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Oops missed out 3rd lol
100% agree we have moved from 1st to 2nd gear still 4-6 to go
I truly believe that Yu Group have been held back by the old hedging agreement. I think the amount of collateral they were posting which was £52m has meant that they have been restricting the amount of new business they have written in the last half of last year. I think the new hedging agreement will let this business fly. They can now drive for meter growth. I think they know they will blow through the 100,000 meter target. Hang on to your seatbelts this ride could get very exciting!!
What does 15x p/e look like in share price terms: It would be trading at £27.33 now. In a years time Yu Group would be £52.27. In two years from today we would be £78.30. Then if I were BK I would take £100 per share from Shell for the whole business and ride off into the sunset with my £880m and have a wild time!!
We should also remember this is just working on 15x p/e not 30 or 40 times p/e!! The main thing to watch in this thesis is the figure of 100,000 meters by the end of 2024. If this happens the game is on!!!
Excellent posts NG it’s all about the future now and we are priced on the past.
As you say big boys don’t care about about history they want future growth and I am under no illusion a huge amount of share has been gobbled up since results.
The question to be revealed is who or more than one battling it out
Our MC now puts us well within the AIM50 so promotion to top league AIM in June radars must be flashing on a lot of IIs at the moment.
Remember this time last year Liberum where expecting eps for 2023 to be 43p they ended at 182.2p per share.
If what is set out below happens in 2024 then Yu Group will start 2025 with 100,000 doing £11,700 per meter, so contracted revenue of £1.17bn of revenue already in the book for 2025. If Yu Group achieve the 100,000 meters by the end of 2024 then they will try and reach their 5% market share target of 165,000 meters by the end of 2025. If achieved then the average meters during 2025 will have been 132,500 meters. Again times that by Liberums £11,700 per meter and you get £1.55bn revenue for 2025, at 7% net EBITDA margin then that is £108.5m, take off 25% tax and add £6m for interest. Then the EPS for 2025 would be 522p per share. Just 15x p/e for this kind of growth? I think II's will be happy to put this on a better rating. Don't get scared by the current share price, this little gem has a lot further to go. Also, be wary of Liberums eps forecasts of 186p for 2024 and 211 for 2025. They will upgrade significantly over the next year or two.
From 43p to an actual 182.2p need I say more?!
Always be wary when someone says things have changed. BUT for Yu Group things have changed! The movement since the results were reported is different. The share price in the past has been driven by individuals, private clients who have got seen an opportunity, a share price that has fallen a long way and a company that is righting the wrongs of the past. The results on the 19th March have changed everything. Yu Group became the cheapest it has ever been, and the people now looking at this company have also changed from private clients who say I can't buy this stock, because look where it has come from to now institutions looking at a company on it's fundamentals and saying this share is too cheap. A company that is classed as a disruptor in the SME energy sector should be trading on a p/e multiple of a lot higher than 9.89 times and if they do the 100,000 meters by the end of 2024 then this share is unbelievably cheap at this share price and looking to what it will be worth in the future not where it has come from over the past 5 years.
Yu Group now has a market cap of over £300m and the free float is £150m (taking BK's shares out of the equation.) The cash at the end of the year will be around £120m after paying ROC and dividends. They have a new hedging agreement with Shell who want them to grow their market share quickly and have not restrained them with margin payments as Shell are producing the gas and electricity anyway, and want a guaranteed market price to sell into one and two years out, to allow them to have price certainty for their products.
So going back to the institutions now looking at a company that was too small to consider, what do they see now? They see a house broker that is comfortable predicting that Yu Group are aiming for 100,000 meters at the end of 2024, a company management that is very pleased with how the year has started, and very comfortable with a 100,000 meter target. They also look at Liberums research note and see that in 2023 each meter averaged £11,700 of revenue. They then look at the meters at the end of 2023: 53,400 and the 100,000 target which if met will mean that the 2024 average meters was 76,700 (53,400 + 100,000 /2) this is the calculation Liberum put in their note of the 19/03/24. They then multiply 76,700 by the liberum figure per meter of £11,700 and see a turnover figure for 2024 of £897k. £520m of this £897k 2024 revenue figure was booked at a net EBITDA margin in double figures! If we assume the 2024 net EBITDA margin is lower say 8% (management are comfortable between 6-8% then you get around £72m, take off 25% tax and add around £4.5m for interest. That means profit will be £58.34m for 2024. There are now 16.74m shares in issue, so eps for 2024 would be 348.5p per share.
Institutions know that the p/e on a disruptor growing at this rate is worth over 15x p/e and they don't care where this share was 5 years ago they only care about where they think the share will be in the futu
Hi everyone can someone give me an idea of where they would set their stop loss please- i personally think theres a lot more in this one to come but dont want the mms cutting me out !! any help greatfully recieved
Another one appears who has missed the early boat by the sounds of things.
Lol. Sorry but what are you smoking ?
Notable that only one of them (the smallest) paid more than 1806. So that may be the ceiling for the moment.
As for talk of a takeover, remember the CEO holds 52%. So it can't happen without him, for sure. Also he is probably irreplaceable, given the nature of the company's business.
After hours again
Someone is 100% building a stake been like this for days and days nown
Just this: while everything is going very well at present, the company would be vulnerable to any slowdown in trading, given the present MC.
They are not - they are valued by the market and at present the markets very happy with the company's results and as I said I suspect that an II or HNWI is taking a stake as we have now had 5 days of large after market transactions posted accounting for over 300k shares. Will need to get to about 500k for a TR1 though
@lucian, doesn't bother me at all, cash position after return of collateral of £82m. EBITDA for 2023 of £42m, the company is now profitable with good margins - expected 6-8% for 2024.
What are you reasons for asking?
There is pretty much zero chance of a takeover as CEO owns 53% and has his sights on a mountain Ch bigger business - 5% market share is the stated aim, up from 1.4% now.
Lucain - Ipc will no doubt reply himself.
But, since when are companies valued on their accounting assets? Eps for 2023 was 199p (adj) and 182p (diluted). Yu is still on a PER of less than 10. Most in the sector are on around 15 times, including TEP (adj basis). Brokers have noted the Opus takeover by Drax at 10 times EBITDA. Yu group EBITDA for 2023 was 42.6m. 10 times is 426m, plus cash of £60m (ie the 80m less accrued ROC payments), so say a rounded up £500m. Equates to just under £30 per share, oddly enough is also 15 times PER! Current price action here is all pointing to a significant re-rate towards a 'normal' market valuation. Though as the IC article shows, the market still perceives some risk from historic issues. At some point the SP will consolidate, but where ... ... ... ??????
Extract
"Part of the reason there is less competition in the SME space, however – and why some suppliers are actively abandoning it – is because it is risky. The likelihood of customers paying their bills is dependent on the economic backdrop, and balance sheets are laden with money earned but not yet received. Yu Group’s accrued income, net of provisions made for bad debt, jumped by 64 per cent to £52.3mn in 2023.
An accounting scandal in 2018, relating to a massive miscalculation of Yu Group’s accrued income, also casts a long shadow."
Conclusion
"Small utility players are clearly risky. In the case of Yu Group, it's also important to remember that the market rarely reacts well when darling stocks unexpectedly disappoint. However, their compelling customer propositions should not be ignored, and it will be fascinating to see how they fare as the energy market finds its new normal."
The article does not give a recommendation, it is reporting only. No mention is made on valuation or even the low PER! The writer of the article offers nothing new and has simply read the broker notes, and quotes from them. The other stock covered is TEP, and likewise bad debt, which has doubled at TEP, is highlighted as an increasing risk. IC - "As with Yu Group, there are also concerns that unusual market conditions have artificially boosted growth."
Market cap here now over 300 million. Net assets as in last RNS, around 50 million (mainly cash).
Probably more by now, but it still puts a high value on hope and expectation.
Does that worry you at all?
Now £18.20 to sell. Ripe for a takeover?
It's the spot price of gold/oz - it's nudging the ATH again and could push on this time.
Good luck with your investments.
Typical! The Waitrose that always has copies has none today!
However, 'Nil Desprandum' as the wife is going to try another Waitrose on Saturday for me. . .
Everything I am invested in is going up!
AT. Result are due in May. It looks like the SP has started its rise towards results day. In November they announced are ahead of expectations. YU. and AT. are my best investments ever.
I am not familiar with POG, what is that?
1802 to sell.