Eco Investor July 2017

Core Securities

Pacific Energy Tracking Well

In May Pacific Energy's share price touched 76.5 cents, and in February it touched 77 cents - only half a cent off its all time high. The point however is that the all time high was in November 1999, nearly 18 years ago.

Since 2016 the share price has more than doubled from 35 cents. The company looks to have got its act together and has released an impressive set of charts to illustrate its growth.

Its first half revenue of $29 million almost equaled its 2011-12 full year revenue of $31.9 million. First half earnings (EBITDA) of $21.3 million were very close to the 2011-12 full year EBITDA of $21.5 million. Its interim adjusted net profit after tax at $9.6 million looks like it may help challenge the 2015-16 record high of $17.8 million and is well above the 2011-12 full year profit of $6.3 million. And total assets are at a record level, and so is total contracted generation capacity. Contracted capacity is now 278 megawatts compared to 239 megawatts in June 2016.

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The full year EBITDA guidance is $40-$41 million compared to $36.8 million in 2015-16.

The remote power company said it expects the growth to continue as it has had a high level of tendering activity for new projects and is also pricing expansions at some existing sites.

It said the African expansion strategy that started last June is unfolding well. Bids have been submitted on a range of projects, mostly with ASX listed companies operating in Africa. The company believes the first contract win is imminent, and it expects the first revenue in late 2017-18 or early 2018-19.

The current strong cash flows should see gearing at 30 June reduce to 23 per cent. With cash and low gearing, the company is looking for investments and acquisitions in the energy and infrastructure market that can offer recurring revenue.

That's a lot of positives. The full year results will provide a definitive picture of how the company is traveling. The question for investors is whether all of the good news is already in the share price? (ASX: PEA)

 

 

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