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Ahh gotcha, ok. Just trying to make sure we display the most accurate info even if "new" info we find isnt as relevant to current events.
For clarity to new investors, if it was up to me, I would suggest having two overarching threads here on the board until more can be confirmed: discussion regarding 3Power Shala projects & deals, and discussion regarding other potential strategies or speculative deals that have yet to be substantially confirmed.
As much as I want to see Falak reverse merge some of their income generating entities into PSPW, the only things 8k'd so far have been regarding 3Power Shala and deals surrounding the hydro project(s).
Either way, I'm glad to see new Shala updates coming out regularly now that things are moving!
Could you take this link down please? Confusing info from the past. You can delete this message as well. Thanks.
Was that you @ .12?
Excerpt from cached 3powershala.com/about-us updated Nov 6th:
"The expected time of completion of the project is about three years from the start of the works in the site and the total investment is calculated roughly to 85 Milion Euro."
They had originally said 110 million Euro. So if this is really the most updated figure at 85 mil Euro (which is may not be), the needed investment for Shala has been lowered by 25 mil which means more of the potential 253 mil will likely go toward the other ~116.5 MW of projects.
http://webcache.googleusercontent.com/search?q=cache:c9UDwrED_rIJ:3powershala.com/about-us/+&cd=1&hl=en&ct=clnk&gl=us
Then make this one count - I've got 12x more shares than back then and at a lower average.
Good eye then. Nothing gets by you!
Your average must be a little higher than those .02s now ;)
An Indian consortium won the big PV bid.
http://acp.al/news/5413/Shpallet-kompania-fituese-per-Impiantin-fotovoltaik-te-Akernise---70-milion-euro-investim/
There were 6 bids and 3 finalists. I can’t seem to find who the other bidders were on the Public Procurement site (http://app.gov.al/home/). Would be nice to know if we did submit a bid.
They've probably closed the funding already. Wouldn't surprise me based on the timing: my last conversation with Juljana on Oct 17th was 3 weeks after the MOU with Sinohydro.
The Google cached version of the "newsactivities" page has the MOU with Sinohydro on it. Its not just pulling from the 8k either because the wording of the announcement from June is slightly different.
Everything you're going to miss out on here comes from getting snubbed in Dubai - just let it go.
It does say "exportable electricity" in this 8k as well. Which potentially doubles or triples the revenue stream numbers I used in my recent analysis, depending on what price per KWh is used. Perhaps they really have made adjustments that increase the future revenue stream here.
I believe the NT for the next Q should be tomorrow or Thurs.
Makes sense. Lower costs and more efficient production.
Clearly there's much more profit available selling to those countries. However, 3Power's initial revenue estimate on Shala's output lines up with the €.05x per KWh price. Perhaps the additional project would be exported? Or maybe they'll even adjust the plan now if its that much more profitable.
Of course. I just needed to run the numbers and see for myself the kind of value that Shala & additional project should bring. Speculating on potential deals (reverse merge with Falak entities, etc) is one thing, but seeing real numbers in context to the current facts put it all in perspective.
Update - discounted cashflow valuation range for Shala et al
$.69-$1.23 share valuation under conservative conditions discounted at 15% and 7.5%, respectively
$1.21-$2.18 share valuation under optimal conditions discounted at 15% and 7.5%, respectively
I know this is a wide range of share prices, but until the financing is closed and we know how to accurately calculate the weighted average cost of capital for debt & equity, we have to estimate the discount rate to find net present values for the cashflows (over 30 yrs rather than 32 to be safe).
The more I investigate, the more it looks like my assumption of 10% for avg cost of capital for this kind of project could still be a little high. This GWU paper from 2014 calculates the NPV on a very big hydro project in Brazil using a discount rate of 3.97% when weighted for the debt/equity percentages and the various factors included in each (https://bit.ly/2z7YdkV). I would imagine the economic climate in Albania carries more risk premium than a country like Brazil, and thus other variable percentage points should likely be added to the WACC. So for now, let’s use a range of 7.5% (most optimal) to 15% (most conservative). Then when the financing is announced, we can plug & play the numbers more accurately.
NPV range, very conservative scenario (85% output, €.056 per KWh, 4% O&M cost):
@15% WACC: $196.32 million
@7.5% WACC: $353.13 million
NPV range, most optimal scenario (100% output, €.064 per KWh, 1% O&M cost):
@15% WACC: $346.03 million
@7.5% WACC: $622.41 million
196.32 / 286 = .69
353.13 ... = 1.23
346.03... = 1.21
622.41... = 2.18
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Original Post
$2.30/share (conservative) to $5.40/share (optimal)
Without an estimate on EBITDA, a cashflow valuation makes the most sense.
Incoming Cashflow
Shala’s stated annual output on 83.5 MW = 321,465,632 KWh
Extrapolate the output on 200 MW total capacity (which includes the potential acquisitions mentioned in previous 10q’s and now in the most recent 8k), and we get a annual output of 768,302,860 KWh. To be conservative, let’s say output doesn’t live up to expectations and the projects only achieve 85%, so call it 653,057,431 KWh annually.
2018 purchase price of power in Albania = €.064 per KWh
The 2016 & 2017 purchase price was €.056 per KWh
Let’s average the two and use €.06 per KWh.
Link to stats: https://bit.ly/2PqlSaj
Projected gross annual revenue would then be €39.18 million or $44.2 million in today’s dollars.
The concession is for 35 years starting April 2018, with 36 months to build. We’ll assume the additional project will include the same timeframe. Let’s be safe and say there’s 2 years of delays for whatever reason. So 30 operational years of producing revenue.
$44.2 x 30 years = $1.326 billion revenue over the life of the project
Outgoing Cashflow:
This is a bit trickier right now since we don’t know the terms of the financing to calculate the cost of capital. A 2012 cost analysis paper by the International Renewable Energy Agency used 10% as the avg cost of capital for hydro power projects (https://bit.ly/2JuNi8i). Again let’s be safe and use 15% which would be €291 million.
It also seems that operation & maintenance expenses are quite low, at somewhere between 1-4% annually of the total investment cost (source: IRENA paper, above). Larger the project, lower the percentage, generally. So let’s go on the high side to be conservative again and say 4% of €253 is around €10 million a year in operating costs, or €300 million over the life of the project.
Outgoing cash flow in this scenario would be €591 million, or $668 million in today’s dollars.
Put it together and what have you got?
$1.326 billion incoming minus $668 million outgoing = $658 million market cap. 658 / 286 shares is $2.30 a share current valuation ON THE LOW SIDE.
Rework the numbers on both cashflows to be optimal (full output, purchase price at 2018 prices, 10% cost of capital and 2% operation cost), and you get $5.40 a share.
I haven’t discounted my cashflows, so if there’s a finance nerd that can do me up a quick NPV on the numbers, we’ll be slightly more accurate.
I welcome feedback on this. Cheers to progress!
Anything I'm missing on my calculations?
Hmm, didnt know that. Could possibly double the revenue numbers then. Wouldn't there need to be a PPA with Italy already in place for that though? It seems that part of the financing process for projects can include a PPA for greater clarity & probability on how investors will get their money back. Perhaps that could be a factor in the other project(s) they have yet to name.
$2.30/share (conservative) to $5.40/share (optimal)
Without an estimate on EBITDA, a cashflow valuation makes the most sense.
Incoming Cashflow
Shala’s stated annual output on 83.5 MW = 321,465,632 KWh
Extrapolate the output on 200 MW total capacity (which includes the potential acquisitions mentioned in previous 10q’s and now in the most recent 8k), and we get a annual output of 768,302,860 KWh. To be conservative, let’s say output doesn’t live up to expectations and the projects only achieve 85%, so call it 653,057,431 KWh annually.
2018 purchase price of power in Albania = €.064 per KWh
The 2016 & 2017 purchase price was €.056 per KWh
Let’s average the two and use €.06 per KWh.
Link to stats: https://bit.ly/2PqlSaj
Projected gross annual revenue would then be €39.18 million or $44.2 million in today’s dollars.
The concession is for 35 years starting April 2018, with 36 months to build. We’ll assume the additional project will include the same timeframe. Let’s be safe and say there’s 2 years of delays for whatever reason. So 30 operational years of producing revenue.
$44.2 x 30 years = $1.326 billion revenue over the life of the project
Outgoing Cashflow:
This is a bit trickier right now since we don’t know the terms of the financing to calculate the cost of capital. A 2012 cost analysis paper by the International Renewable Energy Agency used 10% as the avg cost of capital for hydro power projects (https://bit.ly/2JuNi8i). Again let’s be safe and use 15% which would be €291 million.
It also seems that operation & maintenance expenses are quite low, at somewhere between 1-4% annually of the total investment cost (source: IRENA paper, above). Larger the project, lower the percentage, generally. So let’s go on the high side to be conservative again and say 4% of €253 is around €10 million a year in operating costs, or €300 million over the life of the project.
Outgoing cash flow in this scenario would be €591 million, or $668 million in today’s dollars.
Put it together and what have you got?
$1.326 billion incoming minus $668 million outgoing = $658 million market cap. 658 / 286 shares is $2.30 a share current valuation ON THE LOW SIDE.
Rework the numbers on both cashflows to be optimal (full output, purchase price at 2018 prices, 10% cost of capital and 2% operation cost), and you get $5.40 a share.
I haven’t discounted my cashflows, so if there’s a finance nerd that can do me up a quick NPV on the numbers, we’ll be slightly more accurate. I welcome feedback on this. Cheers to progress!
I've been crunching numbers since the 8k. I've run these by a couple folks so I feel comfortable sharing now.
Yes, fiscal Q2 report would be due next week, I believe.
Albania is still a developing nation - that's always been the risk here. There are only 3 large hydropower projects that provide most of the electricity for Albania - the Shala project would become the 2nd or 3rd largest I believe. So even if it seems small, its actually quite the contrary from their perspective. The fact is, there have been dozens of concessions granted in Albania for hydro projects over the last 8-10 years, but majority have either been canceled or are never actually built.
Albania's new energy legislation from Spring/Summer 2017 seems to be helping move things along, hence why our concession was granted in Fall 2017 and the contract signed in April this year. Plenty of other concession contracts have been signed this year too, but are much smaller, like 2-10 MW. Shala is a big deal.
Now, while I don't believe your bond example is entirely transferable to Albania, 3Power did have to put down 2 security deposits. When I translated the concession, here's what I found (I also posted this on Oct 6th):
Specifics from the bid:
- Upon notification of winning the bid in Aug 2017, they had to submit a non-refundable security deposit of 2% of the investment value (~$2.5 million on €110 million).
- Upon the signing of the contract (as it was on 4/4/18), they had to submit a contract security deposit of 10% of the project investment value (~$12.6 million on €110 million).
- They had to submit financial documents and bank statements to prove they have the economic viability to complete the project. This included several financial ratios tied to the project investment value, as well as bank documents showing at least 7% of investment value available in cash. Makes sense why Falak Properties is one of the 3 shareholders that comprises 3Power Shala Shpk - he's the one with all the capital and leverage.
And back to the Bank Capacity Letter from the 8k yesterday - it may have been needed for other material events coming, as well as for extra security for the contract. Nothing seems to be guaranteed over there to the same degree it is in the States.
Good to see you here Chime!
The purpose of Shala Energy PLC (Irish sub) was always for fundraising. 3Power Shala Shpk (Albanian sub) was formed from the PLC, Falak Properties, and Cinar-San (construction co).
See the excerpt from the most recent 10Q, as well as a link to the Albanian 3Power Shala documents.
"Acquisition of Shala Energy Plc
In October 2017, the Company acquired 45% of Shala Energy Plc, a Republic of Ireland corporation. Effective October 20, 2017, ownership was increased to 75% by acquiring an additional 30% from Falak Enterprises, a related party. Shala Energy Plc was formed to assist with financing opportunities. Purchase price of the 45% and additional 30% has yet to be determined and no consideration has been transferred. Shala Energy Plc is a recently formed entity with no significant assets or liabilities.
On October 20, 2017 Shala Energy Plc formed a 80% owned subsidiary, 3Power Shala Sh.Pk, as an Albanian Special Purpose Vehicle (“SPV”) as required by Albanian law, to bid and to successfully acquire an 83.5MW Shala River Concession."
Albanian 3Power Shala documentation:
http://www.qkb.gov.al/umbraco/Surface/SearchSurface/DownloadDocument?documentCode=6F0B19B7-8BA0-498F-A403-6237D86469B3
I almost called this morning. Had Skype pulled up and then thought, "lets wait this one out." Haha
LOL LETS GO!!
The 3powershala.com domain will expire this Sat 11/10 unless renewed. Doesn't mean they'll be ready to release it yet, but it would be an opportune timeframe given what we've been told...
So make it a doozy!
Remember - per my conversation, I was told it would be published in Albania first, and she obviously has no control over the filings. So yes, hopefully it happens all at once with filings too. But I won't be surprised if the website or documents from the Albanian government come first.
Would be nice to see a .25 base before things get underway. But would obviously need some buying pressure to get the bid up...
Yes. And I'd like to see a PR announcing it and the news of what they've been working on, however, I'm not expecting that in the least bit. She said "the news section of the website."
I'm also not ruling out the possibility of another couple weeks before we actually see anything. But we do know its coming.
Yeah that's from summer 2017. They used to have annual meeting minutes on their website that showed that Aardvark was only valued at $1M and they chopped it up and sold parts of it off, I believe.
Load, baby, load!
For a visual of Enthalpy's numbers, here are the actual screen grabs from the filings:
Chronological Ledger of Falaknaz & Related Parties' converted shares, 2010 to Present
https://s15.postimg.cc/g3jb3w3ej/IMG_6004.jpg
Chronological Statement of Beneficial Ownership, 2011 to 2017
https://postimg.cc/gallery/1eu2y04m0/
The reason for the range of 75-91% insider ownership (which is 214-260 million shares of the 286 million OS) is due to Falak & parties buying back shares from former insiders through off-market transactions that are not in the filings but have been corroborated from outside sources by multiple board members here. Plus the 12 million shares issued in March/April of this year that will be accounted for in the 10k when filed. I am assuming those have been given to Rahman/Falak for salaries as they typically convert their salaries to shares at the year-end March 31st (see past 10ks).
News likely on 3powershala.com end of next week.
Decided to call the office this morn quick. Nothing to report. Working on website and should likely have news to announce on the website by end of next week.
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Clearly she is just estimating when she thinks the website will be ready based on the work they have to get done. Nonetheless, I'm glad to see how they've kept everything dark while preparing to distribute consistent information which has obviously not happened in the past.
I'll call again Thurs morn if we don't hear anything tomorrow.
Probably only from folks who read or have stumbled upon this board ;)
Nope, I wasn't there, and you were - thanks for falling on the sword for all of us. Well, that's what we're about to find out, now isn't it? What great & wonderful things have kept the filings delinquent. Whatever it is, I'm certain you'll find plenty of your own holes in it. I mean, wow - revenue, anyone?