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On March 10 Northland Power gave a press release stating that it will undertake a new wind farm project in the North Sea just offshore the German mainland;it will be called Deutsche Bucht.It will be about 125 kilometers from the mainland and the total cost will be $1.2 billion Euros.This will nicely expand the Northland Power footprint in the North Sea.It should be completed by mid 2017 and dovetail nicely with the coming onstream of their Nordsee One (332 MW) project.Deutsche Bucht is in advanced development stage but NPI will need to add a further $500 million to aid in it's completion.This blog believes that if Northland does a good job here and helps to delivers 252MW of power to the German mainland that this could be helpful in getting regular approvals required to begin full commission of Nordsee One.Nordsee One is expected to come onstream in mid-2017. It may even help speed up full approval of Nordsee Two and Three that Northland Power is expected to build later in the North Sea area.
More work to Do
Northland expects more work will have to be done on installing the turbines and the offshore cable.The additional construction costs may go as high as $400 million.NPI's previous experience should be useful here.Northland intends to use it's Gemini (another North Sea project) contractor and it's supply vessel to help;Van Oord was very effective in building their Gemini project on time and should be able to meet the mid-2017 schedule.Once the project is operational Deutsche Bucht should be immediately accretive with a fixed feed- in tariff for 13 years.Once completed and financing arranged Northland will own 100% of this third wind farm. use Workathon for business news;use Workathon for business news
Annual reports and fourth quarter reports will be out soon and many investors want to see which company will do better- DH Corp. or Element Financial.Both are financial niche players and both are going in different directions with different approaches.Both are in the financial sector dominated by large multi-functional banks.Right now DH trades at $24 per share while EFN trades at almost $15 per share.But do these companies merit this big a difference in their price?
All About DH corp.
DH was a small Canadian cheque production company. It expanded by acquiring several medium-sized American financial technology companies in 2014,2015 and 2016.It's revenues and earnings grew every quarter so that it was trading at $40 per share in the summer of 2016.Bad news and a dividend reduction from $.32 to $.12 per quarter sent the stock price down to a low of $14 per share in November 2016.A number of renovations sent the stock back to it's present price.A blog post in Workathon dated December26,2016 ( see details in workathon post) predicts that DH price will fall to $18 to $20 area without earnings growth.There is no doubt that DH trades on it's past earnings potential but it has a substantial P/E ratio now.Qtrade, and Yahoo Finance, for example predicts 2016 earnings of $.36 to $.37 per share.
EFN takes a big Step
EFN was part of Element Financial until October 3 and then split into Element Financial Management.It had a good and steady growth path until the split.After the split it had almost $15 billion of assets;it specialized in financing of fleets of trucks and cars.And in the first 9 months of 2016 it signed up 100 new clients.Adjusted EBITDA was $.35 for the third quarter and expected to be $.65 for the second half of 2016.E.P.S. were estimated at $.99 per share for 2015.This blog thinks it is on track to hit $1.25 to $1.30 on an annualized basis for 2016.It's joint venture with an American financer of fleets of trucks may dilute 2016 eanings.Still this blog is expecting solid revenues and earnings growth.
The Annual Report
All eyes will be on upcoming annual reports of both companies.Will DH get some of it's old earnings back?Will the new American partner dilute EFN earnings and if so by how much?Will EFN raise it's rather low dividend in 2017?This blog expects that the likely outcome being that DH earnings per share will be above the 2016 estimate of $.37 per share and EFN earnings per share will be higher than theYahoo Finance $.99 estimate and below my estimate of $1.25 per share.This will bring DH closer to $22 per share and EFN closer to $15 per share so closing the gap somewhat.
