As I mentioned previously, EWC’s share price is pushed down by a third party with reportedly access to ‘limitless funds’. The reason behind this appears to be to drive EWC out of its modular LNG approach, before it becomes a substantial player in Asia’s LNG market.
In this context one crucial fact is worth noting: In recent months, the short sell of EWC’s daily trading volume has varied mostly between 30% and 70%; ie. exercising a consistent, relentless downward pressure. The effect of this heavy short sell can be seen, for example, in the following: On 10 May 2012 EWC announced the shipment of all four cold boxes plus major LNG equipment to Sengkang which, in and of itself, should have led to a strong upward bounce in its share price. What actually happened is the reverse: from 41.5cents on 9 May,2012 the share price bottomed at 32 cents on 8 June,2012. Furthermore, EWC’s 14 August, 2012 announcement of the arrival of all this major LNG equipment, including the cold boxes left the share price flat from 47.5 cents on 13 August, 2012 to 46 cents on 14 Septemer,2012. Today, another opportunity has presented itself: while EWC’s Annual Report stated nothing which we did not already know, there has been, in recent days, increasing speculation that EWC is a strong contender re: Interoil’s Gulf LNG project. EWC will provide a 2 to 3mtpa LNG plant plus build/operate the associated 150MW power plant. The next few months will show whether EWC will be part of Interoil’s Gulf LNG project. For the third party involved in the relentless short sell of EWC, any possibility of EWC building and commercializing its modular LNG trains as part of Interoil’s Gulf LNG project, is to be prevented. In other words, increasing speculation that EWC will be part of Interoil’s Gulf LNG project and the likelihood of an announcement by the PNG Government and Interoil as to the parties involved in this project by December, 2012 force this third party to ‘put out all stops’ in its attempt to prevent EWC from gaining a foothold in PNG. It appears that today offers a ‘perfect storm’ to this third party and a perfect buying opportunity for investors confident that with SE and Chandler owning 60% of EWC shares and with the relevant banks supporting EWC’s business model EWC will have a prosperous future in the LNG market by becoming a leader in modular LNG development.
As to the alleged absence of any earnings guidance by EWC re: eg its Sengkang LNG project, please look at EWC’s ASX announcement of February, 2007 re: company overview.( Indonesia a: 30% company tax plus 15% withholding tax 0.5mtpa LNG at US$6/mmBtu = US$150million revenue =US$ 75million EBITDA =approx. US$40million profit). As EWC did not incur a cost increase since then in this project, the only outdated numbers relate to the LNG price of US$6/mmBtu. If you assume a currently conservative US$12/mmBTU you arrive at an EPS of 5cents for every 0.5mtpa LNG.
EWC Price at posting:
43.0¢ Sentiment: ST Buy Disclosure: Held
