Member Info for JohnGould

I very much suspect.

loving the surge!

My pleasure. It was a reassuring read indeed after the recent drop which I think may be attributed to the financing deal which ironically was beneficial to GKO and their Sh's. GKO is highly diversified and so the rewards far outweigh the risks. I share your confidence, congratulations on getting in at 132 !

. . . your boots time people, come Christmas this could be over 200p IMO

EIG has the option of converting the PIK coupon into Greenko shares at 240p each, or 69 per cent above the current share price.

Given by Simon Thompson . . . his analysis speaks for itself

Thirdly, the moving average convergence divergence (MACD) momentum oscillator appears to be bottoming out. Although still below its signal line, there could be a potential cross over in the offing. And finally, having traded in a tight price range between 130p and 140p since this month's sharp sell-off ended, the point and figure chart (2 point) will signal a triple top break-out on a close of 142p or above. In my view with the technical set-up favourable, and the fundamental case unchanged since I last updated my view in the summer ('Bond investors warm to Greenko, 5 August 2014), a move in the price above the 140p level is worth following. Trading on a bid-offer spread of 136p to 139p, and on less than half Invesco and Arden Partners target prices of 310p and 300p, respectively, I rate Greenko shares a strong buy and have a conservative target price of between 225p and 230p. Buy.

Greenko is also powering up its wind farms and added 136MW of installed capacity in the latest six month trading period. The company has three new projects at advanced stages of construction and these have a total capacity of 338MW. In other words, there is clear visibility in the construction pipeline for investors to be confident that Greenko's 1,000 MW total capacity target will be hit next year. Importantly, the energy back drop is favourable for renewable energy in India as conventional power assets struggle to supply power to the grid due to fuel supply and off-take price issues. It’s worth flagging up that Greenko has a cost advantage and is supplying power below the price of conventional generation in many states of India. So with the roll-out on track, expect another step change in the company’s earnings in the financial year to March 2016. Based on estimates in the market, analysts are predicting Greenko’s turnover will surge to between €146m and €189m in that 12-month period. If achieved this will to lift operating profits to between €100m and $118m. Taking a conservative approach and using the lowest estimates, this still means that we can expect pre-tax profits of around €58m and EPS 21.6¢, or 17p. On this basis, the shares are currently being priced on 8 times earnings estimates for fiscal 2016, a very modest valuation for a company growing so quickly and one that is fully funded. Technical set up The strong fundamentals aside, there are sound technical reasons to believe that Greenko shares are overdue a recovery, and one that the forthcoming interim results are likely to prompt. For starters, Greenko's daily candlestick chart is informative as buyers moved in and pushed the price up from the intraday lows around 130p on both Thursday, 16 October and Thursday, 23 October. This created long tails on the chart, highlighting that a bottom could be in place. Secondly, the 14-day relative strength indicator (RSI) is heavily oversold and currently has a reading of 30. It will not take that much good news flow to spark a sharp rally from such oversold conditions.

A pre-close trading statement from the company ahead of the release of interim results in early December has confirmed as much. In the six months to end September, Greenko’s power generation soared by almost 90 per cent to 1,225GWh on the same period in 2013. And with a better generation mix - hydro and wind each accounted for around 43 per cent of the total - this helped drive first-half revenues up 120 per cent to around €52m (£41m) and cash profits up 130 per cent to €38m (£30m). Reflecting the seasonality of earnings, analyst Adam Forsyth at brokerage Arden Partners predicts that revenues for the 12 months to end March 2015 will surge over 80 per cent from €53m last fiscal year to €95.9m to drive pre-tax profits up 170 per cent to almost €40m. On this basis, expect adjusted EPS to more than treble to 13.9c, or 11p at current exchange rates. This means that the shares are rated on less than 13 times earnings estimates. Powering on up But that only tells part of the story because Greenko has also confirmed that with all its projects currently under construction fully financed, its operational portfolio is set to exceed 1,000 MW next year, up sharply from 697MW at the end of September. Six hydro projects under construction will add 188MW of generating capacity, of which around half will come from the Dikshu project in Sikkim. That plant is scheduled to enter commercial operations at the start of the 2015 generation season. The other five projects are slated to become operational between late 2015 and early 2016.

The discriminate sell-off of small cap shares in the past month has produced some interesting investment opportunities and none more so than Greenko (GKO: 139p), the Indian developer, owner and operator of clean energy projects. The Aim-traded shares in the company have been sold down from around 180p at the end of last month which means you can buy almost 30 per cent more shares for your money now. In fact, the price has retreated to little over where I suggested buying when I initiated coverage at 134p (‘Buy signal flashing green’, 18 March 2013). This is despite the fact that in the past few months the company has refinanced its existing debt facilities by issuing a US$550m (£341m) bond on the Singapore Stock Exchange priced on an 8 per cent coupon and maturing in 2019. The company has also just secured a US$125m (£78m) commitment for the next six years from EIG Global Energy Partners, a company that has $16.4bn invested in the energy sector across more than 290 projects. This replaces a $70m facility with Standard Chartered facility which was due to expire in January. The company will pay a cash coupon of 5 per cent on the new credit line and a payment-in-kind (PIK) coupon of 6 per cent which is payable at maturity. EIG has the option of converting the PIK coupon into Greenko shares at 240p each, or 69 per cent above the current share price. The funding structure is favourable for Greenko as it means that more of its capital can be invested in rolling out its portfolio of highly profitable and cash generative clean energy assets. Interestingly, this is the first investment that EIG has made in the Indian energy industry, highlighting the quality of the assets and investment case for Greenko, in particular.

. . . now buying in . . . who would bet against these people, I'm sure they know something we don't. Will be an interesting few months ahead I think!

That is what we like to see! (most of us that is . . . )

Should see this tick up a few pips now I think

Now realising this is only going up from here and buying back in IMO

a great LT play especially at these levels.

I don't get it. The RNS sounded good and with EIG negotiating an option to convert debt in th future @ 240/share this should have surely been received with confidence especially since they would have done considerable due diligence prior to the deal. Anyone with any suggestion?

any suggestions why the directors might be piling in?

of £13m at the end of June, so assuming the property did go for close to the asking price of £1.25m, then Thalassa had ample funds to make a purchase. Alternatively, a property purchase could have been part funded on a commercial mortgage whereby the interest payable would have been significantly less than the £120,000 annual rent bill Thalassa is now faced with. Moreover, shareholders and not Mr Soukup would have benefited from any upside in the property's value. It's also fair to suggest that the value of the property with the benefit of a tenant at the aforementioned rent is worth considerably more than the £1.25m asking price now that Thalassa has signed a 10-year lease. That's worth thinking about because Thalassa could have alternatively bought the property outright and then marketed the freehold on a sale and lease back agreement in the property investment market. That way the company could have made a profit from the purchase simply by signing a 10-year lease at a £120,000 rental and one that would have benefited all shareholders, and not just Mr Soukup. Poor communication To say communication from the company has been poor on this matter would not be an understatement, so it’s hardly surprising that investors have been unnerved post Friday's announcement. Furthermore, although the directors feel the related party transaction is fair, the fact that Thalassa has a cash rich balance sheet, and undoubtedly access to mortgage finance, raises questions about this transaction even if the property is the ideal place to base Thalassa's operations. I am not comfortable about this at all, and would understand if other shareholders felt the same way. So although Thalassa's shares are trading well below book value per share of 131p, and net cash accounts for half the share price, I feel it is going to take some considerable time to repair the damage caused by the nature of the Eastleigh Court transaction, coming so quickly after the revenue warning. That's perhaps one reason why the shares are now trading on 11 times earnings estimates for 2014. In the circumstances, I have decided to cut my losses and exit the holding with market makers offering to buy them back in the market at 114p.

Shares in Aim-traded Thalassa (THAL: 116p) fell 8 per cent yesterday and have now lost more than one third of their value since the marine seismic equipment provider issued a revenue warning at the time of its half year results in mid-September ('Thalassa sinks on revenue warning', 17 September 2014). At the time I noted that it would take time for investor confidence to return, but concluded that the investment case was strong enough to warrant maintaining my buy recommendation even though the shares had retreated to my original buy tip price of 138p ('Potential for seismic gains', 19 March 2013). As far as I can ascertain, the latest share price sell-off is down to an announcement made by the company on Friday morning regarding the relocation of its operations to a resplendent Grade II-listed property, Eastleigh Court, near Warminster. The property is located 20 miles from the city of Bath. Thalassa has taken a 10-year lease on 10,000 sq ft of office space at Eastleigh Court. This is hardly 'new' news as the company had already announced its planned relocation in a trading update in July. However, what would appear to have unnerved some investors is that Eastleigh Court was purchased by chairman and 12.5 per cent shareholder Duncan Soukup on 11 July through his own company Eastleigh Court Limited, so is a related party transaction through Aim rules. There was no mention of this separate transaction in the July trading update, nor for that matter in Thalassa's half-year results in mid-September. In fact, it only came to light in Friday's RNS announcement that confirmed that the company had entered a 10-year lease on the property on Thursday, 1 October. A related party transaction The property had been marketed by property firm Knight Frank in February this year at an asking price of £1.25m and the estate agent had invited final bids for the property by a deadline of 25 April. The National Trust had previously used the 13,400 sq ft premises as offices. In other words, Thalassa will be paying £120,000 of rent for a 10-year lease on around three quarters of the freehold property. The directors, other than Mr Soukup by reason of his interest in the property, consider that the terms of these leases "are fair and reasonable in so far as its shareholders are concerned". They consulted with WH Ireland, Thalassa's nominated adviser, when making this decision. Graham Cole, a non-executive director of Thalassa said: "We are delighted to have entered into the leases on this new campus which was chosen after an extensive search throughout the South West of England. The location and proximity to major transportation hubs will be key to attracting new staff and to maintaining the company's growth over the coming years." That may indeed be the case, but the obvious question shareholders will be asking themselves is why didn't Thalassa simply buy the property itself? The company had a low yielding cash pil

They know something the rest of us don't I'm certain of that, stay long and wait for this to skyrocket in December/early Jan when the new products are launched.