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Beat! Beat! Beat! On every metric and divi covered 2.8x!
? Record financial performance with revenue up 53% to $2,152 million
? Adjusted EBITDA[1] up 17%, 15% on constant currency basis to $842 million
? Funds from Operations[2] up 16% to $440 million
? Record CFADS[3] of $367m up 34% year-on-year
? Income from Operations up 20% to $370 million
? Dividend up 10%, in line with our progressive dividend growth policy and representing a dividend coverage[4] of 2.8x
I told ya, not that many bought these!
This is one of the best income plays on the LSE!
I am now getting 8.48% income quarterly and that will grow 10% yoy! Sometimes the market gets it wrong, well more times than you’d think!
Good luck with your investments!
Usual caveats
Trek
8am call with results and on a Friday. I like that. Good management discipline!
The little details!
Usual caveats
Trek
Well I traded a few here to protect cash given the war and got another 2p off my average.
It won’t take long for the market to switch on to our European alternative energy production.
I just don’t get why the market is so often so far behind bog standard PI’s. One then ends up questioning one’s own rational.
Anyways I still have a decent position here, third highest in my pf.
Results 18th March should help the city so called analysts decide! They will probably look in here for an explanation! Lol!
Usual caveats
Trek
2022
2021 Fourth Quarter Dividend
· Announcement Date: 18 March 2022
· Ex-dividend Date: 31 March 2022
· Record Date: 1 April 2022
· Payment Date: 14 April 2022
2022 First Quarter Dividend
· Announcement Date: 13 May 2022
· Ex-dividend Date: 26 May 2022
· Record Date: 27 May 2022
· Payment Date: 10 June 2022
Nope. But this is doing very nicely through the crisis with two divi payments on the horizon. Good reasons to hold.
Guess everyone sold up and bought EVR.
I do like the gegraphical spread of GLO and its range of assets. With hindsight I should have been a bit more patient and waited to pick this up around £1.80 instead of my current average (including tax etc.) £1.867.
I like the look of this stock so now have to decide if its worth trying to exit above £1.869 and buy back at a lower point, average down, or just wait for the trading range to rise naturally as I think it will in time.
Recent highs on the 21st, and 22nd of this month appear to make it feasable, and recent lows (excluding this week) over the past few months make an entry around £1.80 look possible.
I have covered the borrowings and pe in previous posts.
Question is define undervalued. It’s not just GLO. It applies to lots of UK stocks especially on a US peer basis.
We are what the market says we are and that unfortunately seems to be based on buys and sells rather than fundamentals.
If you plot GLO to the FTS250 index you will see bar a couple of disconnects we track it. That is a general indication of fair value.
I believe the SP is manipulated by the MM to keep it range bound, it’s their job else there would be huge extremes. I referenced MM schemes before which are MiFID2 compliant. IMO that accounts for the regular small number of share trades put through. You expect to see lots of single trades for a divi scrip but it’s bau hear and on other stocks.
I can regularly sell 30 or even 50k shares but often can’t buy 10k or even 2k without it going NT. Even during the last drop I was quoted 181 to buy when the SP was supposed to be 175.
This is now one of my biggest positions in my pf , that’s how I rate it for income but I have said before that I don’t expect this one to shoot up. Many in this sector trade at a discount to NAV.
I think 250p is a fair price and below 200p gives over 6% yield. The pe is skewed by them paying down debt. It’s a pretty low risk investment. We even now have an ESG B rating badge!
I expect the SP will track the divi. So when they next increase the divi by 10% the SP will lift to keep it in the 5.5-7% range.
Any upside surprises could come from energy price hikes. That is similar to APF in the commodities space. But what goes up usually comes back down.
It’s a really boring hold this one and I think now is bargain basement for income. I am not a fan of trusts, oeic’s, ETF’s etc as I would rather build my own income.
So undervalued or fair value you really have to decide based on what you are looking for and looking at peers.
Good luck with your investments
Trek
Good question. Interested in any replies. Trek this is your area of expertise ..... amongst very many !
I wold. appreciate your. opinion as to. why. GLO is so undervalued. Is it. just the. amount of . . . . debt? The debt. does not. worry me unduly as the. 115 operations. around the. world are obviously producing. the income. to. cover . this. Is. there something else'
Hi trek, I too have purchased more as a sensible precaution given international events, let alone the superb four dividends a year. Interested to see you have taken the plunge re anglo. I know the company quite well and attended the annual results regularly before lock down. Again, a great dividend and investment base. The one concern I have is how the in house new Chef Executive will do.
Article on Greencoat wind. It’s a good read across to GLO. As always though with those articles they never mention the associated costs with holding trust/funds. GLO yields more, has more diversity and you only pay dealing costs…..
Of note….
‘ Russian aggression against the Ukraine and the economic sanctions that are likely to follow have the potential to unnerve the markets, especially as higher power prices would add further inflationary pressure. It is possible that Greencoat and other similar beneficiaries would be one of the few ways to help protect the value of your portfolio.’
Mmmm prescient.
Is it just me that sees this as the market seems agnostic. Oh well. Buying more sub 180!
https://masterinvestor.co.uk/funds-and-investment-trusts/an-ill-wind-could-the-ukraine-crisis-be-good-for-greencoat-uk-wind/?mc_cid=f15ea841b9&mc_eid=418bda054f
Usual caveats
Trek
Some flaky journalism from yahoo finance. I mean they are promoting divi stocks and get the divi wrong! Also they omit the pe is impacted by debt repayments and that each project has individual finance. But hey, they still like the theme!
‘ ContourGlobal (7.7% dividend yield)
Power generator ContourGlobal (LSE: GLO) has the wind in its sails at the moment. In December it upgraded its profits guidance for 2021 thanks to better-than-expected performance from one of its Spanish natural gas plants. I don’t think this dividend stock’s just a great buy for today, though. I reckon it’s a good way to make money from soaring energy consumption around the globe.
ContourGlobal builds and operates power stations across Europe, Africa and Latin America. Demand for its services should hopefully grow as population levels increase and economic output in emerging markets takes off. I also like this particular energy producer because of its growing focus on renewable energy. This could help its share price rise over the long term as the theme of responsible investing takes off.
But I’m aware that today ContourGlobal trades on a high forward P/E ratio of around 29 times. A premium share price always leaves a company in danger of sinking if earnings forecasts start to look a bit flaky. A project delay is one danger that could send ContourGlobal’s share price reversing sharply.’
https://uk.finance.yahoo.com/news/6-dividend-yields-5-best-084607041.html
Trek
This pays out 6.5% within a period of 7 months from the Mar 31st ex divi date to 25th Nov 22 with a chance of a special divi and a very likely 10% divi increase during the period. I expect the results to be a beat over and above guidance given energy prices.
There isnt much stock around hence why the MM’s are forcing through small trades to range bound the SP. However, this is a solid income pay not really for capital growth. If it gets to fair value at +250p range I will be surprised. That’s just how it is in this sector where similar closed funds such as uk wind, greencoat etc trade at nav discounts with slow capital growth.
The benefit is it’s a defensive income play.
Usual caveats
Trek
Good day today, I sold 30k shares and bought them all back cheaper! Got 2x5k at 180 and a bit.
Surprising though the double tax on the two buys has a big impact On the profit. Not complaining about tax. Just saying it was a lot of hard work today but I knocked 3p off my average.
Have just set some buys for sub 180. Just to keep the MM’s on their toes!
At times today 5k was the max you could buy but could sell 35k in one hit. Joke really for a FTSE 250!
I intend to hold these for a long time so view sub 200 as a bargain. But I guess if Armageddon arrives it won’t matter a jot anyway! Yikes!
Trek
Agree the market doesn’t get it. If there was an issue with debt then surely the company would include the third option. Pay down debt. They haven’t…
“ The company said the sale of the subsidiary–which it holds a 71.4% stake in–represents the first step in unlocking value for shareholders and closing the gap between its share price and the intrinsic value of its assets. It will decide whether to reinvest the proceeds into new growth opportunities or return capital to shareholders when the transaction closes.”
https://www.bollyinside.com/news/contourglobal-sells-hydroelectric-business-in-brazil-for-318-million
They are clearly selling because it’s ‘a good shareholder deal’ and it mitigates EM currency risks. With the Fed raising rates EM’s will have to follow to maintain the risk premium. Simple as.
Usual caveats
Trek
I think it is. just the. debt. which is. holding the. SP. back. Investors. do not know or have not bothered. to. find out that. much the. debt is external debt pertaining. to. each specific. operation (115. of them) and not. to the. company as a. whole
Pleased to see this go through. Personally I'd prefer debt reduced a tad in rising rate environment. Seems to be well covered but I do think this is a slight negative for market rerating. By the sounds of it management have the cash earmarked for other uses.
That said I am still scratching my head with GLO.
Utilities sector have been one of the brighter sectors in current market gyrations but GLO SP seems to be stuck in treacle. Div is great but I would like to see some capital appreciation.
Just had a proper read. So reduces non USD/EURO currency exposure to 10%...
“Non EUR or USD adjusted EBITDA currency exposure for the Group will decrease from 14% to 10%”. Looks like wind sale to follow.
Interesting that one of the motives was the disconnect between NAV according to private valuation and what the market currently values GLO for. ‘Cheap!’
This seems to be a challenge for many listed companies. They are based on buy sell pressure rather than what the intrinsic value is. However, in the case of GLO we have a +6.5% yield paid quarterly which I am pretty confident puts a floor under the SP.
The private valuation was about 250p and market valuation is now 188p. That has hardly shifted even after share buy backs, yoy inflation beating divi increases and now some asset sales!
This is looking more and more like a safe boring solid income play if you can tolerate the 20p trading range.
Usual caveats
Trek
I agree totally, a stock holder windfall is nice, but I would rather they add value, which in turn should support long term returns.
Fantastic news! Only glanced at RNS but the axiom is the removal of fx risk to the real following impending fed rate rises. Perfect timing! Now we just have USD and EUR.
Company will ‘determine’ how to spend. I would rather they reinvested as they would, hopefully, get a better long term ROI should the right opportunity manifest than a special divi.
Usual caveats
Trek
Just read todays posts . Way over my head all but think a good investment. My degree for my sins was in international politics and strategic studies which resulted in a great career which included no 10, White House and numerous heads of states. In retirement though when I read these posts think my degree should have been in economics or finance ! At least I have a few in gsk and they are exciting times with them ! Have a great evening all
This info can all be found in the H1 investor presentation on their website:
- Pg 15: $3,038m of debt is at the asset level - and is (in simplified terms) set to amortise over the life of its respective asset/PPA (i.e. no refinance requirement) and non-recourse to the parent (i.e. doesn't represent contagion risk even if any given asset fails). Only $1,537m is at the corporate level and has a "5-7 year maturity profile".
- Pg 16: 83% of all debt is fixed rate, only 17% floating. 81% of assets are inflation protected, 19% not.
Conclude from that what you will!
Hi O&W,
Yes it is the deb5 holding this back as per my earlier post. You can see a breakdown in the table in the 6th Aug RNS...
“4.13. Borrowings
Certain power plants have financed their electric power generating projects by entering into external financing arrangements which require the pledging of collateral and may include financial covenants as described below. The financing arrangements are generally non-recourse (subject to certain guarantees) and the legal obligation for repayment is limited to the borrowing entity.
The Group's principal borrowings with a nominal outstanding amount of $4,580.9 million in total as of June 30, 2021 (December 31, 2020: $4,871.8 million) primarily relate to the following:...
Table follows which won’t past....
Approx $2bn of $4.5bn is either Libor, Euribor, TJLP or US-LIBOR tied + a fixed %.
Debt reduced by $300m. Some expire Unless extended...
“(2) On February 18, 2021, the Group acquired a Thermal portfolio in the United States of America and Trinidad and Tobago representing a total of 1,502 MW. The group entered into a term loan facility agreement in December 2020, and the loan was issued in February 2021 with an outstanding nominal amount of $175.0 million, bearing incremental fixed 2.5% to 4.5% rate, maturing in December 2021 (with option to extend to June 2022). The legal entity Lea Power acquired as per this transaction issued 6.595% Senior Secured Notes under an indenture dated July 24, 2007 which are due to mature June 2033. The remaining nominal amount is $187.5 million as of June 30, 2021.”
But imo even with 4x25bp rate hikes debt is well serviceable due to anticipated prorata increase in energy costs.
Usual caveats
Trek
Evening Trek,
There's just one thing that bothers me, and some others, about GLO, and that's its debt. The debt/equity ratio is around 10 times, as at end-2020. Quite a bit of this debt is due for repayment in the next three years, I believe. But what proportion is set at floating rates or LIBOR-based? If rates rise this year, even if still behind inflation, there will be an impact on GLO's P&L, surely, not to mention sentiment.