The only thing I can think of is the Uniper release to the market (they need bailing out by the German government).. I sense rumours went around the market concerning utilities. The two things happened around 30 mins apart.
Drax is the complete opposite end of this situation. Drax is bailing out the country by keeping the lights on.
Just updated my spreadsheet. The Cal 23 and Cal 24 prices API4 prices are up $15 and $10 respectively over the last 2 weeks.
I make it they will make £6 for the remainder of this year and £21 between now and the end of 2024. It is a shame the buyback authority wasn't granted. They should be hoovering up shares now.
outlined below - upgraded expectations and coming to assist the country in the coming winter.
Updated expectations for full year 2022
In response to increased pressure on European gas markets and associated concerns about electricity security of supply in the UK this winter, Drax continues to optimise its biomass generation and logistics. To accomplish this Drax is reprofiling biomass generation and supply from the summer to the winter, enabling it to provide high levels of reliable renewable electricity generation in the UK throughout the winter when demand is likely to be higher.
The Group also expects to provide additional support from pumped storage hydro at Cruachan Power Station, building on a strong year to date performance, which reflects a high level of system support activities.
Separately, at the request of the UK Government, Drax has now entered into an agreement with National Grid - in its capacity as the electricity systems operator - pursuant to which its two coal-fired units at Drax Power Station will remain available to provide a "winter contingency" service to the UK power system from October 2022 until the end of March 2023. The units will not generate commercially for the duration of the agreement and only operate if and when instructed to do so by National Grid.
Under the terms of the agreement, Drax will be paid a fee for the service and compensated for costs incurred, including coal costs, in connection with the operation of the coal units in accordance with the agreement.
Full year expectations
Reflecting these factors, Drax now expects that full year Adjusted EBITDA(1) for 2022 will be slightly above the top of the range of analyst expectations(2), subject to continued good operational performance.
In the last two weeks, TGA is down 11%.
The coal curve for 2023 is up and 2024 flat.
This is just a downdraft on the back of the falling equity market. If anything, the outlook for coal is stronger.
Just one of those periods to hold through.
That leak of the 'thinking' behind adding generators to the windfall tax has caused a lot of confusion around this stock.
Forward power prices for winter 22 and summer 23 are at all time highs. Calendar 23 power is £25/MWh higher than it was on 27th April, the date of the last update. The company has plenty of volume still to hedge for 2023 and 2024
The outlook for the company has gotten BETTER in the last two months.
I can get people being bearish on the rest of the economy. I don't get the bearishness on this stock absent a windfall tax.
I copied and pasted the below from the SSE page. An explanation for the bounceback.
Ministers are backing away from a windfall tax on Britain's electricity generators in favour of a French-inspired consumer price mechanism in a battle to tame inflation.
Under plans being drawn up in Whitehall, a new system would break the link between the price of low-carbon electricity and that of natural gas, which has risen to record highs following Russia’s war on Ukraine.
This would allow energy suppliers to take advantage of the comparatively cheaper cost of electricity generated by wind and solar farms – and pass on the savings to households and businesses. In France, most electricity is generated by nuclear power. This has meant Emmanuel Macron’s government has been able to order EDF to sell energy at below market rates, shielding consumers.
Telegraph, paywall: https://www.telegraph.co.uk/business/2022/06/17/rishi-sunak-backs-away-windfall-tax-electricity-generators/
I think the reaction today was due to the comment on rail issues being a disappointment.
Lets face it - today was just indiscriminate selling of anything. There is blood everywhere and, unfortunately, some parties have had to sell some of their winners.
Ah well - is good for the people who picked up.
The only thing I would criticise the company for is not buying back the shares.
WAS there a resolution to do so, as I couldnt see one. (I may have missed it).
The company should be filling its boots at these levels.
Lets face it - some of these people cannot stand Drax regardless.
Quite simple - plaster the media with the following messgae - ' We are the biggest generator in the country and we are keeping the lights on. If you dont like it - do one!!!!!'
It’s down to the windfall tax, hence also the fall in SSE.
Has come out of nowhere as the prevailing discussion was that it would be based on the oil and gas companies.
Unclear how it would actually work unless it was an extra corporation tax rate for electricity generators.
There is no evidence they are.
The would have set out the forward prices they had sold at in the last results and they made no mention of margin payments in the working capital information.
There is a risk in them forward selling anyway as they would have to meet margin calls if/when prices rose further.
I have just taken a look at the forward curve for API4.
I calculate that TGA will make £19.31 per share between now and the end of 2024.
I have used a 15% discount to API for TGAs sales and assumed 15M tonnes pa for export.
The estimate excludes anything made so far this year and we know how robust the cash pile was at the end of 2021.
They are throwing off cash at the moment and have enough to cover the closure costs and expansion/life extension plans.
I would expect a comment at the AGM on the subject of acquisitions and/or share buybacks. There is no point sitting on this kind of cash.
https://www.poly4.com/poly4/product-characteristics/
I am very satisfied with the portfolio the company has wrt to PGMs and copper.
I feel that an under=appreciated part of the business is POLY4, which we have a great position in due to Woodsmith.
With the gas situation being massively complicated, so going forward is fertiliser.
POLY4 is a huge low-carbon part of the solution.
There is also some good stuff on the BHP website regarding fertilisers.
Credit Suisse should be concentrating on their own business. A shoddily run bank.
Look at forward power prices that Drax are locking in more and more of. At multi-year highs.
Will bounce back on Monday morning, I reckon.
I reinvest my divis, so hopefully it wont bounce until Monday afternoon.
You should make a formal complaint. That is a disgrace.
Also, you could have capital gains tax liability if it is held outside. SIPP or ISA.
By making a complaint you have grounds to claim for any loss down the line.
Also - how is it taken until now for them to ‘realise’ the stock couldn’t be held in your account? Thungela was divested in June.
Multi year closing high when the wider market is being battered.
This is going to £10 IMHO.
They are successfully capturing the higher forward market prices.
no need for them to buy the hole company.
With royalties and corporation tax, they tax 36% of Thungela’s profits anyway.
If anything, the buyer should be a company from India or China. They will have the demand for the next 20 years and wont have to bother with ESG concerns.
They will also buy Russian cal, of course, but without foreign investment, the long term mineral capability from Russia has beeen seriously impaired.
I am moving some of my holding from a trading account to an ISA.
I have sold some out today at 1360 and bought back in the ISA at 1293. (All perfectly legal tax avoidance).
This isn't about patting myself on the back. I have noticed some people talking about the witholding tax on the divi.
If you want to avoid that by selling out the day before it goes ex dividend, with the way the price flies about WITHIN-DAY, isn't that a bit like running into the M25 to pick up a £10 note.?(Other frustrating motorways are available).
Going forward, the way this thing flies about, the bigger thing to worry about is capital gains tax, not divi taxes.