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Hi Trek,
Thanks for that. Really interesting and well crafted presentation. I note the stable dividend dover, 10% p.a. dividend growth target, and 12% EBITDA p.a. growth rate since 2017 notwithstanding these dividend payments. The price for this attractive mix of growth and payout, in a quasi-regulated power sector is debt incurred. But here, the debt ratios all seem fairly stable, even high, with amortisation over the next 5 years so well capable of falling in time with the cash flow generation underlying. I like that 80% of debt is fixed rate, also.
I don't know about you, but it kind of reminds me where our friends at SAVE might end up in a few years time, with Accugas, dishing out a growth dividend policy out of strongly growing internal cash flows.
ATB.
O&W
Hi OaW,
IMO Wednesdays freak drop was a stop take out. I had an order sat to buy 5000 shares at 180.4 and it to my surprise got filled at 179 and a bit. I often run dummy trades here as I now have a significant position. On Tuesday for a large part of the day I couldn’t even buy 100 shares and the EMS is 5000! But I could sell 30k in one go in a falling market. This is a regular occurrence here. I set the buy opportunistically as I was away with no internet Wednesday. Lol!
There are lots of small buys/sells here which are not divi reinvestment. They are very likely liquidity trades from the market maker to control the price else there probably wouldn’t be much selling and the SP could look silly. See bottom for references.
The liquidity issues are because Reservoir Capital kept 73% at the IPO. If you then tot up the other major holders and factor a few % for PI divi holders there probably isn’t much stock to trade.
https://www.marketscreener.com/quote/stock/CONTOURGLOBAL-PLC-38649308/company/
You asked about divi cover. Check out slides 15-19. Pretty impressive!
https://www.contourglobal.com/sites/default/files/2021-08/h1_2021_results_presentation.pdf
Also adjusted EBITDA will increase significantly driven by thermal on the back of higher energy prices. This imo is either overlooked by the market or more likely they can’t get stock!
Info....Marker Maker Schemes.
Definition: market making incentive schemes that the Exchange is mandated to offer under Article 48(2)(b) of MiFID and Article 1 of Commission Delegated Regulation (EU) 2017/578
Page 58 covers it and also ALGO trades.
https://docs.londonstockexchange.com/sites/default/files/documents/rules-lse.pdf
MiFID2 MM agmt tab...This is what the record the scheme on.
https://docs.londonstockexchange.com/sites/default/files/documents/20200401%20MIT%20&%20TE%20Parameters%20version%207.2.xls
Usual caveats
Trek
What was all that trading down to 176p near the close all about? Very weird.
Back to 190p again for small buys.
Wow finished up today! Just lol!
Mr market doesn’t quite know what box to put us in. Energy producer or utilities/infrastructure. Both!
We are sooooo boringly predictable. Steady income, steady divi, diverse investment.
And I grabbed some at 182!
Anyone looking in and want to know the progress we are making have a read of the last 3 summary comments on the HL site in the company news box for 6 August, 25 October and 24 November...
https://www.hl.co.uk/shares/shares-search-results/c/contourglobal-plc-ord-1p
It pretty much summarise the operational momentum which has not been reflected in the SP!
Buy the dips here and tuck away imo!
Usual caveats
Trek
Hi OaW,
No, and no forms to fill out. I had around £800 for the last divi in GBP paid into my ISA.
I know where you are but I don’t know why some shares are different. This pays cash like VOD, GSK, RDSB etc all hassle free.
Trek
By the way, Trek. With this share reporting numbers and dividends in US$, does that mean we suffer withholding taxes on our dividends?
Thanks Trek.
I'm in, fwiw. Starter position established. Also with DLG.
Regards,
O&W
Hi OaW,
Divi is covered 1.9x by earnings and is quarterly. See 6th August RNS...
“Second quarter dividend of 4.465 cents per share, equivalent to 3.203 pence per share[3], to be paid on 10 September 2021, reflecting our commitment to a 10% year-on-year growing dividend supported by our strong and visible cash flows. Dividend cover remains strong at 1.9x[4]”
Divi is in USD so getting FX tailwind atm.
I picked up 20k shares this morning over several trades got some at 182 and a bit so got my average down nicely and a much needed income top up!
MM now put spread out to 186/182. At times I couldn’t by 5k shares in one hit but could sell 30k!
I am done here buying for now. I sliced a load of stuff this morning in case the market goes lower. I only bought SNG and GLO.
If GLO hits all time low of sub 150 I will double down else I am happy to just take the divi off 50k shares which has been my target. Remember in their trading update ops were unaffected by covid. For sure next time may be different hence it makes sense to have cash and diversity. GLO gives energy mix and country mix diversity + a 10% yoy divi increase.
You normally have to search through ETF’s and Trust for such cover.
Imo this is held in a tight trading range because it lacks liquidity due to the majority investor. Ops, cash, gearing is fine. Growth is measured.
Usual caveats
Trek
Good morning Trek.
I'm just reading through the Interims rns and trying to understand that the earnings are either 6c or 4c, depending on whether you include the unrealised FX loss? So the quarterly dividend of 4.465c, paid twice in the H1, is uncovered? Confused.
This is nice..... today...
“GOLDMAN CUTS CONTOURGLOBAL PRICE TARGET TO 205 (215) PENCE - 'NEUTRAL'”
So we get a huge +£100k UT trade today and SP knocked down 4.2p! Just lol!
Firstly you can seldom buy any volume here without NT and it’s a FTSE250!
Mostly because of the corporate structure with the major holder. I am not a fan, but it’s how it is.
Whenever this dips below 190 I try and add. It’s an income play. +6.5% relatively low risk divi. Sound business model, throwing off cash and using cash accretively.
Also we have no lift following the increase in energy prices. A kw at point of sale is ‘same’ for any kw generated. It doesn’t matter where it comes from. It’s the profit margin that varies. So whilst coal is expensive and we only generate a small percentage of our energy pf from coal the KW is the same as from solar where we generate a lot of energy cheaply!
The impacts of lack of wind will be a factor but we don’t generate KW in UK!
We have a wide geographical presence and a diverse energy mix. Check out the company ppt.
As for as for SP trajectory. It’s pretty flat here and the majority shareholder probably rules out a t/o. Also gives stability and the market knows any cash call for acquisition can be readily financed if needed.
I am sure there would be many takers for our pf especially for our renewables but we are well defended.
This isn’t like MNG with a huge yield, relatively unknown bus plan and swimming with sharks!
Nope this is a boring steady eddy!
Buy as close to 190 as possible and take the quarterly divi. If you have to sell wait for the usual spike to 200’s ahead of next quarterly divi!
Usual caveats
Trek
So a 3.2223p divi knocked 5.40p off the SP.
Well thats not quite a true reflection. The 200p close yesterday was an after hours close, an artificial high.
I actually managed to add at 1.97 and 1.98 yesterday. Also you have to factor in spread and trading costs. So trading the divi I.e. selling before and buying after isn't worth it imo. Taking the cash and reinvesting on the dips probably is.
The trading range here is 185-220p. So if you can tolerate that, which I can as I am used to trading a much higher vix, then the 6.48% divi at current SP, with the 10% yoy growth is imo about as good as it gets in terms of safety, cover at 1.9x, inflation beating and diversification.
The divi is quarterly and it’s from a diverse energy pf with a 20 country geo spread. It’s also paid in USD so we get some currency tailwinds as well.
You normally have to buy an energy ETF or trust for that which comes with costs.
I mentioned inflation, well a lot of that is energy driven and it’s not imo in the SP here yet. So adding now especially sub £2 should prove a sound inflation beating defensive income play. Just don’t expect huge capital gains as you can seldom have both!
Usual caveats
Trek
I bought a few more this morning for my ISA @ 1.9428, it would have been rude not to!
Ah well all good things come to an end. It looks like this is heading back to the 200’s again!
Market may have added in the divi +10% in advance and starting to absorb numbers which imo was pretty impressive. On track to hit revised upwards guidance!
Oh well! And I haven’t finished building my position here yet!
Trek
Ignore google SP it’s +195p to buy and you can only get 500 shares atm but I can sell 25000 without going NT.
I rest my case! Needs liquidity!
Trek
“(Alliance News) - ContourGlobal PLC on Monday maintained its annual guidance as it reported double-digit revenue growth in the first nine months of 2021.
The London-based power generation business said its operational performance remained strong in the first nine months of 2021. Adjusted earnings before interest, tax, depreciation and amortisation were up 14% to USD622.2 million from USD542.8 million a year ago, mainly reflecting the contribution from the Western Generation portfolio acquisition completed on February 18.
Revenue, meanwhile, grew by 46% year-on-year to USD1.48 billion from USD1.02 billion, as renewable production for the nine months to September 30 rose by 7.4% to 3,913 gigawatt hours and thermal production increased by 53% year-on-year to 11,644 gigawatt hours.
The FTSE 250-listed company said it will pay a dividend for the third quarter of 2021 of 4.465 US cents per share, unchanged quarter-on-quarter, but up from 4.0591 US cents paid a year ago. This is in line with the company's commitment to an annual 10% increase in dividend per share.
Looking ahead, ContourGlobal reiterated its guidance for 2021 adjusted Ebitda in the range of USD780 million to USD810 million and its intention to maintain its dividend policy of a 10% annual increase in dividend per share.
"We continue to focus on operationally led low-carbon growth opportunities in our key geographies and our pipeline of attractive opportunities remains robust," said Chief Executive Joseph Brandt.
Elsewhere, the company noted that it had two "unacceptable" health & safety failures in the third quarter: a fatality of one of its contractors at a wind farm in Brazil, and a lost time incident at one of its CSPs in Spain.
By Evelina Grecenko; evelinagrecenko@alliancenews.com”
Great set of numbers, such a shame about the LTI’s as they were running with zero across 20 countries!
Trek
Tiny increase in divi with forex tailwind.
I will be holding mine for the divi. I get 6.71% on a quarterly yield. Probably one of the safest divi’s in the 250 and bar two coal plants (which still have their part to play) mostly green energy!
I hope to add a few more after the ex divi date. This one doesn’t always drop pro-rata or its brief so I wouldn’t plan on selling in advance like trading the dive on the insurers. At least hedge your bets with half and half if I was trading.
Re the new IR appt, I am not so sure what Jose can do as imo it’s liquidity that is hold back the SP. If they could tempt our 70 odd % shareholder to sell some stock that may actually help bid the price up.
Doesn’t bother me though as the SP trading range of 185-220 ish is very comfortable so happy to buy the lower end when cash is available and bag the divi.
Just waiting for the trading update to drop in now! Should be at higher end of guidance given the energy prices.
Can’t believe this stock is so underreported! Amazing!
Usual caveats
Trek
Re our
No idea where you are quoting from but it’s yielding 6.4% atm 1.9x covered with a 10% yoy divi increase!
I just added again. It was NT to buy 2000 shares again so I added 1500 and 500 at a tad under 187. My best price yet!
The SP here is complete madness. Peeps go on about Brazil but that is a very small part of their pf. They also refinanced debt on better terms.
The market has also overlooked energy price increases!
Look at TGA that is an even bigger price error and the market is waking up to it.
GLO is not that bad but it should be 220-240 range comfortable and given the divi security should be no more than 5% yield!
There isn’t gonna be fireworks here but if you need income there is no better place on a lower risk basis imo. My target is 50k shares! That’s then my pension pretty much sorted!
Usual caveats
Trek
According to T212, GLO's payout ratio of the LFY was 671.25%! Have they ****ed this up somewhere, or is this correct does anyone know?