Investors shouldn't be too concerned by the profit slide at India-focused power plant operator and developer, OPG Power Ventures. That reflects a decision to deconsolidate the group's minority interests in a 26-megawatt (MW) waste heat power plant and a 10MW gas-fired power plant – operations that are in long-term decline. That hit earnings and resulted in a £4.8m one-off charge. But with an impressive pipeline of projects, and with Indian power demand still robust, the shares look too cheap.
Indeed, pre-tax earnings from OPG's first purpose-built power plant – the 77-megawatt (MW) Chennai I project – reached £7.55m, with the plant operating at 92 per cent of capacity. Furthermore, OPG's second 77MW plant, Chennai II, should be commissioned in September – that could prove to be a transformational development for the group as it embarks upon several years of rapid expansion. The 80MW Chennai IV plant is also in advanced-stage construction – it should be commissioned by this time next year – while construction has also begun at two much-larger plants; Chennai III and Gujarat, which comprise a total of 460MW of generating capacity.
OPG POWER VENTURES (OPG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 34p | MARKET VALUE: | £120m | |
| TOUCH: | 32-35p | 12-MONTH HIGH: | 83p | LOW: 29p |
| DIVIDEND YIELD: | nil | PE RATIO: | 486 | |
| NET ASSET VALUE: | 37p | NET DEBT: | 24% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 7.30 | 6.30 | 1.24 | nil |
| 2010 | 11.5 | 5.40 | 0.32 | nil |
| 2011 | 33.2 | 11.2 | 2.13 | nil |
| 2012 | 45.3 | 2.26 | 0.07 | nil |
| % change | +36 | -80 | -97 | - |
