Okay, so Management will be promoting this presentation during a series of non-deal institutional investor meetings in the coming weeks. Non-deal means there's nothing for sale i.e. no placements, equity raising or dilution!!! The meetings will give current and potential investors enough time to evaluate KPO prior to the expected completion of the Hainan Island plant in July. Some decent institutional buying support should push the SP up and ensure the August options remain well in the money. From my lengthy discussion with Tim Horgan last week, Hartleys will be instrumental in reviving the SP so it's fair to say they'll be on the meeting agenda. Remember, the August options are worth A$3.9m to KPO and were factored in to the initial business plan. Naturally, KPO will want to ensure that Hartleys recommend their clients convert those options.
@thunder54, I disagree emphatically with your post about relations with Sinopec going south. Do you have any information to back that up or is it just a 'gut feeling'? Kalina Cycle technology is the only waste heat to power option available to petrochemical plants due to the non-explosive working fluids used. Sinopec has a commitment to use waste heat recovery technology throughout it's industrial infrastructure. They provided funding to complete the Hainan Island project and more recently appointed one of their senior project managers to the role of Project Manager with our Chinese subsidiary, A&W in anticipation of further projects. I am very confident that they'll proceed with the rollout of additional plants, however whether these are included in KPO's projected pipeline projects is another question.
Last November, @amadain wrote a few posts about 'Who gets the money in China?' It's actually not a bad question because of the very complicated licensing structure currently in place. My understanding is that SSNE still holds the Kalina Cycle license in China, however our newly formed subsidiary A&W has an option to terminate the agreement based on SSNE's failure to deliver on the Sinopec, Hainan Island contract terms. As we know, KPO own 75% of NEA who currently owns a non-dilutable 49.9% stake in A&W but according to Tim, this number could reduce to around 35% if required. So yeah, basically our China revenue is a percentage of a percentage.
As far as this presentation goes, it appears KPO have made a strategic decision to move the focus away from Sinopec slightly and show potential investors that we're not just a 'one-trick pony'. They highlight this by saying that a 'significant portion of active files in North America are with contacts well known to the former Pristine Power team' and in Canada, there are 'ongoing discussions across multiple industries with potential orders of over 200MW'. Despite this, I'd still like to know what portion (if any) of the 6 pipeline projects that represent 34MW are Sinopec related? It has been stated in previous presentations that the Sinopec Hainan Island plant will require 8 Kalina Cycle plants in total.
On 'Slide 8 - Capital light business model', they've revised the specialised engineering services illustrative economics revenue down from $500k/MW to $300k. Not sure what to make of that ... a typo hopefully?!?!? Licensing royalties remain the same.
Based on current exchange rates and using KPO's projected figure of 34MW over the next 12-18 months, at approx US$300k/MW we're looking at about A$13.8m in revenue from engineering services alone. Assuming customers choose the one-off licensing royalty payment option of US$250k/MW, then we can add a further A$11.5m. On top of all that, add A$3.9m for options conversion this year and we're almost at $30m total revenue within an 18 month period. Not bad for a company with an EV of $14m!!!
As the presentation suggests, 100MW is a key milestone as it puts us in the cross-hairs of larger institutional investment funds. At that point, we should see explosive growth towards a MC in excess of $200M. Ormat had a MC of approx $500M when they hit 100MW. We're not quite in the same ballpark as Ormat due to our revenue model, however the presentation confirms future plans to develop, build, own and operate plants once appropriately capitalised. This is where Wasabi failed and KPO will succeed.
@Wyman Wells, the significance of this presentation is in it's timing and the target audience. Think outside the box and join the dots. There's a lot happening in the months ahead. We have management going on a roadshow this month, the Lions Bay > Pan Andean deal due for completion by June 30th, EOFY selling coming to a close, the Hainan plant due for completion in July and options conversion at the end of August. Yes, the goal posts have moved slightly with regards to KPO's early stage guidance on installed MW capacity, but you have to expect that. It's still very early days!
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Oh, one last question for @amadain. Are you John Byrne??? Please email me sometime. I'd love to chat with you outside of HC.
KPO Price at posting:
5.3¢ Sentiment: Buy Disclosure: Held
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