Ann: ZEN Completes Jundee Expansion Project, page-2

I wonder what pace we should expect announcements

This one popping the share price was a bit odd (to pop the price). Zenith build power stations. So one would expect them to finish them. But this tells me we can expect 6 to 8 pops a year.... that is, a PPA agreement (3 or 4 a year) and a 'build is finished' announcement (3 or 4 a year)

I guess we just need to balance that with other announcements - which can only be negative ones (like the GCY one) or the normal half year accounts statements.

I expect the next four half years accounts (incl this one out in two weeks) will be neutral or slightly positive. I still think the market has the leftovers of the last two half years abysmal 1 cent EPS (2nd half 2018) followed by 2.6 cents EPS last half year. I project a 3.7 cents EPS for this half year - giving 2019 full year as 6.3 cents EPS. Now that still needs to be compared to the 8.6 cents from full year 2018. Remember first half 2018 had the one off 7.5 cents with a big engineering contract.

So these half year reports will be important as they show, half year after half year, ZEN can make 3+ cents, growing to 4+ cents, growing to 5+ cents per half year. Zenith does that just continuing to do what they do and finishing the builds they are undertaking.

If Zenith report 5 cents EPS this past year the share price will fall. If they announce 7 cents the price will rocket. With all the info on hand, I think the current 61 cents maybe up to 65 cents is a fair price. I also await the half year (in the future) they announce a dividend. They do have a lot of franking they can release. The cap raise actually brings closer to fruition one of two things... more projects or a dividend.

As a recap, my projections on EPS for this year just finished and the next two following are 6.3, 6.5, 9 - just on current projects / contracts. I tried hard to correctly use the first half 2019 reported numbers (revenue, ebitda, finance costs, depreciation, tax) to flow forward for the next two years.

Just some notes of my thinking on all things Zenith:

1) I think they tend to under promise; this upcoming report on Aug 5 will show if that is true or not; they are not long enough in the market to make a good judgement on under/over promise; but we will see; over on PEA some poster analysed PEA many months ago and said PEA under promised on the ebitda; and they were correct; PEA then did announce an 'upgrade' a couple weeks ago, that bounced their share about 7%; given ZEN have the yearly numbers in hand, and have not announced any upgrade (or downgrade!), we can only assume their guidance is accurate; but the Zenith guidance range is very wide! if they hit low end they are 5 cents EPS this year; if they hit high end they are 7 cents EPS; I did my projections on hitting the midpoint of guidances

2) I 'wonder' what the directors will do with the $5 mill they can raise with the unsubscribed SPP at 58 cents; they have 90 days to decide from end June; 8 mill new shares would dilute from 137 mill to 145 mill shares; my feeling is I would like them to get the $5 mill into their bank; maybe they should re-offer the SPP; I am sure it would now be taken up

3) I was sad, initially, at the cap raise; but when I consider the FIIG bonds (7.55% for 7 years - mature Aug 2025) I dont want Zenith to ever pay 7.55% for funds again; in this near zero interest rate world, that is too, too high; my belief is the bonds are repaid interest and capital each year (not just interest only); which means from 2025 there should suddenly be and extra $2 mill a year not needing to be paid out; that is a huge hit currently affecting the bottom line; so re the cap raise.... it was better to get $25 mill into the company at a one off 7% discount to current share price, rather than a bond that 'costs' the company 7% every year; I am sure this yearly report will crow about how solid the balance sheet is (less debt to equity)

4) there seems to a start of a new mining boom in WA; metal prices up (gold especially) and AUD down really should bring to fruition some of that 400 Mw pipeline; man, I would love to see that pipeline, but ZEN really hold their cards close to their chest (as they should); to be honest, I search almost daily to see if other PPA providers are signing contracts, and if ZEN is missing out; but it appears no one is really signing much of anything; and I read a govt report that PPA signings are WAY DOWN overall in the last 6 months; so based on the 'pipeline' I really await new PPA announcements by Zenith; but even a 6 month dry spell on signings does not hurt the EPS out for 18 months

5) I need to start modelling current PPAs end dates; but with the current boom I consider projects are more likely to continue operations or even grow rather than STOPPING; OK, for sure I will check the robustness of the current PPAs; there are only 13 PPAs I think, so I can investigate the projects one by one to see if they will continue or even grow; something like a GCY 'stop' is bad, but a DCN 'grow' is good; in my after tax EPS numbers of 6.3 (2019), 6.5 (2020), 9 (2021) I blandly assumed any PPAs stopping would be balanced with new PPAs starting

6) one of the most exciting things I read recently was re the price of 'remote power supply' prices falling as solar becomes cheaper; I read of a WA project (nickle or zinc) that the miner wants to complete the metal making process; currently the raw, raw material is dug out and sent to China for making the alloy (electrolysis or platting or however the Chinese finish it - with cheap electricity); now if solar gets cheap enough it means our remote mines can not only dig the material up, but they can make the finished product; I know it is early days, but maybe in five years the need for power in remote locations will explode! And you know Zenith is a leader (as far as I read) in that solar realm (completed projects on a commercial basis)

Please, if any person can debunk or counter my positiveness re ZEN for now and future, please do it. I dont want to have ZEN coloured glasses. I want to invest long term for retirement. If I have been a big dummy investing in ZEN... help me and save me. But I believe in three years the share price would have doubled and dividends will be coming in.