Operating costs exceeding revenue receipts in a quarter continuing a q-on-q increase for the last year is a sign of a company expanding rapidly with lots of work between contract given and payment received. It is the period when the company actually builds stuff/fills orders. This race to install is also being pushed by the very real probablility that the 40c net FIT in WA will be reduced sooner rather than later as WA fills the government envisaged installation review level (10 or 100MW?).
As long as SOO keeps the receipts for last months installs above the payments for last months materials there is not a lot to worry about.
These are difficult times though with rapid deflation in panels price (up to 10% deflation between puting them on the ship in China and putting them on a tradie's ute in Perth) and in RECs. Management has been working in this environment for the last two years and there weren't too many squeals about poor management performance when the divvy was declared last year. No reason to think this year will be different.
Overall we shareholders have taken a punt that Julia will get the Carbon Tax through. I see a real risk that in doing that the extra RECs for PV will be done away with and all renewables (or more logically, all carbon emission reducing technologies - see my counter bet in CFU Ceramic Fuel Cells) will receive RECs at the same rate. Either 1 REC/MWhr or a bonus level of say 2 RECs per MWhr, not the current unsustainable rate of 5 RECs per MWhr.
GOE Price at posting:
11.5¢ Sentiment: Hold Disclosure: Held
