Tuesday, March 28, 2017

Romania economy poised to grow 4% in 2017 and 2018


Japan Credit Rating Agency (JCRA) on Monday said it has affirmed the outlook on Romania's long-term government debt in foreign currency and local currency to BBB/BBB+ stable. 

The ratings are primarily supported by the country’s solid growth prospect, improving external position and a low level of government debt, JCRA said in a press release. 

The agency also said that Romania's economy will grow by about 4% annually in 2017 and 2018, with sustained growth to be led by domestic demand with a moderate acceleration of inflation.

I haven't talked about Romania in a while but the economy is one of the fastest growing in Europe. I am playing this via the closed end fund Fondul Proprietatea.

If you want to know more about this fund which sells at a 28% discount to net asset value read the article I wrote about Fondul Proprietatea back in 2015.

Canacol Energy reports 2016 results and updates operations

Canacol Energy:

Charle Gamba, President and CEO of the Corporation, commented: “2016 saw the emergence of Canacol as a premier gas producer in Colombia. By April 2016, we had achieved our goal of 90 million standard cubic feet per day of gas production.

 As a result of the increased gas sales, our adjusted petroleum and natural gas revenues after royalties increased 43% to $173.2 million for the year ended December 31, 2016 compared to $121.5 million in 2015; our adjusted funds from operations increased 122% to $113 million for the year ended December 31, 2016 compared to $51 million in 2015; our EBITDAX increased 101% to $135.5 million for the year ended December 31, 2016 compared to $67.4 million in 2015; and we posted comprehensive income of $23.6 million in 2016. 

After achieving the 90 MMscfpd milestone, several significant new 2016 gas discoveries drive our reserve and production base towards our December 1, 2017 target of 130 MMscfpd, and our December 1, 2018 target of 230 MMscfpd, which will place Canacol as the second largest gas producer in Colombia behind the state oil company.

It would seem it is a matter of waiting until later this year when production will increase along with cashflow. I continue to like Canacol long term because it sells its gas into an area that is growing yet has a near term gas supply issue.

Monday, March 27, 2017

Fairfax India annual shareholder letter

Link to Letter


Fairfax India’s increase in common shareholders’ equity in 2016 was $62.1 million, which raised book value per share, our key performance measure, by 7.9%, from $9.50 to $10.25. During the same period the USD BSE 30 Index was relatively flat.

Fairfax India had excellent growth in net earnings in 2016, largely the result of net unrealized gains on investments of $105 million versus $14 million in 2015, partially offset by lower interest income of $21 million versus $45 million in 2015 (when a larger portion of its funds were in high yielding Indian bonds, awaiting deployment into Indian investments) and a $7 million loss due to foreign exchange versus a $7 million foreign exchange gain in 2015.

Investing in Fairfax India is like investing in Berkshire Hathaway back when it first started up. Prem Watsa is known as the Canadian Warren Buffet.

He is also from India and has the connections to get the best deals in one of the fastest growing economies in the world. Just buy this one, put it in a coffee can and come back in ten years and it will be worth multiples of what it is now.

I am up 22% since buying Fairfax India stock in August of 2016.

Myanmar power problems need to be addressed


Myanmar is one of the world's fastest growing economies, with projected annual growth of 7.8% in gross domestic product for the financial year to March 31 2017, according to the World Bank. Only those who have not spent time with its overwhelmingly young and enthusiastic people -- or those unaware of the vast potential of this emerging market of about 54 million consumers -- should find this surprising. But it is nevertheless an achievement for a country that for decades struggled in the wake of the Asian tigers.

Even as the country gains momentum, however, many observers ask whether its success can be sustained. Various elements will combine to answer that question, although there is one crucial aspect that could make or break the country's rise. That is energy -- or rather, Myanmar's lack of electric power generation capacity.

Myanmar's often crippling power shortages is are starkly apparent to anyone living there. Almost 70% of its the population lacks access to grid electricity. Electricity use per capita is less than 10% of the amount consumed in neighboring Thailand. Even major cities that are connected to the grid suffer regular blackouts because supply struggles to meet even the relatively low levels of demand.

Over time this problem will get solved. Again these problems are opportunities to be solved by profit making ventures. However, with only 30% of the population having access to the grid there will be need for a tremendous amount of investment in the power generation and delivery sector.

The economy is growing at 8% per year and would probably be in the double digits if not for the lack of reliable electric power.

Sunday, March 26, 2017

Alterra Power announces 2016 earnings

Alterra Power:


Revenue and Adjusted EBITDA: Consolidated revenue increased by 5% to $60.8 million and net interest revenue increased by 12% to $80.1 million due to the addition of the Shannon and Jimmie Creek projects as well as foreign exchange. Adjusted EBITDA increased by 5% on a consolidated and net interest basis to $48.5 million and $39.0 million respectively, primarily due to the addition of the Shannon and Jimmie Creek projects. 


Jimmie Creek commercial operations achieved: Jimmie Creek commenced commercial operations on August 1 on time and under budget by approximately $4.0 million. The project is now selling 100% of its power to the British Columbia Hydro and Power Authority under a 40-year power purchase agreement ("PPA") that expires in 2056.

Kokomo commercial operations achieved: On December 29, the 7 MWDC Kokomo solar project commenced commercial operations and is now selling 100% of its output under a 20-year PPA with Duke Energy Indiana, Inc. Alterra owned 93.8% of the project at December 31 along with its partner, a subsidiary of Inovateus Solar, LLC ("Inovateus").

The company continues to add new projects to its portfolio especially in US wind. The commencement of a dividend is the really good news. Although the dividend is only $.05 per share annualized I expect it will be going up over time. I continue to hold.

Ukraine's agricultral potential

Emerging Europe.com:

Ukraine’s favourable geographical location; it’s extremely fertile black soil; decent infrastructure and relatively cheap labour force make the country’s agribusiness sector highly competitive. A lot has been achieved in the country over the past 25 years to enable Ukraine to live up to its status as the “breadbasket of Europe” and to help, at least partly, address the global challenge of sustainable food supply and food security.

As a result the agribusiness sector is one of the main drivers of the Ukrainian economy: it accounts for 17 per cent of the country’s GDP, 32 per cent of local employment and 31 per cent of foreign currency revenues. During the severe economic downturn of 2014/2015, the agrifood sector was the only one to increase its production and exports. In fostering Ukraine’s agribusiness potential, the EBRD has provided over € 2.2 billion of financing to the sector, to date, since the start of its operations in the country.

Over the last several years I have been increasing my long term investing into agricultural businesses. The world population is constantly growing while per capita farmable acres are decreasing.

As the emerging and developing markets continue to become wealthier the demand for sophisticated diets is also increasing. This is going to lead to continued pressure on the world's ability to provide food for its population. Sounds like a actionable investment to me.

I have been to Ukraine many times and ridden trains all across the country and seen acres and acres  under cultivation. However I have noticed that the place is starved for capital. Old machines, small plots, cows tied up to trees. It just looked like it was stuck in another time.

I think over time capital comes into the country and production will be maximized. An example is the recent acquisition of an additional 10% of Astarta, a Kiev based ag conglomerate by Fairfax Financial a Canadian based investment firm.

Saturday, March 25, 2017

Chinook Energy Operational Highlights

Chinook Energy:


We completed, equipped and tied-in three (2.63 net) horizontal Montney wells at Birley/Umbach at an average cost to drill and complete of $3.7 million per well, a 30% decrease from the previous six (5.0 net) wells which averaged $5.3 million per well.

Including production from the following new Birley wells, our current production is approximately 5,350 boe/d.

A-071-F/094-H-03 (0.75 net) tested at a final rate of 1,288 boe/d (approximately 96% gas, 4% free condensate).

C-095-F/094-H-03 (0.90 net) tested at a final rate of 1,364 boe/d (approximately 88% gas, 12% free condensate).

D-095-F/094-H-03 (0.98 net) tested at a final rate of 1,094 boe/d (approximately 94% gas, 6% free condensate).

We have commenced construction of a new drilling pad to drill four (3.67 net) wells through spring break-up and will complete all four shortly after spring break-up.

Notice all of the wells are flowing at over 1000 boepd. This is greater than the company expected and confirms the that the company will beat its original production guidance of 6,100 boepd for 2017 with less wells drilled.

I bought more shares of Chinook Energy yesterday.

One third of US jobs at risk to robots

LA Times:


It said that in the U.S., 38% of jobs could be at risk of automation, compared with 30% in Britain, 35% in Germany and 21% in Japan.

The main reason is not that the U.S. has more jobs in sectors that are universally ripe for automation, the report says; rather, it’s that more U.S. jobs in certain sectors are potentially vulnerable than, say, British jobs in the same sectors.

For example, the report says the financial and insurance sector has much higher possibility of automation in the U.S. than in Britain. That’s because, it says, American finance workers are less educated than British ones.

I have been writing about the continued acceleration of automation. As robotics and artificial intelligence advance I expect employers to replace workers. Why wouldn't they? Your employer does not want to be friends with you.

You are there to perform a required task. If they can get a robot to do it then you will be replaced.
This is why you need to thinking about how you will create value and utility. Most people are clueless to what is happening and how quickly things are changing. Do not be one of those people.

Friday, March 24, 2017

Amaya Gaming open to acquisitions

Montreal Gazette:

In his first year as chief executive of online gambling company Amaya Inc. (TSX: AYA), Rafi Ashkenazi has made careful moves. Now his appetite for risk is growing.

Promoted after founder David Baazov stepped down amid insider trading charges and poor earnings performance, Ashkenazi has focused on paying down debt, installing a new management team and lessening the company’s exposure to the unstable online-poker business. His pragmatic style of management has helped him regain investors’ confidence, with the stock up 31 per cent since he took the helm as interim CEO last March.

This summer, the world’s largest online-poker company will have money to spend after finishing paying for its $4.9-billion purchase of sites PokerStars and Full Tilt, a deal struck in 2014 under Baazov. That means the Pointe-Claire company will be on the hunt for deals.

“We are very open to acquisitions generally,” Ashkenazi, 42, said in an interview at an Amaya office outside Toronto. He’s now recruiting someone to focus on M&A, with the “highest priority” on sports betting.

Amaya was my highest conviction pick last year and I continue to like the company. There was turmoil inside the company last year as the founder David Baazov was embroiled in an alleged insider trading scheme. Baazov left as CEO last year and has been replaced by new management that is focusing on managing and maximizing the company businesses.

It looks like the market liked the recent earnings and the track the company is on.

India set to triple nuclear power capacity by 2024

India Times:

Nuclear power generation capacity in the country is expected to reach nearly 15,000 MW by 2024 as the government has expedited the process of setting up new plants, Lok Sabha was informed today.

 In 2014, India's nuclear power generation capacity was 4,780 MW. 

Minister of State for PMO Jitendra Singh said a number of steps have been taken by the Narendra Modi government to fast-track all ongoing nuclear projects and setting up of new plants in different parts of the country.

Although Japan has been slow to restart reactors after the Fukishima disaster many other countries like India and China are moving forward with large nuclear fleet build outs.
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