12-Jun-2012 Corporate Disclosure - PAP

http://www.cse.lk/cmt/upload_cse_announcements/1411339472674_.pdf

PAP accepted Offer made by Padiyapelella Hydropower (Pvt) Ltd to acquire 90% of tht company which has 3.6MW capacity which is nearing completion and a license to develop an additional 3MW for a consideration of Rs.910,000,000.00.

this is an extremely over valued in-house purchase. Padiyapellella is originally owned by former parent company of PAP, any one has doubts can refer PAP prospectus page no 10.

As per PUCSL, the governing body for all these companies, the cost of a MW power plant is about 200mn,which in-turn 90% of such comes to 648mn for the constructed power plant, so they are going to pay 258 mn for the approval construct the next power plant.

by the way PUCSL's value of 200mn is based on a plant factor of 42%, i seriously doubt this project capability to meet that target to achieve that valuation.

hope you all remember the Manelwala acquisition which they did along with the IPO (actually IPO was to pay the Manelwala acquisition cost). that is also a very much under performing project.

If anyone happened to go for this EGM, please ask these questions.

(I usually refrain myself from making comments here, but i couldn't resist myself in this case)

tinyman wrote:this is an extremely over valued in-house purchase. Padiyapellella is originally owned by former parent company of PAP, any one has doubts can refer PAP prospectus page no 10.

As per PUCSL, the governing body for all these companies, the cost of a MW power plant is about 200mn,which in-turn 90% of such comes to 648mn for the constructed power plant, so they are going to pay 258 mn for the approval construct the next power plant.

by the way PUCSL's value of 200mn is based on a plant factor of 42%, i seriously doubt this project capability to meet that target to achieve that valuation.

hope you all remember the Manelwala acquisition which they did along with the IPO (actually IPO was to pay the Manelwala acquisition cost). that is also a very much under performing project.

If anyone happened to go for this EGM, please ask these questions.

(I usually refrain myself from making comments here, but i couldn't resist myself in this case)

Valuable info.
Thanks for the warning.

tinyman wrote:this is an extremely over valued in-house purchase. Padiyapellella is originally owned by former parent company of PAP, any one has doubts can refer PAP prospectus page no 10.

As per PUCSL, the governing body for all these companies, the cost of a MW power plant is about 200mn,which in-turn 90% of such comes to 648mn for the constructed power plant, so they are going to pay 258 mn for the approval construct the next power plant.

by the way PUCSL's value of 200mn is based on a plant factor of 42%, i seriously doubt this project capability to meet that target to achieve that valuation.

hope you all remember the Manelwala acquisition which they did along with the IPO (actually IPO was to pay the Manelwala acquisition cost). that is also a very much under performing project.

If anyone happened to go for this EGM, please ask these questions.

(I usually refrain myself from making comments here, but i couldn't resist myself in this case)

Thanks for sharing your valuable comment

One more point to add, yesterday's plant factor at manelwala plant is just 1% generating only 328 units. the days revenue should be around 4000-5000 rupees. for this project they paid 565mn to acquire.

Refer www.panasianpower.com

tinyman wrote:One more point to add, yesterday's plant factor at manelwala plant is just 1% generating only 328 units. the days revenue should be around 4000-5000 rupees. for this project they paid 565mn to acquire.

Refer www.panasianpower.com

What does mean "Plant Factor"?

Monster wrote:

tinyman wrote:One more point to add, yesterday's plant factor at manelwala plant is just 1% generating only 328 units. the days revenue should be around 4000-5000 rupees. for this project they paid 565mn to acquire.

Refer www.panasianpower.com

What does mean "Plant Factor"?

In short it is the actual generated Vs designed(capable)

If you generated 100 units today and the designed (or capability of the plant) is 1000 ,
then today's PF is 10%

In SL, seasonal rain fall, drought , human behaviors may reduce PF.

To achieve a fair amount of power generation during rainy seasons they design generators considering the inflow. In off seasons, normally the inflow goes down below the required amount to run the turbines in full speed.
Now you can't use the full capability of the plant, PF become low. You have to think about this when selecting a place to install a power plant.

In some areas like Ratnapura you get fair amount of rain spread throughout the year, from both monsoons ?, then the plants in that area usually have high PF and this makes the projects viable.
In some areas you get better RF but limited to some months , you have to fix high capacity turbines to make use of it but PF will become very low in other season.

Hence a low cost, low capacity plant with high PF may become profitable than high cost high capacity low PF one.

A PF of 60 or 70 is very good in SL.

Chinwi wrote:

Monster wrote:

tinyman wrote:One more point to add, yesterday's plant factor at manelwala plant is just 1% generating only 328 units. the days revenue should be around 4000-5000 rupees. for this project they paid 565mn to acquire.

Refer www.panasianpower.com

What does mean "Plant Factor"?

In short it is the actual generated Vs designed(capable)

If you generated 100 units today and the designed (or capability of the plant) is 1000 ,
then today's PF is 10%

In SL, seasonal rain fall, drought , human behaviors may reduce PF.

To achieve a fair amount of power generation during rainy seasons they design generators considering the inflow. In off seasons, normally the inflow goes down below the required amount to run the turbines in full speed.
Now you can't use the full capability of the plant, PF become low. You have to think about this when selecting a place to install a power plant.

In some areas like Ratnapura you get fair amount of rain spread throughout the year, from both monsoons ?, then the plants in that area usually have high PF and this makes the projects viable.
In some areas you get better RF but limited to some months , you have to fix high capacity turbines to make use of it but PF will become very low in other season.

Hence a low cost, low capacity plant with high PF may become profitable than high cost high capacity low PF one.

A PF of 60 or 70 is very good in SL.

Thanks Chinwi, for your good explanation.

Any body has any idea how PANASIA POWER will fund 910M to acquire the PADIYAPELELLA HYDRO POWER PVT LTD

Do they go for right issues ? and Debenture issues ??

Please share the thoughts

tinyman, seeing your comments after a very long time and thanks Chinwi for the extended explanation. Very useful points discussed as my knowledge is limited in our power generation sector.

They have already had an agreement with them to buy in 2011 june see the following link

http://www.cse.lk/cmt/uploadAnnounceFiles/4061307962243_1040.pdf

ccsentha wrote:They have already had an agreement with them to buy in 2011 june see the following link

http://www.cse.lk/cmt/uploadAnnounceFiles/4061307962243_1040.pdf

yes it is, but what my point is this valuation is exorbitantly high amount compared to the industry norms plus their past record also indicates the same.

Moreover the so called independent valuers did the valuation for the Manelwala power plant also,the funniest part is that they assumed a plant factor about 47% to be achieved whilst the actual for previous years were at 20-25%. (refer the prospectus) (and FYI, that plant factor is solely depends on the water flow in the river). this was done, purely to justify the higher price paid by giving a high valuation. Similar work was done by them on the Access Engineering Prospectus - Private Placement (I didn't check the IPO prosperous as I was disappointed on the valuation numbers.) as to forecast more than double the bottom line growth for the coming years whilst having past two year earnings flat at 800mn and without any major investments.