PIF.TO + 11% yesterday + my DD
...maybe you bought here LOL? I actually got some big orders filled at $7.10 as figured the Fabrice article would solidify the technical chart floor and then PIF went +11% on the day and I am feeling brilliant for once.
Recommend reading that article from my last post again and seeing if you can buy cheaper later this week.
Found my notes from first public quarterly teleconference with management after getting close to emerging from bankruptcy (Q3-2015?). Here they are. Don't think I ever posted them on the board:
Summary
- Single producing asset geothermal electricity producer in Nicaragua. Contracted offtake @ $USD $115/MW, inflating at 3%/year to 2022; 1% thereafter, with National entry company. Baseline production is 51-52 MW and represents 16% of national energy grid. 3% decline/year so maintenance capex required to maintain production.
- Formerly Ram Power on TSX, who was indebted much too high (6.3X Debt/EBITDA), went into restructuring and was recapitalized in Spring 2015. Pre-existing equity was wiped out. That is irrelevant to new company though, but is also the current opportunity.
- “Classic” low-information, inefficient markets opportunity as newly recapitalized, share-consolidated , newly named company has no website, no market-awareness, plus it only trades in Canada. Can only find relevant news releases on SEDAR for example (Canada’s EDGAR). One Vancouver analyst Salman Partners (not widely followed in Canada) follows them (probably because they had investors in former RAM Power). [Note from March 30, 2016 - doesn't apply after Globe and Mail article yesterday!
- EBITDA, CFOps (after interest) and Free Cash flow positive.
- Trades at a third of other Canadian utilities on EV/EBITDA and FCF yield. Will always trade at discount as single asset geothermal company but even a re-rating to 50% of comparables is about a 40% gain – this is before drilling upside.
- Are drilling 2-3 wells over next 6 months to be brought into production from April-October 2016. Expecting 5MW/well, but impossible to predict actual outcome with Geothermal.
- Dividend restriction of ProjectCo in Nicargua ends in March 31, 2016, so likely to be dividend payer after that and management has guided such intention. Note on March 30, 2016 - Management delivered on guidance announcing first dividend for shareholders on record in mid-may
- New management seems very reputable with CEO former co-head of investment banking for Power group at Cormark (reputable Canadian research/iBank)
- Ignore the trading action prior to August 31st where only 200,000 shares were freely trading. Only Sept + trading action counts.
- Top Pick of widely followed Canadian newsletter writer Fabrice Taylor on BNN a week ago. Note - this was in October or November 2015
- Listened to the first new-management Q2 conference call and the Salman analyst report was excellent coming out of this and got every detail almost word for word
- Pays divvy in $USD. For Canadians this is great as Revenue is in $USD.
- Opportunity here is 1) Rerating as company gets more awareness 2) Valuation upside from success on drilling program 3) Valuation upside from becoming a dividend payer in April 2016.
- $USD 71M of cash at June 30 vs. $17M of debt principal due in next 12 months. No risk of default anymore
