. I have about 6k tucked in Gko and the recent share price weakness means I will be adding to my position this week. In terms of the effect of the falling oil price, This will have minimal impact on GKO's plans. There is a severe shortage of ANY forms of energy in India. The new government are not short sited and know that companies like GKO are going to be integral for India's upcoming growth spurt. My take on the drop in share price is due to GKO utilising the euro as its base currency. Please correct me if I'm wrong. If they do peg to the euro can someone explain to me why this is? The current weakness in the euro should begin to abate as QE is introduced and prospects for the EU block start to improve later this year. Anyway I look at it a play on the Indian Energy market is a fantastic medium term investment.
Can only see this continuing to drift into the 30p's purely on POC tax sentiment alone. Should begin to pick up in the new year once the tax has been implemented
No one likes a smart arse
Well i am currently really regretting my top up yesterday at 43p. Seriously this year i am getting my ass handed to me on a plate. If only i'd waited another 24 hours.....shouldda wouldda couldda story of my life recently. However JQW strikes me as different to companies such as NBU. Here i see a top ranked global website based on traffic. Genuine growth trajectory and a willingness to reward investors with an ongoing progressive dividend policy. They are well known in China, Award winning and respected greatly in their home province for their contribution to chinese E commerce and the local community. These drops just don't add up. Ok so we only have a free float of 8% so someone selling 100k share chunks consistently is likely to have a large effect on the daily share price. I can't help thinking though that the market makers see this as a perfect storm to drop the price further beyond comprehension and flush out numerous stops along the way. Further, with a free float of 8% share price drops can be exaggerated. However on that basis the opposite is also true. It is my opinion that the BOD will continue to reward investors with excessive dividends. This fact coupled with continued growth, further coverage from the press (now an IC buy recommendation, mentioned by SCSW not so long ago) and the Alibaba knock on exposure should see this share price re rate time after time in the coming 1 - 3 years. Be greedy when others are fearful really does seem to resonate with truth in this instance. However with a total outlay of £4307 and currently staring at a 33% loss i will refrain from one further top up at this stage. If the price drops sub 35p again though i will find it impossible not to scrape together another 1k top up. What a 9 months its been...
Well that was silly wasn't it. Only tricky thing to do is work out what fair value is of the thg shares right now in relation to when the dust settles and they move to the main market. I think at 25p they are worth a little top up
The whole debacle is a perfect example of uncertainty pulling down the price. All the bad news and more is now factored in. The risk is pretty much completely skewed to the upside. Buying at this price just seems a no brainer with a 12 months outlook.
Whichever way you look at it. 56p will look like FANTASTIC value in a years time.
Elite As Simon says you cannot simply take 15% of net revenue and assume this will be the amount of poc tax paid. It would be naive to assume that 32red would pay a full 15% of their net revenue with no cost savings or offsets elsewhere.... "...Some operators have clarified the implication of this POC tax. For instance, NetplayTV generated net gaming revenue of £28.5m and earned cash profits of £5.2m last year. The company has stated that the impact on its profits would have been £1.7m – or a third of its cash profits – if the POC tax had been implemented in 2013. This figure is calculated after a gaming tax charge of £4.2m and taking into account applicable contractual offsets and cost savings. NetplayTV has stated that they expect the tax charge to be 15 per cent of net revenues, but you can not simply take 15 per cent of the net gaming revenue and say the total impact of POC tax would have been £4.2m for NetplayTV since there are major offsetting factors which significantly reduce the profit hit. For instance, the payments paid by the gaming companies to suppliers will fall under the new regime (thus having an offsetting impact on the tax take) where the revenue generated by customers is directly linked to the amount payable to a supplier as is common practice. I believe Simon knows fully well the details of the POC tax, he is a rather detailed kinda guy to say the least.
..........Factoring in the offsets on supplier agreements, and cost savings, I believe the hit on 32Red's profits would have only been a quarter of its pre-tax profits had the POC tax been operating last year. This also equates to 15 per cent of its gross profits. I stand by my advice. Regards Simon
todays Investors Chronicle article. ....."Simon i think it would be very helpful if you would clarify what the POC tax is based upon. In their results NPT specify that the poc tax is based on NET REVENUES and NOT gross profits. They give an illustration of the tax implications in their figures to back this up. There is a huge difference between the two. Bulletin boards are full of people saying POC tax is based on net revenue and would therefore wipe out all of TTR's profits for this yr if for instance the tax was already in place. So the question to you is.....is it on NET REVENUE or GROSS PROFITS. The more you can clarify this then the better for the share price." Dear readers In the government's consultation document, Taxing remote gambling on a place of consumption basis (August 2012), H.M. Treasury and H.M.R.C. state in section 1.2: "At Budget 2012, the Government announced that gambling taxes in the UK will be reformed so that remote gambling is taxed on a "place of consumption" basis. With a place of consumption tax basis, remote gambling operators will pay tax on the gross gambling profits generated from UK customers, no matter where in the world the operator itself is located. Premises based gambling will be unaffected." Some operators have clarified the implication of this POC tax. For instance, NetplayTV generated net gaming revenue of £28.5m and earned cash profits of £5.2m last year. The company has stated that the impact on its profits would have been £1.7m – or a third of its cash profits – if the POC tax had been implemented in 2013. This figure is calculated after a gaming tax charge of £4.2m and taking into account applicable contractual offsets and cost savings. NetplayTV has stated that they expect the tax charge to be 15 per cent of net revenues, but you can not simply take 15 per cent of the net gaming revenue and say the total impact of POC tax would have been £4.2m for NetplayTV since there are major offsetting factors which significantly reduce the profit hit. For instance, the payments paid by the gaming companies to suppliers will fall under the new regime (thus having an offsetting impact on the tax take) where the revenue generated by customers is directly linked to the amount payable to a supplier as is common practice. By comparison, 32Red had gross gaming revenues of £38.8m last year, but incurred customer incentives of £13.4m to give net gaming revenues of £25.4m. That is £3m less than NetplayTV. Cost of sales were £17.4m to produce gross profits of £7.9m representing a 31 per cent margin on net revenues. Underlying cash profits were £5m which is pretty similar to NetplayTV although as I point out 32Red had lower net revenues. Factoring in the offsets on supplier agreements, and cost savings, I believe the hit on 32Red's profits would have only been a quarter of its pre-tax profit
.........Factoring in the offsets on supplier agreements, and cost savings, I believe the hit on 32Red's profits would have only been a quarter of its pre-tax profits had the POC tax been operating last year. This also equates to 15 per cent of its gross profits. I stand by my advice. Regards Simon
todays Investors Chronicle article. ....."Simon i think it would be very helpful if you would clarify what the POC tax is based upon. In their results NPT specify that the poc tax is based on NET REVENUES and NOT gross profits. They give an illustration of the tax implications in their figures to back this up. There is a huge difference between the two. Bulletin boards are full of people saying POC tax is based on net revenue and would therefore wipe out all of TTR's profits for this yr if for instance the tax was already in place. So the question to you is.....is it on NET REVENUE or GROSS PROFITS. The more you can clarify this then the better for the share price." Dear readers In the government's consultation document, Taxing remote gambling on a place of consumption basis (August 2012), H.M. Treasury and H.M.R.C. state in section 1.2: "At Budget 2012, the Government announced that gambling taxes in the UK will be reformed so that remote gambling is taxed on a "place of consumption" basis. With a place of consumption tax basis, remote gambling operators will pay tax on the gross gambling profits generated from UK customers, no matter where in the world the operator itself is located. Premises based gambling will be unaffected." Some operators have clarified the implication of this POC tax. For instance, NetplayTV generated net gaming revenue of £28.5m and earned cash profits of £5.2m last year. The company has stated that the impact on its profits would have been £1.7m – or a third of its cash profits – if the POC tax had been implemented in 2013. This figure is calculated after a gaming tax charge of £4.2m and taking into account applicable contractual offsets and cost savings. NetplayTV has stated that they expect the tax charge to be 15 per cent of net revenues, but you can not simply take 15 per cent of the net gaming revenue and say the total impact of POC tax would have been £4.2m for NetplayTV since there are major offsetting factors which significantly reduce the profit hit. For instance, the payments paid by the gaming companies to suppliers will fall under the new regime (thus having an offsetting impact on the tax take) where the revenue generated by customers is directly linked to the amount payable to a supplier as is common practice. By comparison, 32Red had gross gaming revenues of £38.8m last year, but incurred customer incentives of £13.4m to give net gaming revenues of £25.4m. That is £3m less than NetplayTV. Cost of sales were £17.4m to produce gross profits of £7.9m representing a 31 per cent margin on net revenues. Underlying cash profits were £5m which is pretty similar to NetplayTV although as I point out 32Red had lower net revenues. Factoring in the offsets on supplier agreements, and cost savings, I believe the hit on 32Red's profits would have only been a quarter of its pre-tax profit