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sadj89

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20/06/16

17:05

Post #: 18076170
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Originally posted by joewolf ↑

I dont agree - according to my models the Gross margin was around $3.98 to $4.11 per Mwh in Oz- they are saying its going to be around $3.00 in 2017. So we can expect a 25% decrease in the supply business and the generating unit has already reduced its profits as it came off contract.

Mt estimation of that is that it drops our EBITDAIF by around $20 million for 2017. Its not a profit downgrade for 2016 but a large one for 2017. We already have banked the drop this year - they had promised a return to growth next year - they have wiped that out with them appearing to be just holding volume with new business making up for lost renewals.

The USA business cannot be the savior until it gets its sales up to the same as Oz. So the %Twh is just too small but is promising - around 25% of Oz - the forward sales contracts grew by almost 4 times what they had the year before but that is the same experience they had here in the early days. They are now also flagging the ceiling to sales in Oz - so after telling all of us that there was a great opportunity in SME business its not even mentioned - I suspect that its plateaued and that growth will only come organically until the market realizes they are a good supplier - or they will have to spend a lot of money on marketing. Not sure they will go there.

My model suggests that underlying EPS in 2017 will be between 10.9c and 13c - I am not surprised its fallen this far yes its probably an overshoot but at the same time they have only a few more times they can shock the market to the downside.

I should have sold ages ago... - I think its worth between $1.25 and $1.55 so really its not been good at all.

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Hi Joe, EPS is currently 33c - by my calcs the EBITDA would need to drop to $32m at an EPS of 12c
(at current dilution) in order for your EPS target to be achieved which would also represent a 60% drop in profitability from current levels.

How can EPW pay a 10c dividend when profits are only 12c/share?

EPW Price at posting: $1.10 Sentiment: None Disclosure: Held
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0 Great analysis

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what a dog, page-15

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