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UU Equity ratio 1.3 Cash �200M Debt:equity 3.4 SVT Equity ratio 1.1 Cash �50M Debt:equity 8.8 There is a clear winner and it is not SVT (Severn Trent)
1 svt 2 uu 3 pnn Would be my rankings and i hold �100k in the first two. Wouldnt touch the third one with someone elses money! Pnn core business operationally is balanced on a knife edge, poorly paid poorly motivated and too few operational staff in both water and sewerage, most o f the works built around year 2000 are falling to bits with zero maintenance, management penny pinching is legendary, they may look an attractive takeover prospect but if that ever happended the buyer would need to find a fortune to rebuild. Virador is in much much better shape however. All of course imho.
Thanks.
Holdings In all 3 Bond Proxies - all takeover prospects, IMO. Yes, we should fear a Corbinista regime, but that wont be for 4 years yet - if May resigns Boris or another cabinet member would take over, just like when 'Call me Dave', go the push. If you know a better 'ole - go to it :]
.......told clients Ofwat could drag earnings down next year, renationalisation from a Dustbyn government, high RPI and high index linked debt could also have a negative effect on earnings.
Given your experience then which of the 3 water companies do you rate most highly? I would rank them in the following order purely based on fundamentals and their balance sheets: - 1. UU 2. Pennon 3. Severn Trent I believe it was Severn Trent that received a take over offer 2-3 years ago?
Holding in 2/3rds of the uk water industry and have worked in it for 30 years, the drop in price recently has been pretty staggering. The biggest cause in my eyes is the political issues over Corbyn getting in if mrs m gets the chop. His ridiculus populist threats to renationalse the industry amongst others is depressing all utility prices at the moment. Nothing wrong with the industry or uu per se i dont think.
I assume it is an innocent question. Last year EPS was 64p At the current SP this gives a P/E of around 12 You can't get much more defensive than water can you? These type of shares usually trade on P/E's in the high teens, perhaps even 20. It hit 1066p just a few months ago - this is all down to fear over what Ofwat may or may not do with water companies. There was a time when water companies were in high demand and receiving take over offers...
Hi Mulder, Can you elaborate "P/E of 12 for a water utility is madness"? Thanks
This hit 1066p (!) just a couple of months ago.
All utilities on downtrend, just look at cna and sse. Funds will be back for divis but may be more bloodshed before then
UU made an operating profit of �606M last year and the current liabilities = �690M so this is just 1.14x EBITDA P/E of 12 for a water utility is madness.
...because some broker in HSBC decided that to change its rating from buy to hold BUT no explanation is ever given, as always. Call it Black Friday, if you want. May be the broker had a bad experience with his partner last night and the ripple effect affects all of us. https://www.brokerforecasts.com/news/article/articleId/5747522
Despite the political desire to bring back into so called public ownership which may or may not ever happen cannot understand why a reliable solid dividend payer should drop so low. They may have some debt but it is funding capital investment which bodes well for the future.
Best balance sheet also. Takeover anyone? Multi year low price.
Low for a 'defensive' water utility.
I sold up around �10 some time ago & waited for the sp to drop to �9 & below before buying in again. Still in profit overall but wary of buying more at present-sp has unravelled more than expected, & taking into account the highish PE, labour's threats and potential rise in rates there may more downward spiral to come-but hope I'm wrong!
I would say you are right Wolf. Ironically though the fall is driving up the yield. The dividend is linked to RPI until 2020. RPI is almost 4% now so that is more good news for investors. Interest rates will go up but gradually. I will try and catch the bottom of this fall as these are sure to reboun with a fae yield and progressive divi.
Upgrade by Standard and Poors and continuing good grading by Moodys together with increase of just under 3% on six month trading seems solid to me. Yield attractive and plenty of upward movement as the JV firms up IMHO GLA
Perhaps the recent labour threat of water company renationalisation & interest rates maybe soon rising is having a negative effect on the sp?
The government sights seem to be set more on Thames who have paid out millions in dividends to Quataris and others while failing to invest enough in infrastructure. UU reduced it's dividend formula at the beginning of this five year period and earmarked £800M capex for infrastructure improvements and exceeded customer satisfaction targets. Most brokers recommendations still above £10 per share. New joint venture for non domestic market well under way with Seven Trent. GLA
Who knows what it's worth? Maybe 400 is the bottom. One thing for sure Governments not very friendly to companies that charge household bills paying juicy dividends anymore.
Hmm with the new pricing coming and and ex divi gone I'm wondering where it's going to go myself ....UU as a strong following plus more and more houses have to be built too and being built this adds to UU profit albeit all on metre
Heading that way billy. Thought I had a good deal at 873 on friday
Unless it drops to £8 or lower