My, you are an angry little poster aren’t you! I think it’s pretty obvious that there is now a pipeline of projects that will be revenue producing over the next six to 18 months. And those revenues have the potential to last up to 25 years in some cases. So it’s not “Monopoly money” as you sarcastically stated.
Of course the shares consolidation doesn’t change the pre-post value. I appreciate you being so patronising. Now it’s my turn. What it does do is create less supply of shares on the market and therefore when demand is increased the share price will increase. At the moment the share price struggles because there are so many shares available! Hence either a buyback or a consolidation is needed to change that or revenues increase dramatically.
Now in terms of a successful business. The “business” has two parts, IMO. The research and development arm, CETO and the more traditional power generation.
Is the research arm successful? Well they have achieved more than any other wave company worldwide. They have a technology that while unproven has the potential to be a disruptive force. They have government backing (and importantly both sides of politics have a vested interest in ensuring Albany works) and now a clear pathway to commercialisation, admittedly after a few wrong turns. It is naive to think of all this does not make them successful.
Is the traditional arm successful? It’s pretty close. If you looked at it as a stand alone business it’s been operational since (approx) nov 2016. It has a pipeline of projects which will be revenue raising in the not too distant future. It has a joint partnership with one of the largest companies in Australia. It is now winning tenders both on east and west coast. It has potential highly lucrative market with the expertise its developed through DOD work and CSIRO. It is well known in the political sphere and is reaping rewards because of it. It has a diverse technology enabling many different types of projects to be “tendered” for and the technology can be scaled up if required. This all in effect in just over 18 months. Given it usually takes six months to integrate two business, this is impressive.
In terms of revenue, it is clear that each project actually earns a lot more than what we think it will as cce will get paid not only for the electricity but for REC, O&M and Project development fees.
I think it is also important to mention that they are financing through debt as well. Now debt often has bad connotations, in this case it shouldn’t. When you have projects that will last 25 years it’s no different to a mortgage and by using debt facilities you don’t have to do a CR or if you do the money can be used in better ways. There is another way to look at the debt facilities, it’s a vote of confidence. Commonwealth bank crunches all the numbers and given their own self interest as the priority, agree to lend the money. They know that CCE will be able to pay the money back and that the project has a high chance of success.
So it’s not a “successful” business, yet, by your definition. But then isn’t our goal to pick businesses that aren’t successful that are going to be? and maybe Monopoly money is worth more than cce potential. However, I’d prefer to look at it much like another famous board game.
The Game of Life, by the Milton bradley. For example, once a player reached the "Day of Reckoning", they had to choose between moving on to "Millionaire Acres" (if they had a lot of money), or trying to become a "Millionaire Tycoon" (if they had little or no money) with the risk of being sent to the "Poor Farm".
CCE has its day of reckoning coming. I think when it does I’d rather own shares and head to millionaire acres.
CCE Price at posting:
3.8¢ Sentiment: Buy Disclosure: Held
I think it’s pretty obvious that there is now a pipeline of projects that will be revenue producing over the next six to 18 months. And those revenues have the potential to last up to 25 years in some cases. So it’s not “Monopoly money” as you sarcastically stated.
