PVCS – interesting special situation

OK, so I’m a bit late to the party on this one, but PVCS looks like it presents an interesting special situation. Let’s throw it out there, and see how it does 6 months down the line.

PVCS (PV Crystalolox Solar) is in the alternative energy sector. As you know, I am dead set against this sector. So is everybody else. Now read on.

What do PVCS do?

The principal activity of the Company and its subsidiaries is engaged in the production and supply of multicrystalline silicon wafers to the worldwide photovoltaic market.

… and so on. Basically, the idea here is that governments provided lots of subsidies so that solar energy could be developed. Money and investment poured into the sector. Then the governments pulled the plug on funding, and competition from China built up.

Needless to say, the whole sector got turned upside down.

So what’s the investment case here?

Well, the investment case here is that PVCS has a NCAV of £79.3m – that’s total current assets less all liabilities. Its market cap is £45.9m. Moreover, on 17 Dec 2012, PVCS announced a “radical” restructuring, in which it will eliminate employees and production in areas where there are “vast” over-capacities 9which is presumably most areas). What’s more: “The Group expects to return cash to shareholders during Q2 2013 in a manner that will provide shareholders with an element of choice as to the form in which they receive the cash,”

Not sure what they mean by “choice”, though. Surely a cheque is a cheque?

Interesting, n’est pas?


I hold no position

About mcturra2000

Computer programmer living in Scotland.
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2 Responses to PVCS – interesting special situation

  1. Alas! poor PVCS. I knew it two years ago. I was lucky enough to sell for good profit but was aware of their painful trading condition since then. But what you point out actually surprise me on just how bad the share price are in comparison of it value.

    As for Return of Cash, this remind me of similar return of cash with Stagecoach where shareholders are given a choice between “income” or “capital”. Maybe this choice can apply to this as well?

    What wrong with alternative energy sector? Lot of high risk companies or some other aspects that you and everyone else are uncomfortable with?

    • mcturra2000 says:

      Joe, you could be right about the return of cash as either of capital or income, I hadn’t thought of that. What you say sounds logical, and is probably correct.

      The problem with alternative energy is that, to my mind, they are largely unproven technologies. This makes them very risky to invest in.

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