The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Hi ShareNewb95, you misunderstand what I said.
The 58.5p is earnings per share after tax, the earnings from which the company will pay a dividend, the share price would be a multiple of that.
We can only guess what that multiple would be but as PHE will be paying a very good dividend my guess would be a P/E of around the 20 mark, giving a share price of £11.70.
I will leave you to work out the market cap.
Hi FlyingHorse1, I like your thinking.
As you will have already worked out those numbers would give PHE gross earnings of £3b per year, lets say £2.4b after tax and company running costs, if we round up to 4.1b shares after Peel invest their £10.2m then that equates to earnings per share of 58.5p.
Obviously it will take some time to get there but that is the true potential of this amazing technology.
AIMHO
Hi ShareNewb95, unless I have missed something in the past few months the DMG units themselves will be built and commissioned on the premises of whichever international engineering company is chosen and then transported to and installed on site.
My understanding is that a number of international engineering companies are interested in taking on this work, I think they may have already chosen at least one company for the UK but we don't as yet know who.
This leaves a number of international engineering companies for building out in other countries when licences are signed so I don't envisage any bottlenecks whatsoever.
It could also be that more than one engineering company will be used in any one country to ensure we do not suffer any setbacks should any individual engineering company suffer (financial/staff) difficulties.
Hi Bananaman2, yes absolutely and more.
Why? As I said earlier we have a very simple but lucrative business model with very low overheads as we do not need a factory and have no debt. This means that we only need the royalties from two DMG units to break even and everything after those first two are profit, so looking at the UK in isolation once we get to say 20 units up and running we will see royalty earnings of £10m, £1m of that runs the company and the remaining £9m is profit before tax.
In comparison ITM, with a market cap of £1.2b, have taken the route of manufacturing their own electrolysers which gives them much greater overheads, consequently although they have revenues they are still making a loss, for instance last year they had revenues of £4.59m but made an operating loss of £9.35m.
So if the market is willing to buy into a company like ITM on the hope that it will at some point start making a profit how will they react to a potential cash cow like PHE, at some point the penny will drop, it may be before or after the FOAK is up and running but it will happen.
Once it is up and running, due to the revenues from gate fees and sales of electricity, Peel will be making a profitable return even before sales of H2 kick in, whereas the operator of an electrolyser can only get revenue from the sale of H2 alone. This is why there will be no shortage of customers for the PHE DMG.
And then in parallel with the UK, where we expect over 70 DMG sites from Peel alone, we will have further licensees in other countries across the world.
So whilst it is impossible to predict what market cap we will aspire to it is easy to see that it could be quite something.
AIMHO.
Hi Gadams, it's not so much the share price that's important to me, it's the dividends.
Although I will sell some of my holding at some time in the future when I find the right property, I will be retaining the majority of my holding for dividend income.
That said, I fully expect the PHE market cap to surpass that of ITM once the market fully appreciates the future profitability and low overheads of the PHE business model.
As PHE expect the £5m raised this week to take us to profitability it will be interesting to see where they are going to use the monies from the Peel warrants once exercised.
1. Yes.
2. No later than 2023.
Thanks for taking the time to update us on the site LedZep, very much appreciated.
IMHO ITM indicates where we could be, last years revenues were £4.9m but they made an operating loss of £9.35m, market cap today is £1313m.
Part 2.
The plastic to hydrogen facility, is the first part of the ‘Plastic Park’ planned at Protos, which will revolutionise the way that plastic waste is currently handled. Envisaged to be one of many Plastic Parks across the UK, it will provide a comprehensive solution for the 4.9 million tonnes of plastic waste generated in the UK each year, preventing it ending up in landfill, exported overseas or in the ocean. A planning application for the first Plastic Park at Protos is expected before the end of the year.
Richard Barker, Director at Peel L&P Environmental said: “This FEED phase is an important step forward in delivering this innovative technology at Protos. Working with Powerhouse Energy we’re creating a blueprint for this UK first plastic-to-hydrogen facility, with plans to roll out over 70 more across the UK. With hydrogen increasingly being seen as an important part of our journey to net zero the time is now.”
Jayne Hennessy, Development Manager at Peel L&P Environmental said: “The Powerhouse Energy technology was developed right next door to Protos at Thornton Science Park which illustrates how the North West is leading on innovation around net zero. It’s great to see the project moving forward and paves the way for construction starting later this year.”
David Ryan, CEO of Powerhouse Energy said: “I would like to congratulate Peel L&P on bringing the FEED phase for the DMG plant at Protos to a successful completion, especially during the lockdown period which is a significant achievement. Defining the application at Protos has provided further commercial and technical validation of our DMG technology. We are confident that the delivery of this first commercial plant will provide a community based distributed source of hydrogen to further the hydrogen economy in the UK.”
Peel L&P Environmental is engaging with supply chain partners to support the project with construction expected to start later this year. The company is also in the process of applying for an Environmental Permit for the facility.
Here's the press release mentioned in the ShareTalk article, part 1.
£20M PLASTIC-TO-HYDROGEN PLANT AT PEEL L&P’S PROTOS MOVES FORWARD
The Front End Engineering Design (FEED) phase has been completed on the UK’s first waste plastic to hydrogen facility. The facility, which is planned for Protos – Peel L&P Environmental’s strategic energy and resource hub in Cheshire – will create hydrogen from waste plastic which could be used to fuel cars, buses and HGVs.
Completed during lockdown, the study assessed all the design and engineering aspects of the proposed facility. It also evaluated the total project costs – estimated at £20m – which will facilitate Peel L&P Environmental finalising the project financing.
The ‘UK first’ facility which gained planning consent from Cheshire West & Chester Council in March 2020 will use pioneering DMG (Distributed Modular Generation) technology developed by Powerhouse Energy Group plc (AIM: PHE) at Thornton Science Park, next door to Protos. The facility will transform the way plastic is dealt with regionally, with the scheme also set to provide a blueprint for future projects to be rolled out nationally. Peel L&P Environmental will develop 11 facilities across the UK in the next few years and has the option of exclusive rights to the Powerhouse Energy technology in the UK leading to over 70 facilities in total.
Hi Piltick, I'd just like to add this from the year end results, " Engineering development continued and the DMG waste regeneration design capacity of generic equipment increased to 40 tonnes per day."
Very pleased to hear that as it seemed far to conservative when Peel have intentions to start the next tranche of 4 units next year and I really can't see Europe being 4 years behind the UK in deployment. In truth I could see Europe rolling out faster than the UK.
Hi stokey, I read it as a further 77 sites plus the expanded 11 unit deal.
All resolutions passed.
MrNation, you have no idea what you are talking about, it is an all share take-over of W2T....not a monetary one.
And I'm still waiting to hear from them.:-)
Thankyou for that clarification Mana.
Hi stokey, that is a good rational explanation of the current market cap and shows that a share price of 5p would not be untoward.
Once the take-over is completed then PHE can concentrate on signing up new licensees and as BuilderPete illustrated earlier this morning there are countries in Asia who are desperate for a solution to discarded waste plastic.
There is every reason to assume that when these new licensees sign up they will execute projects as quickly as Peel in the UK.
So when licensee number two signs up, can we expect the share price to rise towards 10p in anticipation of future income?
Where might we be with 6 or 10 licensees and how quickly will we be signing them up?
The potential here is off the scale.
I'm afraid not stokey, I was given the heads up by a friend who has access.
Or it could be the fact that Southbank have raised their price target to 4.5p.