Yu Energy Share Chat (YU.)

Hi SNN

Yes sorry pips equals pence.

I’d raised my stop this morning to 1875 to ensure I’d still make the 30 pips (the spread on SB’s are greater than the market spread). It got hit on the early pm dip. Volume seemed to be falling away prior to the closing auction and the bears had taken over and it was in the red.

I note that the UT has closed the price at 1900 (crafty sods lol), but would expect this to open lower in the morning. Will then see if buyers return again. But now on closing price since confirmation of the TU it’s risen 13% (which isn’t too bad for holders and traders may think that’s it, don’t know).

How's that happened? What's 30 pips? - 30 pence equivalent?

A late reported trade from yesterday is showing of 11,080 shares at 1864.00, posted at about 12 noon. Has that triggered your stop?

SB hit my floating stop so only made 30 pips.

Oh well, a smaller profit than thought. May try again before the TU.

It’s active it just doesn’t have any significant accounting transactions.

Kal is a dormant and has been for ages

Thanks

Enzo

It’s now on their website - the 23rd.

Thanks MrG

Yeah think SNN posted this previously. Did read but tbh it’s beyond me. Clearly Shell have an asset of YU Group as security but not too certain which asset it related to - think it was their subsidiary/holding company KAL Portfolio Holdings Ltd. I note that yesterday BK ceased his 75% of KAL but not too certain if this is part of the charge.

If someone could enlighten me / this board, would be appreciated.

Thanks

I just tried calling Panmure to confirm if YU are still publishing the TU this week as they said they would last week. Got voicemail sadly, has anyone else tried?

Same a bank loan having a charge is it not, pay your debt or else. Simple as really

Old news that was posted weeks ago

Shell have a Security charge over Yu Group its reg in Companies House

22/02/2024

Charge code: 1000 4236 0002

Persons entitled: SHELL ENERGY EUROPE LIMITED

People who make these deal are way more clever than you and me. BK will be the biggest loser from a bad deal than you i think.

2227

The devils in the detail.

Anyway, decent volume again today and 3 trading days to go.

Discodave4561,

Remember, BK is a shrewd businessman, has built this business from scratch to this level and most of his wealth is tied with this company . I don't think we need to worry about deatails we know nothing and understand nothing.

NG

It’s the Shell deal that’s my biggest concern, or would be if a holder. The agreement is for 5 years and surprised something so variable and correlated with growth (which makes sense from Shells perspective) like WC is the collateral element. They (Shell) I’m guessing will also have a cash charge or fixed fee (do you know what that is?). Their own UK energy supply business didn’t do too well either despite their commodity buying power / hedging - but best I stop there as I do have a glass half emoty type of strategy where investments are concerned.

Accepted DD. However, even the very cautious Liberum have the cash figure for y/e 2025 at £138.4m, and if Yu's figures are what I am expecting, it will be a lot higher than that. It isn't something that causes me concern. I think that if the hedging agreement is working for both parties, Yu to buy energy forward and Shell who is producing the gas and electricity be know what price they are selling their products for in the future, then if the agreement needs to be revisited and both parties are happy, I am sure they will be able to come to an agreement that works for both parties.

NG

Not too certain as their WC could be quite significant based on your £2bn turnover by 2026, that’s over four times last years income. Using the WC Turnover ratio based on FY23 finals data that equates to a ratio of 14.4x. So using that ratio the WC for £2bn sales would be circa £140m.

They have no doubt got a better handle on what that collateral commitment actually looks like over the longer term.

When asked the question directly in the institutional presentation, the only collateral mentioned was the one months working capital. Nothing else.

I don't know what the figure is for one months working at the current time, but I would expect his figure to increase as the business increases in size over time. Also, with all the cash in the business at the current time, (over 1/3 of the market cap.) I don't see this being a problem for Yu Group.

Ipc - thanks for clarifying.

NG - I’d read that some collateral (other than cash) was part of the deal hence my thinking that BK could do a secondary placing with Shell the other party. He has the opportunity to take some well earned profit, it improves liquidity and Shell get a decent equity stake in the business. Hear what you say that that was kicked into the long grass, but time will tell.

You mention that the actual collateral was one month of WC, which I’m surprised at as that is in effect cash on the BS and if defaults could prove to be an issue? (with all that cash perhaps not too much of an issue?). Out of interest do you know what a month of WC equates to?. The accounts are only a snapshot in time so difficult to get a feel as to what that might be. From the finals it’s about £30m from memory for that instant in time.

Thanks

DD,

The company didn't give a revenue figure last year in the TU. They gave number of meters, cash figure, Cash conversion % and monthly bookings, as well as indication of what margins are doing. Luckily, Liberum gave us an H1 revenue figure of £195m and it came in at £194.7m (although their EBITDA figure was only £11m and it came in at £13.7m). We will have to work with the numbers we are given, and work out our own estimates for what will be confirmed on 24th September 2024.

Shell could see Yu Groups forward revenue projections in the Due Diligence that was carried out by their lawyers for over 12 months. They wanted to form a joint venture company which would have involved Shell buying some of BK's shares. This was dismissed by BK. The agreement was put together so that Yu Group didn't have to post collateral but did have to keep 1 months working capital in cash at all times (on Yu's balance sheet.) They will not be revisiting this, and it is clear to me, SNN and IPC why BK was not for selling some of his shares back in January/February.

He know better than us where this share price is going! I am in full agreement with SNN, this company if it gets to 8% market share of the B2B energy business will be doing £10 EPS per year, and if you price that conservatively on 10x p/e you get to £100 share price. It will get there more slowly if BK holds onto all his shares, but it will get there. Why sell them down here to speed the process up. I've been on this for 5 1/2 years. I am happy to hold.

The share price will be over £30 in March next year, if they are close to 100,000 meters at the year end in Dec 24. Priced at under 10x P/E. I am hoping they achieve 5% market share by the end of 2025. That's 165,000 meters! If they do that then 2026 turnover will be over £2bn. This company is a growth stock priced as a utility. What's the rush? It will be priced correctly in time, if BK sells a few of his shares or not. It will just take a little more time with the low free float. One advantage of BK's >50% holding is we won't be taken out too early and fail to see the full potential.

@DD I am using 16.7m shares and 25% obviously and I said in the region of £25m, would need to be £26.7 PAT to get to the 1.2 EPS. 1.1 or 1.2 EPS is way ahead of current brokers either way and my jottings below are based on continuing 2023's contract numbers, which YU implied were being held back by the Smartest deal due to the need for ever increasing collateral with them. Iam certain that we won't see PBT numbers next week, might get EBITDA if we lucky but definitely H1 TO and hopefully bookings. With those the brokers will reevaluate, publish new guidance and we can all then update our calculations and positions.

NG

That’s exactly what I’ve used to get my figs. If they only give H1 Rev in the TU then it’s still up for guesswork anyway until Sept interims.

Have you any views on BK reducing his holding?, it would help liquidity. As you said Shell wanted a stake in the business then a decent secondary placing by BK would be a win win IMO.

2227

Fair point but margins have been quite variable.

Long SB at 1845 this morning just after 9am. Tight stop which I’ll float. Volume is picking up so will see how it goes. Could be close to new 52w high by 22nd (looking at 100 points). If it is then will close and review depending on the TU.

We should be using a tax rate of 25% and the number of shares for EPS purposes (deducting the shares in Treasury,) should be 16,784.337 (to be exact!)