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I agree it’s a bit cryptic but does imply a large cash inflow subsequent to the 52.25m so we could be on way over 100m in cash
32 + 52.25 + Jan + feb + whatever March is implied so way over 100m in my simple mind
"with further material cash benefits to be realised over the next month."
A bit cryptic. Sounds like they have also got an extra month on their credit payment terms, an extra month before they pay the cost of sales. So, worth another £40m or so, permanently added on to cash / net current assets. More interest, more flexibility. Will also enable them to offer an extra month credit to their own customers, which is crucial if they want to attract larger blue chip type customers. Could be more of a partnership type agreement with Shell, to do this, as Shell will also benefit greatly here. £2bn revenue is the new medium term ambition?
Looking forward to results and roadshow presentation.
That would be my take on it, no point in being a market maker if they are not going to make a market and buy and sell so they can make money. It could also be that they have a client who is looking to obtain a holding and they can use their MM status to trade the shares and build the holding.... who knows it was just an interesting piece I noticed.
IPC - re market makers. What are the implications of that? Presumably, Yu is gaining more attention, and greater daily volume expected?
Nice Summary @SNN - another interesting point I picked up today is that YU now has 7 market makers - Investec have come on board.
Investec Bank Plc, Joh. Berenberg, Gossler & Co. KG, Liberum Capital Limited, Peel Hunt LLP, Shore Capital Stockbrokers Limited, Singer Capital Markets Securities Limited and Winterflood Securities Ltd
RNS clears a good few uncertainties and some of the market's concerns with this stock (hence, the low SP). But also confirms that the remaining concerns are real, which will limit the level this will trade at.
Gone is the uncertainty over what happens when the Smartest deal expires. Shell is a much bigger and stronger partner, should allow for better margins to Yu and removes all working capital collateral and MTM hedging issues. Probably now scaled to £2bn mark for revenue.
Capital allocation / dividends / acquisitions now wide open - allows full flexibility. The market is desperate for concrete guidance here, going forwards. I am guessing that we'll get this on the 19th. Liberum 'speculate' over £1 special dividend. What should we read between the lines here? My opinion - it's in the right area, and allows for any acquisitions that may 'pop up' (BKs words). I hope they will set a minimum payout ratio, which can then be supplemented by special dividends, if no acquisitions come up. (25%, perhaps a third, 33%)
Yu is ultimately a utility and growth is limited. Once they hit 2-3% of the market they are in a bigger pond with 10 or so other similar sized suppliers. Revenue growth will slow significantly, meaning it becomes a dividend play and will trade off the dividend yield. Dividends of say 120p and a 6% yield gives a SP in the region of £20 (for now). And this could easily double two years out, with eps at 300p then 400p.
As Liberum note, falling prices will hold back growth - they need additional customers to make up for lower prices, just to stand still. The forward booked revenue will actually come out lower than stated, as contracts get blended and extended on to lower rates. Liberum's target price is still only 10 PER and is a reflection of such issues. We on here may choose to disagree, but we are not the market consensus! Utilities are not growth stocks - the growth here, is here for now, but is not sustainable beyond say £2bn revenue.
Mind you, £2bn revenue could be 800p eps, with £6 dividends. Not bad if your entry price was 100p or less!!!!
Results are also confirmed for the 19th March.
Sparky - I am not concerned, just a bit bemused. The SP will respond appropriately at the right time, the big news today is the £82m YU is now sitting on and what they are going to do with it as well as the long term solution for hedging nailed down.
The next RNS will be massive. Liberum have kept the FY23 final dividend at 17p (10% of Earnings - good call SNN which I think they will stick too moving forward whilst making special dividend payments to distribute spare cash) whilst making a huge hint at a £20m special dividend. Liberum have not been wrong before with their predictions this close to FY numbers coming out in a couple of weeks.
I think the sellers today actually have no idea of the groundbreaker deal today and the material benefits it brings. Utter madness if you ask me, the due diligence alone from shell would have been incredible and testament to YU
"Yü Group will not be required to deposit cash as collateral "
"Yü Group will benefit from Shell's leading and considerable commodity trading access to liquid commodity markets, at market reflective prices."
With this new arrangement with SHELL they'll be able to buy energy at better prices than before and that should improve their margins further . I'm looking for much improved forecasts for this year and beyond when the finals are announced in just over three weeks. Crossing £20 mark likely soon IMO.
I am not expecting Shell to be interested int he business, just as a customer for the commodities. Its frustrating that it has got back to year highs but really struggles to break this £13+ barrier. Lets hope for another RNS soon with a special dividend in line with Liberums comments....
Https://octopus.energy/shell/#:~:text=January%2030%2C%202024%3A%20We',the%20coming%20weeks%20and%20months.
Didn’t she’ll sell the retail to octopus ?
While I suspect a t/o is not happening any time soon you'd hope some larger companies would be taking a look at a utility company like this.
Shell will have had a nice look under the bonnet before setting up the new hedging facility with their 12mth due diligence process. Would Yu compliment Shells existing retail business....?
Ok, so I take back zero chance :-) but if an offer of £30+ came in then he might sell out and I suspect we would all be very happy too
Ridiculous being the equivalent here of £42 ...
I know a person who was in a similar position in 2015 - they made him a ridiculous offer and he sold.
There is zero chance of a takeover - CEO owns 51% of the company.
So the new liberum note makes great reading especially the bit about "if we assume £32m of FY 23 net cash and add £50m for the collateral unwind, and deduct a £20m buffer, we expect that c. £60m of cash is to be utilised or distributed, depending on the Group’s capital allocation policy. We speculate that a £20m special could be paid."
That's a £1.15 special dividend if it happens ....
Yep. Yu management really are growing this company for the future in a sustainable way. Smartest to Shell is a step change forward. Not to mention the 52m inflow. Its almost as if the handbrake has finally come off
Well there's £13 already, waiting for £14
People have missed this, its huge
Massive, 53 mill cash back on the balance sheet, that 30% of market cap. should see this at £14 today
Morning, NG/All,
' It's so exciting, there are so many things that could inject rocket fuel into this share price.'
I didn't realize you meant the very next morning!!
GLA.
New Liberum note titled embarrassment of riches, new target price 1883. (P/E of 6.8 based on 2024 expectations)