All of them make good profits because of the unusually high purchasing price of CEB.
How long they can continue this / how many years the enjoy this as per their agreement ? These -ve questions come in to mind when valuating power shares ....
Somehow at the moment they are OK.
When considering PAP I am very much sure it can double-treble its asset value, with earnings + re-valuation, in few seasons before anything happen. Hence, even if buying price reduced or Govt. start to charge for water they get free at the moment I think we can get good return before that.
All PPPs have 15-20 year government guaranteed power purchase agreements. for most of them, 80-90% floor price is fixed. but according to past experience we can say purchase tariff is increasing annually.
also they are enjoying 2 type of tariff in a year. dry season and wet season. dry season tariff are much higher than wet tariff. so
purchasing tariff of mini hydro plants are in positive direction.
As you said PAP at present is very undervalued...
when will look at it earnings
Pan Asian Power - For 6 Months ( 30th Sep) ----45,159,110
Manelwala For 6 Months ( 30th Sep) ----- 6,421,291
Total For 6 Months ( 30th Sep) - ---51,580,401
3rd & 4th quarter Expected Profit -----70,000,000
Issued qty ------500,000,000
Annualized EPS ------ Rs.0.26
Current MKT Price ------ Rs.4.20
PE ------- Only 16 times
However in bloomberg has not adjusted Manelwala earnings and not annualised.. ( http://www.bloomberg.com/apps/quote?ticker=PAP:SL)
When you look at the other companies in power sector
VLL- 23 Times http://www.bloomberg.com/apps/quote?ticker=VLL:SL
HPWR -19 Times http://www.bloomberg.com/apps/quote?ticker=HPWR:SL
VPEL - 17 Times http://www.bloomberg.com/apps/quote?ticker=VPEL:SL
HPFL - 23 Times http://www.bloomberg.com/apps/quote?ticker=HPFL:SL
when HPWR was Rs.30 level I was telling in Investnow PAP and HPWR are the undervalued stock in the sectors. Now HPWR as i expected it hit rs.42 level...
My prediction is PAP will hit in the Range of Rs.5.20 5.50 once they release it financial and coming quarters..