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Wednesday, May 13, 2015

Mytrah Energy - El Nino threat sell-off overdone, reckons Cantor

May 13:

This is a weather phenomenon, which causes the warming of the Pacific Ocean and has knock-on effects across the globe














This is a weather phenomenon, which causes the warming
 of the Pacific Ocean and has knock-on effects across the globe


A sell-off in shares in Indian wind power firm Mytrah Energy (LON:MYT) and clean energy group Greenko(LON:GKO) on the back of the El Nino weather threat was overdone, reckons City broker Cantor.
Mytrah shares dropped 9% while Greenko fell 10% yesterday as media reports swirled on how a 'substantial' event from El Nino was predicted. 
This is a weather phenomenon, which causes the warming of the Pacific Ocean and has knock-on effects across the globe.
It comes around every two to seven years and can cause droughts and flooding.
Adam Forsyth at broker Cantor noted that analysis of the Indian Meteorological Department (IMD) had shown that of the 18 El Nino years between 1880 and 2006, 12 coincided with weak monsoons in India, which can cause weaker wind generation.
Significantly, between two thirds and four fifths of India's wind output comes in the six months most associated with the monsoon.
"If this is causing a sell-off we think it is overdone," said the analyst, citing more recent IMD research, which had been less conclusive.
"Additionally both Greenko and Mytrah have well diversified assets, Greenko between generation types and Mytrah’s assets are geographically well spread. These both minimise the potential impact of a weak monsoon," he said, adding that he sees the risk of significant disruption to earnings as small.
"Finally with with all weather effects tending to revert to a mean over time, any impact is unlikely to be more than a one-off event," he added.
Last month, Mytrah said underlying earnings (EBITDA) had increasedd to US$65.39mln from US$48.19mln in 2013, while underlying profit before tax increased 10% to US$11.1mln from US$10.1mln the year before.
Electricity generated in 2014 rose by 41% from the year before to an average operating capacity of 442 Mw from 307 Mw in 2013.
The broker says buy Mytrah and hold Greenko.

Source: http://www.proactiveinvestors.co.uk/companies/news/80306/mytrah-energy-el-nino-threat-sell-off-overdone-reckons-cantor--80306.html?

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