Member Info for tedmak

I dont understand the comment in the FT that they dont have scope to go higher. They are paying in paper and BHP only has debt of $12B. They are not burdened by gearing.

The parts of the business they dont want are traded o the JoBurg stock exchange - so the implicit valuation was not a figment of the imagination.

IMHO they will definitely make a formal bid before the 22nd May deadline, if only to extend the process. If they dont make a bid, they wont be able to come back for another year.

In that time period someone else could come in for Anglo and they would miss the chance of getting those copper assets.

Is for the same reasoning that one of their rivals will also make a pitch, I think.

I can understand disputes about price, but if you are sceptical about South Africa exposure and the other parts of the business (am a massive fan of the POLY4 project), I would question why you are in this share at all.

Just sell the day before the transaction is due to complete.

Then you can buy back the components you want to keep.

The transaction fees in the scheme of things are neither here not there.

Not much more to say than that.

Only thing I notice, however, is that they dont seem to own much of their property. It is mainly leases.

My initial thought was that this could be a break-up play based on NAV.

Do they have some proprietary tech or something?

It Is not really relevant if there is a bid incoming, but am concerned what would happen if I bought now and a bid didnt materialise.

Good luck to you if you already hold.

I ama. fan of the company and the strategy but I am fed up with the noise around the business environment.

This latest consolation came out this morning and company would (I assume) have head the heads up last night.

Why has a formal response only come out just before midday.

We dont know when the decision will be made nor by which minister..

It is very frustrating as the UK electricity system cannot function without Drax but the wider political environment gives little confidence/visibility.

In summary - I am on the fence.

Interest rates were much lower this time last year, though.

All high yielders have taken a hit.

There are a couple of aspects to this - political and technical/energy security.

The grid NEEDS Drax power station, It is well-located on the grid and a solid 2,4GW source of flexible power.

Other than Hinkley, the only new power bing constructed is inflexible. The biomass supply is secured by Drax so it will be needed going forward. The Just Stop Oil types who hate Drax will be ignored, as it is impractical.

Politically, looking at net zero and, more wider HS2, clarity on policy is all over the place. The sentiment is not good, but there is still currently a highly profitable business and there is no chance the current support mechanisms (CFD and ROC) would be withdrawn, as the government would sued and it would damage confidence in the regimes.

It is NOT red in the water. There is a chance of good returns but a probability of high volatility.

Https://www.nao.org.uk/work-in-progress/the-governments-support-for-biomass/

Seems much ado. NAO does loads of reviews.

There is no chance of net zero without Drax, especially as the recent auctions has no offshore wind awards.

Accounts published and trading suspension lifted. Why this couldn’t have been sorted on Friday is a puzzle, to put it mildly

I am not happy at today’s communication.
I find it hard to believe they didn’t get advance notice that the government was going to make its announcement today.
The RNS should have been released before the market opened.
All I had to go on was the shrieking people on Twitter who can’t stand Drax anyway.
All
In all - seems like much ado about nothing wrt yesterday but this kind of trading action gives the market a bad name.

I see Jefferies (600PT) and Barclays (over 800) have updated their price targets.
Does anyone have the research notes?
Thanks

The ROC buyout price for 2022/23 is £52.88. They get that for the ROCs produced on two units and the third unit is a 'spare' that they can use to produce ROCs if there is an extended outage on the other two. There is a limit of about 10.5TWh of production from the three units they can get ROCs for.
The business is gearing up to be subsidy free from 2027, anyway. The thing to look out for is what the 'voluntary' CFD will entail. It could be good for the company if it takes away the threat of a windfall tax. The UK economy NEEDS Drax to keep the lights on. I think DECC actually gets this. My concern is that too many people outside of the sector don't.
If we shut Drax down tomorrow - the last person to leave the UK, please turn out the lights.

RB - what are you basing the divis on? A percentage of the EPS?

I dont see why they dont return 100% of earnings going forward as they have the cash buffer on the balance sheet.

I think the £18 target is too low.
The forward curve for coal is flat for Cal 23 and UP for Cal 24 over the last 7 days.
The share price is showing noise, thats all.

Looking at the share price of SSE and Centrica today, can only think it is this stuff about ‘unjustified’ profits for the sector. Hearing some dubious concepts being bandied about.
Will have to put up its this daft noise until the ‘fiscal event’ next month.

Tbf - they do sell coal for power stations. They mine it in south Africa and export it abroad.
A bit of punctuation could have helped, but not the most misleading article I have ever read.

The labour policy approach, irrespective of whether you think it is a good idea, will be limited to oil and gas coompanies for the windfall tax.
Whoever wins the conservative member vote want go further than that, so I think power generators are safe.
Can see a run to year-highs.

Tiger,
That is the only downer for me, and it was not the company’s fault.
The shareholders didn’t approve the buyback authority request. Could have taken advantage of all the down days.
Then again, the shareholders have an ability to buy on dips.
I can see another £3 ps dividend at the full year announcement as they are quite comfortable with the cash buffer on the balance sheet at present.
Thank God AAL divested the stock to us instead selling to Glencore like BHP and Rio.
I have a dividend return of 182% on my first purchase. This has been a once in an investing lifetime opportunity.

SLT
I haven’t read one of your posts before.
I have plainly missed nothing.

Pop
your understanding is correct. They have not received any cash from AAL hence wont be sending anything back.
(Unless the coal price absolutely craters to below $70 between now and the end of the year. If that happens, the share price has bigger issues than the CSA).

Pop31

yes - the limit is on the maximum amount that AA will pay to TGA.
Hence - if the price of coal plunged to zero, the amount AAL would have to pay would be capped.
Now - if, say, AA pays an amount to TGA under the agreement and prices subsequently rose, TGA would be liable to pay back the amount AA paid to it.
TGA is writing down the value of the agreement because it is unlikely that any cash will be paid by AAL to TGA because prices are so far above the floor. In essence, the agreement, because it expires at the end of this year and prices are so high, is worthless.
That is all you need to think about.

Where there is confusion in the min

TGA has something it does not need and is writing the value of it down.