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This has been a long time coming - I do think this was predictable several months ago, as this thread shows.
I would be tempted to buy in at 2.5p - £2500 for 100,000 shares is crazy cheap, but I think the Uskmouth rejection could be just around the corner and that makes me hesitant.
On the other hand, the last time they did a placing at 14p they released good news a few days later and everyone who bought in made a packet. I don't know what I'll do. I certainly wouldn't buy in with any money I couldn't afford to lose.
Good luck to everyone who buys in.
really want to invest , so this weekend will research the last 5 years of this company , its strange but 20 years ago tidal was the new ground but with massive investment by the government never taken off.
It would appear that times have changed , but Tidal still needs Government backing to then go free as fund managers set up company's to invest.
Its how wind went 20 years ago
Would definitely recommend doing so! I did the same over the weekend and in my opinion the market is missing the fact they can actually (more than likely) tread water and won't be forced to raise until after the WAG situation is cleared up. If it is a positive decision then all could be well again and you'd have to think they would be able place at over 15p.
I'm a new investor here buying on Friday and doubling down today, although I was in before so know the company well. I think it is a cracking opportunity from sub 6p for those with a high risk tolerance and 3-5 year time horizon. "Buy when others are fearful" as they say.
Thanks! I thought I was being generous using that since those losses were less than the previous year (and I was only doing back of the envelope sums) but if you're right then that would be very encouraging for shareholders. On that basis they would be pretty close to profitability on tidal?
I don't have time this week, but I might have a deeper dig into their finances when I get time.
The 6 months you used had a loss of £6.2m, but £5.3m of that was a depreciation expense (which has no material impact on cash). So material "loss on cash" was only £0.9m over 6 months. So maybe the can actually tread water for a while, wait for the decision and they aren't going to be crippled by a financing time bomb?
And if you want the Uskmouth-PP-is-approved-before-mid-August case, I think the SP could plausibly settle in the high 40s or low 50s in that scenario. Suppose you had a placing at 40p. If I were Reid I would raise about 18 months of cash with about 45 million shares (<10% dilution), which would see SAE through to profitability. SAE would surely have a market cap of over a billion within a few years of Uskmouth being converted.
For clarity:
I have no position in SAE at the moment because I don't think Uskmouth will be approved, but I would buy in at 40p if Uskmouth PP is approved (and cry about the shares I sold at ~11p). I would not buy in any of the other scenarios until I saw a resolution to Uskmouth and a plausible path to profitability.
Some back-of-the-envelope numbers:
Cash position was £9.8 million as of June 30th 2020. Since then, they've received £4 million from share placements. The most recent figures we have for cash burn are about £1mil/month for the first half of 2020. This may have been affected by furlough (i.e. government paying some wages), but we'll ignore that since the RNS attributes it to increased revenues from Atlantis engineering and Meygen.
(£9.8 mil + £4 mil)/1mil ~= 14 months of cash from June 30th 2020: they will probably run out of money before August 30th 2021.
The best case scenario (that seems plausible to me) is that the government announces a CfD pot within a pot structure for AR4 in the next month or two, and the share price rises as a result. If they are smart, and I think Reid probably is smart, then they will announce a placing straight after that with an update on their hopes/expectations for CfD revenues.
The worst case scenario is that the CfD budget notice isn't released in time or is unfavourable for tidal (e.g. no pot-within-pot) and/or the planning application for Uskmouth is rejected by the WG.
It's difficult to say what the share price would be doing in those scenarios. My guess is that with a really positive CfD budget they could expect to be profitable in the tidal division within a couple of years and, best case scenario, raise in the low teens. To raise at 14 pence (which seems highly optimistic given the current SP), it would cost about 10% dilution per 7 months of cash raised (50 mil shares times 0.14 pence gives 7 mil cash). An even better case scenario would involve some kind of deal in Asia (perhaps with Hana) to convert coal plants over there, but that seems pretty speculative at the moment and I'm not confident anyone will be willing to partner while Uskmouth hangs over them.
In the worst case scenario I mentioned, it doesn't look great. Suppose you could raise at 3p per share (which I highly doubt given the bad news we're imagining). It would cost you about 45% dilution to raise 7 months cash, and what's worse is that you wouldn't have any guarantee of funding from CfDs or from Uskmouth in the foreseeable future. They might need to raise more than 7 months cash, and at a lower share price. Frankly, if the CfD budget is unfavourable and Uskmouth planning is rejected, I would be sad but unsurprised to see a share placing at about 1 pence. This is mostly because, as I understand it, they will at some point have to find money to decommission Uskmouth on top of regular losses.
The relevant RNS in case you want to check my numbers:
https://www.lse.co.uk/rns/SAE/interim-results-unaudited-8cyb09iqtd82mga.html (cash position and cash burn June 2020)
https://www.lse.co.uk/rns/SAE/share-placement-agreement-0jj5m5e0lf0y0r4.html (first share placement Dec 2020)
https://www.lse.co.uk/rns/SAE/investment-under-share-placement-agreement-wpnyf0s2xaobuxe.html (second placement Mar 2021)
Yeah, I have to agree. Things have gotten serious. I kind of wish in hindsight they did this at the high 20s but alas, what can you do.
Just read and very impressive. My concern is that all this is making losses at present and without a cash raise very soon, these project times will fall behind or have to stop. The longer it is left, the lower the SPwill go and the more new shares will have to be issued at a lower price. So unless the co can print money some other way, let's be having it now please and let us LTHs participate, not just a Placing with institutions.
Read the update and the video ref Uskmouth and they are definitely angling this in a very proactive way.
This is a great update showing the wide range of projects that SAE is successfully delivering.
https://twitter.com/GrahamReidSAE/status/1405065653976023041?s=19