Daily News Basket – March 6, 2017

Solar Electricity at Cents 2.42 per Kilowatt in Abu Dhabi

MARSAL COMMENTS: Abu Dhabi will very shortly award a Japanese/Chinese consortium a contract to build and operate, for 25 years, a 1,177 megawatt Solar electricity power plant. It will be built from scratch to become operational in less than two years from now (2019) and will cost US$ 872 million.

It will produce electricity at a rate of US Cents 2.42 per kilowatt (KD Fils 7.3) and this includes the cost construction, plant equipment, cost of production, cost of finance (75% of the money will be borrowed), depreciation, amortization AND profit for the operators as well as the investors. Compared to the claimed cost of KD Fils 40 per kilowatt in Kuwait, this is magic… or simply good sense!

EFFECT PERIOD: (Short Term to Long Term)
READ ORIGINAL: Abu Dhabi to Build World’s Largest Solar Power Plant

Deutsche Bank… still wobbling?

MARSAL COMMENTS: Deutsche Bank has been wobbling for a decade. It nearly drowned in the 2008/9 mortgage quagmire, then was fined for its role in it, and recently paid the negotiated smaller fine of US$ 7.2 Billion. However, it still under investigation for illegal money transfers from Russia and manipulation of forex rates… etc. On top of that, operationally, it has been losing money for two years.
The top management began a remedial restructuring plan two years ago, but now seem to have admitted defeat and are changing course. The new strategy involves selling assets and liquidating investments, as well as planning to reduce employees by 9000. Also, a few days ago, Deutsche announced it plans to increase capital by US$ 8.5 Billion, which immediately hit its share price dropping it over 5% on Monday (Mar 6, 2017).
The management hopes that the capital infusion, cost cutting and sale of assets will even its tilt and save it from the sharks. It hopes this will get its Tier 1 capital ratio up to 14.1 from 11.9 two months ago. Nevertheless, all this means a huge and painful dilution of ownership… But maybe better to remain with less, than with nothing?
(We had mentioned the stigma of big banks in an earlier article)
EFFECT PERIOD: (Short & Medium Term)
READ ORIGINAL: Deutsche Bank’s Cryan Has New Strategy: Reverse the Old One


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