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Deadly4U, the UK Govt brought in the current price capping system, which is a maximum price so Energy Cos can charge well below it if they wish. I understand Greed, etc .., but why don't they simply charge a price which gives them v good profits and which is seen as moral v current high gas and oil input prices, accept that SSE is Wind Energy ? Centrica announced yesterday that they'll donate 10%+ of their profits back to help reduce their customers energy costs. I'm a LT SSE investor but believe in fairness.
Great summary of current concerns for SSE Guitarsolo! I sold out for similar reasons a few months back, I can't see how SSE can avoid the current toxic political conversation around energy generation and profits. I really think it is an excellent business with very smart management, but the current energy market where they sell their wind energy for large profits above expectations, even if in practice that doesnt rly happen, will lead to continued talks of "super" profits and calls to reform the energy market, affecting SSE's business and affecting profits and business confidence.
I've sold my minor holding here at 1831p today. I've pocketed a nice profit of about 75% over 2.5 years (incl dividends) having bought in at 1208p. I've long had the feeling that I am better at judging when to buy utilities than sell them, but there are a few current/future issues for SSE that make me think I might be better to pocket my profit and step away:
(i) With the energy price crisis there will be persistent calls for windfall taxes.
(ii) Following on from the above, the threat of nationalisation will linger. It will never happen, but even a whiff can dent the share price.
(iii) Ofgem is going to come under enormous pressure to make future pricing favourable to customers.
(iv) Rising interest rates will make financing the massive investments required more expensive (I haven't done any research or calculations about this, just a general feeling).
(v) There is a clear and coordinated attack from the right-wing of politics against green energy. If the Tories remain in power I see them conceding at least some ground in that department which will hit SSE's windfarms I presume.
(vi) On the financials, it is now trading at a P/E of 15 which is high-ish for a utility.
(vii) The dividend is due to rebase to around 60p in 2024 and then progressively rise (perhaps 5% p.a.). That would put SSE on a 3.3% yield which is way too low for a utility in my view (even if it is then covered x2 and will increase progressively). I think there will be a few shareholders waking up to that over the next year. I would want at least 5% yield from a utility so at 60p that would put the share price at around £12!
I note Berenberg has a recent price target of £22 and Barclays £20 (no dates when it will reach it though!). So clearly analysts think there might be more to come from this rally. As I said, I am probably better and deciding when the buy than sell! And I am sure I will be a buyer again someday.
Good luck everyone.
Guitarsolo
Yes, the current Grid Price system is by no means perfect. SSE produces Electricity for a certain cost per kilowatt, Another produces for a different cost per kilowatt. Ideally, each utility company should be able to offer their electricity at their own price just like most other businesses. However, utility cos are based in specific areas and those living there would have limited, if any, competition to choose from. Presumably that's why the Grid system was set up so that the average cost going into the grid would be used by utility cos to bill out their electricity, etc... ?? One option for consumers is to install Solar Panels, Wind Energy devices, etc.... and then sell unused units back to the grid, though not everyone can do this. Another option is to minimise use of electricity and gas by eating more cold meals, streamlining necessary cooking, turning off any lights and devices not needed to be on, staggering heating times, etc...
The media are obsessed with talking of the average electricity bill going up to over 4K…average for what: house?, flat? They are scaring the beejeezus out of people…my ma is even talking about giving up smoking, after 60 odd years…a straight percentage would be handier.
I agree that nationalisation has a bad track record but maybe it's time to have another bash.
I see no logic in buying my energy from a company that doesn't actually produce it after using a comparison site that adds 20% on to the price.
The **** in my last message below is Pack for the country next to India. Quite discriminatory being prevented from inserting a full country name, why not have ****ain or ***any, etc...
Bad Credit ratings can mean no more loans from banks, no more credit card, no more non-prepay bills, etc... Okay if one has no mortgage and doesn't mind paying up front for everything !! Agree that loans can be source of poverty unless for business where cost of loan is less than returns from what it is used for. Re Nationalisation: Govts have a very bad track record of running businesses as their financial control is sloppy, public service unions take undue advantage, they lack and usually cannot attract the right expertise. Sri Lanka and ****stan are two great current examples where Govts have meddled in their country's utilities and bankrupted their country.
A bad credit rating is probably no bad thing, borrowing is often the source of poverty.
Nationalise the energy industry, the only sensible option, cuts out all the middlemen and their profits.
No so easy as you might imagine. You have to gain entry. With an underground supply the cable has to be traced, excavated off the property, cut using Live techniques and the pavement reinstated. An expensive operation, always assuming the cable is not a shared supply.
From a retired former cable jointer.
I hope these customers really understand the effects of being cutoff, prosecuted and getting a bad credit rating !!!
Nice to see that following dividend paid (60p) the share price dropped back to below 16.90 from 17.80. However, only days later we have recovered and now heading towards £18.
r1234, a 4% div on sp of £15 + a growth extra amount also a possibility. So current sp maybe not unreasonable as the Nov21 RNS indicates 'growth-enabling dividend'.
I thought it’ll only go down 60 p from 1780, I’m tempted too, if it gets closer to the 16 mark . Gl
I'm getting really tempted to add.
It is a general statement, there will obviously be exceptions.
If you know something the market doesn't then yes you should invest but generally you are better buying shares with positive momentum than negative.
A better example of sp declining because of outside events is Rolls Royce. In 2013 was a £12 share, fell to about £6 beginning of 2020 because of too many factors to list, and is now a 80p share because of Covid. We still have not reached 'safery zone' with cv19 yet, mainly because of many people not getting vaccine. However, RR. is still the same company as in 2019, with a few more profit enhancing products. Passenger numbers will return to pre-pandemic numbers, and possibly LHR will change it's management to people who know what they are doing. Many RR. S/H did not sell all their holdings post pandemic, and many bought on the way down £4, 3, 2 1. I'm sure many have 'av, down' at present sp. It can't be a gamble?, can it?
OWLS.
'Averaging down is not a good strategy, what is falling tends to continue falling.'
First, the second part of your comment is obviously not true in the majority of cases. eg. SSE fell from over £19 on MaY 23 To under £16 mid June. It has now risen to mid £17. We are invested here because we believe the sp will go considerably N of its present value. Shares never go up in straight lines, and rarely fall to bankruptcy in straight lines.
'Averaging down' is well understood, but has to be done with caution. It is normally used when sp's fall due to events outside of companies control, eg. falls in sp of mfg companies because of supply problems caused by war in Ukraine. At some point in the future, the problem will be resolved. Av. down when falls are because of companies poor policies problematic, but can be good choice if management is changed. Investing is not easy.
Averaging down is not a good strategy, what is falling tends to continue falling.
From the RNS 17/11/21 Net Zero Acceleration Programme
"Growth-enabling dividend, paying at least £3.50 per share across the five years, comprising:
o completion of current RPI linked dividend plan to March 2023
o followed by a rebased dividend to 60p in 23/24 with attractive annual growth of at least 5% to March 2026"
Since that RNS I've expected the share price to tumble, but it seems to be defying gravity. If I understand that correctly, that the annual dividend will be reduced to 60p, I'd expect the SP to be around the 1200p level (giving 5% yield). The current SP says I have it wrong. The SP was around 1650 at the time of the RNS. I'm on the side, waiting to see how it pans out, the rise to 1900 gave me pause for thought.
I can’t get my head around the price action currently… my bet is we’re closer to 1800 next week, might be wrong.. GLA
''If it drops a bit further towards 1600s range then might be worth selling some other shares to Average down again in anticipation of some minor extra profit.'' I had that theory with BP 3 years ago,followed it up and ended with a financial ''cluster ***k'' which I am slowly getting out of.
''If it drops a bit further towards 1600s range then might be worth selling some other shares to Average down again in anticipation of some minor extra profit.'' I had that theory with BP 3 years ago,followed it up and ended with a financial ''cluster ***k'' which I am slowly getting out of.
Yep. I've averaged down in the hope to 'recover' some ground, especially mon-tue.
If it drops a bit further towards 1600s range then might be worth selling some other shares to Average down again in anticipation of some minor extra profit.
So GLA
Next week will be interesting, especially the 27th… I do T see the reason for the fall… probably because I topped up! lol