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PC: ".. exposed to reducing battery prices and improving storage capacity."
- .. this worries me slightly and I don't see it discussed anywhere. The new battery tecs that will show up over next couple years mean that altho the sector will get huge demand bump, prices fall + there will be a huge capital appetite. I can only hope that by then the current capital drought has gone away. BTW I saw recently some new player just committed 10 Bil GBP to new BESS build-out, can't find the link just now.
I suspect the reason such a straight forward set of accounts is in to the fourth month after year end has probably a lot to do with the going concern statement from the auditors which in turn is a function of the structure of the external bank debt, the £110M which was increased by £50M during the half year . £110M at 8% needs £9 m just to pay interest and whatever amortisations are required are extra. When you are doing only £20M of revenue in 6 months and prices are declining rapidly its a tough position to be in. National Grid better gets its act together. Ridiculous really that they could kill this important business initiative because of inefficiency. Never be reliant on Governments or civil servants until they are in crisis mode and then they are lambs to the slaughter.
Interesting article. If the price at end 23 is one third of where it was in 22 than my back of the envelope is too high for now and the share price could half again from here ie by not making the double assumption I did to see where the market was at. It doesn't mean it is out of business it is just a reflection of the poor cash returns from such a high accumulated capex spend at current pricing levels. As they only have £110M external bank debt as most of the debt is intercompany from the plc to the operating entities and they can capitalise this interest but that of course is the reason the div was cancelled and will be for 2024. They raised over £600M in equity and it generated £20M revenue or £13.8M ebitda in the first half of 2023. Think market valuing it at £230M odd is being nice. It could get much uglier. Think they should try and sell some of smaller units if they can get a reasonable price just to build their cash reserves. The £110M bank loan will want its interest in cash and so GRID don't want the lenders getting nervous. Think its led by Santander.
In the FT today
https://www.ft.com/content/6485d918-5882-448e-b277-5b5674869281
https://archive.ph/u4UeR
The underlying EBITDA is 13.8M for half year with external interest 4.4M that's 9.4M EBT. Take off tax at 25% and EAT is 7.05 for half year say 14M for FY. Double it for the capacity increases etc and all initiatives they are working on and for now value as a perpetuity at 12% and you get £235M, the current market cap. Until there is more information this basic DCF approach justifies where we are at albeit with a doubling of the underlying P&L account and the value of a perpetuity without further investment which is unreasonable. Market isn't being unreasonable just working with what it knows at moment in a high level way.
Interesting how HEIT has had a good few days while GRID continues to fall.
Is not replacement cost a better metric for determining value rather than some arbitrary NPV driven valuation?
Ultimately it all boils done to supply demand. If roll out of new storage dries up because revenues too low then revenues must rises.
REITs appear easier/safer as new build costs generally trending up with inflation whereas battery storage looks most exposed to reducing battery prices and improving storage capacity.
Heck, throwing caution to the wind I've bought a few in the hope of recouping an imprudent gamble on the Scotch mist gold mine!
Although loathing the mnemonic passionately - GLA but especially me!
Tiny uptick at lunchtime today. About time too! Could it herald better times ahead?
The company does seem to be a little tardy with announcements and updates posted on the investor section of their website. Is there something we should ne reading into this?
Right, this is priced as if their going to significantly cut balance sheet + NAV, postpone pipeline and then maybe even sell off some assets... doesn't seem reasonable at all
If only I knew what will happen here, because the market appears to be pricing armageddon.
I don't see any open short positions?
Sentiment is having a bigger effect than normal on the market.
That's what I read into Buffet's statement "that the market is increasingly casino like"
There are of course advantages in that. IE GRIDs present share price is definitely an excellent opportunity.
In terms of income GRID is likely to see a significant increase when the National Grid eventually sorts self out.
Dependency on volatility to make money is always going to be riskier.
Sentiments will flip this and there will be tears for the short sellers .
Value always wins
If GRID is buying almost 50 grand worth of shares a day atm, where's all this selling pressure coming from?
It is painful. Investors have lost faith in the sector and in the management of GRID in particular. I also read concerns about the shorter duration battery assets which GRID holds.
If that 47% increase in recent BESS flows somehow feeds through to GRID's revenues, well, that's the 1st piece of optimistic news in a while.
Posted 18th Mar on Energy Storage News
"Battery storage market intelligence firm Modo Energy has released data confirming a 47% increase in weekly battery energy storage system (BESS) dispatched volume on the grid in Great Britain (GB) compared to eight weeks prior.
In January 2024, the electricity system operator National Grid ESO relaunched bulk dispatch for battery energy storage units in the Balancing Mechanism (BM) following its closure in December 2023 due to technical issues."
Presumably GRID has benefited too in this. Still a long way to go. Can't see reason for the continued sell off at all time lows
Mind boggling isn't it
Energy-storage.news does have some useful updates, specifically regarding BESS. Worth keeping at eye out there
The drop is surprising though. Could be due to end of year accounting for some who've punching in losses to balance profits elsewhere? Just seems mad to sell at these levels otherwise.
I topped up in the 50's pre-recent push with pension and kids accounts. Wouldn't put anything in here with sub-18 month window
According to UK energy dashboard at 14:30 today the UK was importing almost half of our electricity.
I don't think it's a good idea for an island to rely on imports of a commodity that cannot be stored in significant amounts. I wonder when we'll be found out.
I appreciate battery storage isn't the solution to this issue but you'd think the powers that be would push for more self-sufficiency.
Hope Mr Putin doesn't get any ideas to trawl/blow up any subsea cables.
ESO published this yesterday: "https://www.nationalgrideso.com/news/new-balancing-reserve-service-goes-live-reduce-balancing-costs-and-improve-system-security"
Confirms go-live for Balancing Reserve. I thought the wave of selling might be down to a delay but apparently not.
Interesting, thanks. There seems to be a paucity of info about GRID. I keep looking and will update this board if I find anything relevant & useful. I'm sure you're doing the same JTS13. It's been a painful experience for all of us LTHs, but I've added this morning at 52p because I really don't think they'll allow a trust with (supposedly) £950m in assets go to the wall.
Patience is required because this is now a long-term recovery situation without divi income to sweeten the pill. First they need to cut debt while trying to avoid a fire sale of assets. Then we require the flows of revenue from the grid connections to bed down and become more predictable. Finally there should be a renegotiation of the fee structure, imo, as has happened with other poorly performing trusts. A lot of things to fall into place but with time I remain hopeful.
House of Lords has posted a report entitled: "Long duration energy storage: get on with it".
Published on Wednesday, it formally criticises the government and demand immediate and strategic actions on BESS infrastructure in the UK.
Hopefully something comes of it.
Otherwise, looks like we are being shorted again!
Oof! A capitulation day to end a fun week. Income mandates selling out I suppose. Loads of uncertainty here, both in the battery storage sector generally and with this trust. Another c*ck-up buying this...