Tokyo Electric Power

[pianist]

hot fr cna:

Fukushima plant operator TEPCO was a big winner on Monday, with its shares rocketing 33 per cent, leading the charge by energy firms as investors cheered the likely end to a nascent move to snuff out atomic power.

[Thriftville]

From the recent quarter report, Tepco's compensation to victims has been stabilized. The management expects the company to return to profit by 2014.

Bloomberg News
Tokyo Electric Leads Surge in Utilities After Nomura Upgrades
By Tsuyoshi Inajima
May 14, 2013

Tokyo Electric Power Co. (9501) led a surge in Japanese power company shares after Nomura Holdings Inc. boosted its ratings on some of the nation’s utilities amid an expectation idled nuclear power plants will be restarted.

Tokyo Electric, which wasn’t mentioned in the Nomura report, rose as much as 18 percent on the Tokyo Stock Exchange, its biggest gain since April 3. Tohoku Electric Power Co. rose as much as 22 percent, heading for its biggest jump since at least September 1974. Tohoku Electric and five other Japanese power companies were among the best performers on the 1605-member MSCI World Index in Asian time.

Tohoku Electric may return to profit and restore its dividend in the year ending in March, “ahead of other electric power companies that have applied for permission to hike electricity rates,” Shigeki Matsumoto, a Tokyo-based analyst at Nomura Securities Co., wrote in a report dated yesterday.

Japanese power companies reported combined losses of about 1.6 trillion yen ($15.8 billion) last fiscal year to cover rising fuel costs as almost all of the country’s reactors undergo checks and upgrades after the Fukushima disaster. The idled reactors will have to meet new safety standards, to be put into effect by July, before resuming operations.

Kyushu Electric Power Co.’s Sendai No. 1 and No. 2 reactors, which are candidates for the first restarts, may resume operations in January and February, respectively, Matsumoto wrote. Kansai Electric Power Co. may be able to restart No. 3 and No. 4 reactors at the Takahana nuclear plant as early as July 2014, he wrote.

Matsumoto, who maintained his rating on Tohoku at neutral, raise his target price from 720 yen to 1,380 yen in the report. Ratings on Kansai Electric and Kyushu Electric were raised to neutral from reduce.

Tohoku Electric was up 132 yen at 1,325 yen as of 1:34 p.m. Tokyo time. Kansai Electric gained 153 yen to 1,406 yen, while Kyushu Electric rose 94 yen to 1,471 yen.

Tokyo Electric, operator of the stricken Fukushima Dai-Ichi nuclear plant, rose 80 yen to 522 yen.

To contact the reporter on this story: Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

[Thriftville]

With positive outlook from analyst, Tepco surged 19% today. It's share price has already tripled year to date. Anyone vested?

[Image: capturecqbi.jpg]

[Thriftville]

Tokyo Electric Power: Stars Are Aligning For Another Tripling Of Stock Value
Jul 11 2013, 10:00 | about: TKECF.PK


Link

I find it insightful when appraising the prospects of investing in Tokyo Electric Power Company or TEPCO (TKECF.PK) to study the fortunes of another company that once faced and overcame similar challenges, namely the General Public Utilities Corporation or GPU, to make some solid assumptions on TEPCO's condition within the next two years, and to use two different valuation approaches to predict where their stock should and will soon trade.

GPU's Three Mile Island Experience

Following the partial, INES Level 5, meltdown of Three Mile Island's (TMI's) Unit 2 on March 28, 1979, power plant owner GPU's stock suffered a rapid loss in value. Within 47 days, GPU's stock lost more than 50% of its value, falling from $17.38 pre-accident to $8.63. The stock then plummeted to as low as 80% of its pre-incident value, closing at $3.38 in 1980.

GPU's costs following the accident were staggering: not only did it need to clean up TMI at great expense, it also needed to continue to supply energy to its customers via more costly alternative sources. Many feared a GPU bankruptcy.

Ultimately, those that heeded Murray Stahl's advice and took a chance on GPU equity during the depths of this plunge were rewarded. In late 1985, GPU was authorized by the NRC to restart power generation at TMI Unit 1. By April 2nd, 1987, GPU's stock closed at $24.88, nearly a 50% gain over its pre-accident value. Record energy production from GPU-owned units powered it to two inter-year dividend increases in both 1988 and 1989, and one each in 1990 and 1991.

TEPCO Parallels

TEPCO experienced it's own, though far more severe (INES Level 7 or top-of-scale) nuclear accident at their Fukushima Daiichi nuclear power plant on March 11, 2011, following the Tōhoku earthquake and tsunami. (However, similar to TMI, not all reactors at Daiichi were scuttled, and at TEPCO's nearby Fukushima Daini nuclear power plant, all reactors were successfully cold shutdown for potential future use.) TEPCO's dollar-denominated OTC pink sheet stock TKECF.PK similarly crashed, bottoming out at $1.50, a 94% loss from its pre-accident value, on the heels of the 2012 US presidential election. TEPCO also must deal with the same twin burdens of massive cleanup and costly purchases of alternative energy supplies that GPU faced.

Yet TEPCO's fortunes are turning just like GPU's did, though at a faster pace. While TMI had a chilling effect on American nuclear power that lingers to this day, Japan's late 2012 landslide election of the pro-nuclear Liberal Democratic Party, led by PM Shinzō Abe, portends popular and governmental support for TEPCO reconvening use of their existing nuclear power plants (and resulted in a 40% gain for their stock directly following the victory, taking TKECF.PK to $2.41 overnight).

And although seemingly never-ending new complications with containing the radiation at Daiichi continue to stymie the cleanup there, TEPCO nonetheless believes it will regain profitable operations before year's end if their July 2nd request to restart their Kashiwazaki-Kariwa plant (which was itself damaged by an earthquake in 2007) is approved by regulators, along with electricity rate hikes. The fact that TEPCO has been able to substantially reduce its use of crude oil by 72%, and fuel oil by 55%, from last year by bringing 1,600 MW of more cost-effective coal-fired power generation units online in April also helps.

The Japanese government, via its Nuclear Damage Compensation Facilitation Corporation (the Corporation), affirmatively and literally bought into TEPCO's profitability pledge and Comprehensive Special Business Plan by injecting 1 trillion yen of capital into the company in exchange for preferred shares that impart the Corporation a minimum of 50.11% voting rights, and can be converted to anywhere between 75.84 to 95.44% of ownership at their discretion. The ultimate dilutive effect of this transaction on common shares, and especially on shares of future dividends, is unclear.

Investors have responded with increasingly positive sentiment to these developments, tripling the value of TKECF.PK shares from this time last year.

While TEPCO has been understandably delicate about discussing restarting Fukushima Daini, let alone the remaining viable reactors at Daiichi, both are technically possible and the 1985 restart of reactors at TMI is a strong precedent here.

Reasonable TEPCO Assumptions Going Forward

With so much uncertainty surrounding TEPCO, it is difficult to accurately predict earnings going forward (note the range and volatility of analyst forecasts below). However, we can make some reasonable assumptions about the next couple of years:

TEPCO will retain its enviable service area, encompassing over 44 million Japanese customers with electrical demand averaging 280 billion kWh since 1997.
TEPCO, with assistance from a sympathetic LDP government, systematically restarts its Kashiwazaki-Kariwa reactors and regains the ability to produce electricity at a healthy dividend-producing margin similar to its normative years between 2000 and 2006 (before the 2007 earthquake and 2011 tsunami).
A restart of Daini will also be considered, requested, and approved perhaps as early as next year but more likely in 2016. A partial restart of Daiichi will likely take around the same six post-accident years it took to partially reutilize GPU's Three Mile Island facility.
Investor memories of the Daiichi crisis will slowly fade into the background, while (especially institutional) investor interest in a dividend-paying and healthy mega-utility will grow.

With these assumptions made, we can then predict an appreciation of TEPCO stock back to a normative price level with a normative P/E multiple.

EPS Multiple-Based Stock Valuation

As the chart below demonstrates, 2014 EPS estimates have skyrocketed recently from a negative mean forecast to a heady ¥259.26, a figure easily eclipsing any year in TEPCO's recent history.

(click to enlarge)

Source: 4-traders

The pro-forma income statement below confirms that TEPCO will be reporting a profit in March, although of ¥165 per share. It takes into consideration electricity rate hikes beginning next month, job cuts, other cost cutting, fuel savings via the increased subsitution of coal for crude noted above, fuel savings following the restart of Kashiwazaki reactors 6 & 7 (and consequently less purchasing of power from other utilities), and continued but tapered extraordinary losses offset by financial support from the Corporation.

(click to enlarge)

(click to enlarge)

In lieu of analyst predictions of earnings cratering in 2015, I believe TEPCO's EPS will continue to increase after the majority of the Kashiwazaki reactors are brought back on line, and especially if TEPCO customers tired of subsidizing fossil fuel surcharges allow early resumption of operations at Daini.

(click to enlarge)2015 EPS Analyst Estimates

Source: 4-traders

Investors had a solid track record of supporting an average 17.4 P/E multiple during TEPCO's 2000-06 normative years, where it steadily paid dividends and, at worse, in 2003, experienced 44.8 Billion JPY in extraordinary losses. This multiple continues to be reflected in the valuation of profitable electrical utilities. Such a multiple would suggest a value of around $28 for TKECF.PK.

I expect investors to react strongly to definitive signs of TEPCO profitability coming before year-end or soon thereafter, conservatively discount TEPCO's earning potential into a more conservative EPS range around ¥100, and begin trading TKECF.PK in the $17-18 range in anticipation of the resumption of a dividend.

Gordon Growth Model Valuation

An even more conservative alternative valuation (although one still suggesting a significant impending increase in value) is based on a Gordon Growth model assuming TEPCO will resume paying annual dividends at 2001-2009 levels, where it was predominately ¥60 per share (though reaching as high as ¥65 and ¥70 in 2007 and 2006, respectively).

(click to enlarge)TEPCO Recent Dividend History

Source: TEPCO

Assuming a 2.64% risk-free (10-year Treasury) rate, and therefore a 7.67% cost of capital from Damodaran's latest data set, and a 3% perpetual growth rate in dividends (always tough to estimate and especially so here, since TEPCO seems to prefer large periodic dividend hikes rather than yearly adjustments, raising its dividend ¥10 (20%) per share from 1999 to 2000, and then only temporarily increasing it twice as noted above until it was reset to ¥60 and then suspended in 2011), resumption of a ¥60 dividend would equate to a TKECF.PK per share value of around $13. A bump up to a ¥65 dividend would equate to a value around $14, while an attention-grabbing ¥70 dividend would equate to a value around $15.

(click to enlarge)Gordon Growth Model

Conclusion

Monitoring TKECF.PK on a regular basis, it appears that large daily percentage moves are more common than not. Traders are quick to discount setbacks at Fukushima Daiichi and aggressively buy on news suggesting TEPCO's profit-making nuclear reactors will be turned back on. Resumption of power generation at Kashiwazaki-Kariwa, confirmation that TEPCO is back operating at a profit and able to start paying a dividend again, and less dreary news from Fukushima Daiichi will lead to investors enthusiastically bidding it back up to the $17-18 range. Although this will constitute a tripling of value from recent price levels, that is still not particularly higher than a simple Gordon Growth model would support.

[pianist]

Kyoko Hasegawa
AFP
Tuesday, Aug 20, 2013
TOKYO - Some 300 tonnes of radioactive water is believed to have leaked from a tank at Japan's crippled nuclear plant, the worst such leak since the crisis began, the operator said Tuesday.

Tokyo Electric Power Company (TEPCO) said the leak was believed to be continuing Tuesday at Fukushima and it had not yet pinpointed the source of it.

TEPCO said puddles with extremely high radiation levels - about 100 millisieverts per hour - have been found near the water tanks at the ruined plant.

"This means you are exposed to the level of radiation in an hour that a nuclear plant worker is allowed to be exposed to in five years," a TEPCO spokesman told a press conference.

The company later said it had identified which tank was faulty but had yet to find the spot from where it was leaking.

"We have instructed TEPCO to find the source of contaminated water...and to seal the leakage point," an official from the Nuclear Regulation Authority told AFP.

"We have also instructed them to retrieve contaminated soil to avoid a further expansion of toxic water, and to strengthen monitoring of the surrounding environment."

There were no significant changes in radiation levels outside the plant, he added.

Since a quake-generated tsunami struck Fukushima in March 2011, knocking out reactor cooling systems and sparking meltdowns, there have been four similar leaks from tanks of the same design.

[sgd]

TEPCO said puddles with extremely high radiation levels - about 100 millisieverts per hour - have been found near the water tanks at the ruined plant.

on very prolonged exposures it will be bad but in chernobyl the ratings are much higher people have since returned and living there .... after seeing this video I think if you visited the tepco site for a month or for holiday or because curious it should be ok bah