Yu Energy Share Chat (YU.)

Must say I’m very surprised the market didn’t seem aware that the revenue is related to the price of the very thing they are selling. Though would have expected a 5% drawdown given Yu’s history of beating expectations.

Having said that, if you are not a buyer at £14 then you should have been selling at £19! This is a great chance to buy more, and unless you need the money soon (should have sold at £19) then this volatility is a great thing.

Bobby Kalar better do something to steady the ship as he'll be feeling this drop more than anyone else, being the largest shareholder. At this rate we'll have lost all gains made since the turnaround

Not my research but respected poster

Yes, monthly bookings were lower in H1 2024 but the overall picture says #YU is continuing to deliver substantial growth that is now bedding in.

£46.7m is still £560m per annum + revenues picked up during the year + non-contracted revenues + meters.

As an example, FY23 delivered £29m in non-contracted revenues.

Now here is the average growth of revenues vs. contracted exit from the year before.

This year, it looks like it'll be around 25%-30% due to YU's rapid growth.

Now what happens if commodity prices pick up? Or we get another shock.

However, YU has the ability to push this much harder if they see fit which is demonstrated through the 35% increase in meters in H1 2024. A significant number that has so far been ignored.

But even at 20% we are talking c. £700m in revenues in FY25 on those 3 metrics alone.

What about their smart meter business or the upcoming progressive dividend? Or the £300m of contracted revenue that was already booked for FY25 and beyond.

5/

By YE24 YU could well be close to 100,000 meters with a +70% retention rate.

When gas prices pick up the renewals will transform YU's outlook. But by all means, let's judge the business solely on 6 months of monthly bookings performance driven by a dip in commodity prices.

Brutal

Funds Ready to TOP up but nightmare to time this share ?

Re rated SP or something more sinister!

I'm going with RE rated and buying on charts.

It’s funny now, no profits warning, excellent grow in turnover and customers PBT of 42m forecast and 100m in cash year end SP now heading to 200m so half the company in cash.

PE is now 6.9

Does that justify a 30% haircut ? Not on your nelly

Well sausage wherever you are, it’s reached my price but still not tempted, not in these markets.

SP in free fall....where will it end??

Shearclass the revenue recognised in H1 2024 as you say would have booked in 2022 and 2023 when commodity prices were sky high even double or treble current commodity prices when you look at the historic commodity price charts. So even though meter points are continuing their upward trajectory rapidly they haven’t as yet been able to to make up for the steep decline in commodity prices. That would seem like the logical explanation.

Shearclass - what is exactly meant be a fall in monthly bookings, monthly “bookings” of what exactly?

"hence for Yu to have achieved 60% growth in H1 is astonishing"

Nope. The vast majority of revenue recognised in H1 24 will have been contracted in late 2022 and 2023, it's the decline in monthly bookings which is linked to lower commodity prices.

The move over the past couple of days is the market attempting to make sense of what the lower bookings number means for FY25 & 26 revenues, considering the growth in meter points it was a surprisingly large fall.

The lower commodity prices is a very important reason for the lower monthly bookings. This is cross referenced by Good Energy who are expecting LOWER revenue in 2024 compared to 2023 - see last final results for Good Energy in March -(see Stockopedia broker forecasts showing 19% lower) - hence for Yu to have achieved 60% growth in H1 is astonishing.Note TEP is also expecting lower revenue for for this year.

MagicFormula, I may be able to answer a couple of your questions. With regards to cash, if they make a net profit of £45m & ROC is £35m, then in months without the ROC payment, the cash flow is going up by around £7m per month. Very rough calculations but you can see how the cash balance increases at the year end, assuming no funnies.

Also, the ROC may be included in accounts payable, which is why it goes down when ROC paid. I may be wrong here but a possibility.

Hi everyone, got a couple of questions. Would be grateful if anyone knows and can explain to me.

1) After the £49m collateral moved from receivables to cash, Liberum have corresponding drop in payables - why? With this accounting, Liberum are saying Yu’s net assets actually went up by £49m, but surely there was no change? Obvs this makes a big difference to my valuation given it’s 1/5 the market cap.

2) How do Liberum get to £100m YE cash if Yu have to make the c.£30m RoC payment?

Then as an aside, worth noting that we are nearly trading at a 20% earnings yield (adjusted for net current assets). Even if there were no growth, this would be a fantastic investment. Just put 20% interest into a compound interest calculator to see for yourself!

*sp, not dp.

It seems like MMs are fishing for stops. They just took out all the ones at 1400p.

1400p is ridiculously cheap for the business, so expect a fairly big bounce.

The dp only dropped because of macro effects outside the company's control (global gas prices). But if/when gas prices rise then YU is in an even stronger position.

I suggested a target of 1250/1350 but expected over a month of drift down. This is brutal, might be a bounce though but still expect it to reach my lower target.

It's fallen around £5 from last week. Probably it's safe to buy for longer term now. Just my opinion.

Been here for a while but don’t post as I’m no expert at all. Appreciate the TU wasn’t as buoyant as traders would want - but when will this savage effect on price end. Ouch this one is burning longer than I thought it would!

ShareNicelyNow was right. 23 Jul 2024 21:20

"it may well fall another few pounds"

SNN

Sorry but I don’t agree. Numbers of meters isn’t how their forecast income has been determined. Surely it’s based on their forecast of customer usage, and potential customer usage. The consensus revenue for this FY is £674m, they’ve just stated they are in line so why assume anything different. Yes they may be being conservative but no where near to the extent you imply, a few percent perhaps.

Think the expectations of PI’s via numerous BB’s has been, being a bit blunt, OTT. This is also something I look for when trading as momentum in either direction is more likely to be excessive.

Will leave it there until later in the year and see if any further scope for decent trades. Pity I closed yesterday!.

All the best

Putting on the hat of a businessman, rather than an investor or trader.

The management are scaling for growth / market share. Prices have fallen - so what, expected. They have dropped gross margin to win business and o/hs are up for Yu Smart. On target to double meters / market share this year, and trending for plus 50,000 meters a year forwards. Net margins will pick back up. Textbook business practice. As long as the new customers are similar in size then no problem. Average revenue per meter will be consistent (subject to weather and unusual market prices).

Consider the sums -

Meters closed at 72,300, opened at 53,400 - average was 62,850. Revenue of 310, so 4,932 average for 6 months, call it 10,000 annualised. They go into H2 with 72,300, so say 72,300 times 5,000 = H2 revenue = 362, so £672m for the year. This is based on no new meters in H2, and no uplift for seasonality. On the face of it, the forecasts are in the bag, and should be clearly beaten. Bottom line will likewise be over current expectations.

Longer term view, at plus 50k meters a year, 150-200k is doable, with £2bn revenue. In terms of growing the business, they have totally hit the targets they needed to hit. On this basis, it's difficult to fault the TU. As we know, markets and investors are short term. Arguably panic, bordering trauma! If the SP continues to fall, a buyback is bound to be up for consideration. Surely they could afford £3-5m. RNS to drop any day?????

Ipc

ROC - thanks for clarifying.

Shell - Good point, perhaps that is the deal. Hopefully at some point they will provide some clarity.

Energy Supplied - Yes I’m aware it’s in the AR, as I flagged that to Sparky previously. My point is that was the first time it’s been stated (having quickly scanned other AR’s) and they don’t freely give that info throughout the year yet it’s fundamentally the core element of their business, no forecasts and no KPI / Target which I do find very strange. Constant reference to the number of customer meters as an indication of growth (along with income obviously) isn’t the full story. CNA regularly provide energy supplied data along with number of meters and customer numbers (which is also very useful for analysis).

Did think today there might be a bounce, so I did close too early. Will sit on hands now and wait for trading opportunities at interims, possibly before who knows. All the best.

@DD - Cash at year end will include ROc money from April-Dec. I have estimated £25m but could be as high as £30 - depends how the rest of the year goes.

I am sticking to my thoughts that YU will hold at least £50m cash in the bank to ensure no bumps etc so there is still cash to be accounted for.

She'll deal - it could be as straight forward as Shell selling the energy they produce at a profit to YU who sell it on…. Shell are happy to have a customer thats growing and they don't have to deal when the end customers - they proved they weren't good at that historically.

AVG contract length - just noticed that LIb have stated AVG contract length is up to 24 months in H1 24, missed that on the quick read through. So the drop of 15% in monthly bookings is primarily down to the drop of 35% in energy prices, made up by getting more customers / meters onboard.

Volume data was available as sparky says in the AR, might get to see it at interim, who knows.

@SNN - you may be right on the SP, only positive (if it occurs and Lib don't think so) would be a special dividend or buy back.

Anyway, happy to keep holding here and to have sensible discussions.

IPC - Re margins, yes I agree there is some scope here for actuals to be over the brokers. SP angel are on 16% and Liberum on 14.5% (gross). Some difference there, given they are both briefed by the company. As the revenue numbers get bigger, 1% in margins is huge on eps, with only 17m shares in issue. It is highly sensitive and highly leveraged. This makes for difficult forecasting and hence both the company and brokers are duly very cautious in their numbers.

Leaving these boards to the experts from now on. As our latest Guru is such an expert.

Rude and very unwelcome everywhere he travels