Yu Energy Share Chat (YU.)

What a bland trading update…

I am not surprised to see the share going south , but I suspect that the price will recover in due time as time goes by.

Very good compared to TEP turnover declined 17% CNA report Thursday, any lower and we are lowest rated in the sector, bizzare really when you put it in perspective with the increases in turnover , clients etc they are gaining markets share by the bucket full heading to 2% market share from 1.4%

You are probably absolutely right .

It s all down to perception..

the market needs excitement and optimism..

there was no news about any return of capital too .

We have been so used to amazing trading updates … this one fell short …

Was trying not to respond but you can’t compare tonTEP, different business model and besides which they actually report a they beat profit forecasts despite the reduced income when compared to their previous FY. Despite that the sp now is lower than the day of their results, so given the rise up to today here, and so far over one year, with an in line what exactly did you expect?. Even when others here including myself gave our predictions you seem amazed, shocked and angry at the market response, unbelievable IMO.

It’s an excellent well run company and a management that’s building a quality business but the share price had obviously got ahead of itself.

A more realistic price would be for it to consolidate around the 1250/1350 mark which I think it will drift down too in the next month or so.

So being away in the USA at present, meant I didn't see the TU until late morning by which point a hefty sell off had occurred taking the price back down to pre TU announcement. Managed to read Liberums and SP Angel notes as well.

Overall still happy to hold as I am a firm believer that there is still good value to be had - both from an SP uplift and distributions.

TO - my low estimate was £315m so slightly under that but I suspect it will be close come final figures in Sept, but still great growth on prior year. (Well done DD for the 300-310 range)

Bookings - very clearly down on prior as they stated - softening prices and mild spring are the reasons given, I wonder if maybe a shorter AVG contract period may be in there as well….

Brokers have all held margin estimates but I am optimistic that it will be closer to 7% rather than the 6.2% Liberums have. This was an area where the brokers and interims differed last year.

Meters - Really good to see more meters than I had anticipated at nearly 19k new. This does put them close to the 100k meter figure for 2024 full year if they keep up the volume acquisitios.

YU smart seems to be performing well and continues to grow quickly.

ROC payment slightly higher than expected but again in the right ballpark.

Cash is looking good, if they continue on track then circa £100m at year end (albeit with circa £25m of ROC included) still leaves a sizeable cash pile.

The lack of any real comment on distribution is disappointing but we are now back to waiting on this, as they could do this at anytime.

September will be interesting,with Liberum forecasting a FY divi of 48.9p(£8.1m) 16.3p as an interim, we are still no clearer as to what they will do with the remaining £67m or so at year end…. I would be hoping at the very least fro them to distribute £17m or so in this FY.

Anyway let's move on toward the September interims and let's keep the board for sensible discussion and not name calling please.

Only ramping comments allowed sausages ?

I thought my comments was pretty fair, well run company but think the share price is currently to high.

If you only listen to one side I’m sure you must have significant losses

Good luck, sounds like you need it.

SP fall not a surprise, given the update (obviously not what I was expecting pre update). Gross margins looking to be down quite significantly - "strong market positioning and leading customer offer" = reducing prices to scale up market share, and so reduces gross margins. Net margins should tick back up as scale increases into 2025 / 26.

Revenue in-line with my thoughts, meters also fully on track for 100k ish by year end. Expectations / hopes not met in no upgrade, and no buyback or special, maybe reduced monthly bookings too. Brokers have 'downgraded' on margins, cash balance and state no buyback or special is now anticipated. The cash balance is my biggest concern. It was £82m (including collateral) at December and it's only up £5m. There's £20m EBITDA, plus £10m ROCs to end of March (due Aug) plus another £10m ish ROCs to end of June. Less dividends, buyback, tax, some increase in WC. It should be up more? Any thoughts NG / IPC?

Last year at July they upgraded from £392m to £405m, then to £424m in Sept. - final figure was £460m. The July upgrade was minimal. Given the number of meters, bookings etc there is considerable scope for £50m plus upgrade later on. I have previously posted £750m revenue as my forecast and stand by this (for now). So, no upgrade now needs to be put in this perspective. Downside risk is any further drop in gross margin.

A lot of uncertainty and anxiety now in the SP. Can't see a recovery until after Sept. There isn't dividend yield support either - so yes, it may well fall another few pounds.

Ipc

Thanks, got the revenue fairly accurate but not eps according to the broker it’s 85p apparently (Sparky posted). Given their organic Rev growth was 60% and they have confirmed in line for the year, that must I guess mean H2 Rev growth will be less than H2 (as they’ve said +50% for the year) and / or margins lower to hit EBITDA forecast? may have missed something been a long day!.

Thought also their margin target was 6% to 8% so broker is going for the lower target.

Agree meters 100k looks achievable, but once again. the glass half empty in me says it means relatively nothing in terms of income growth because they never mention the actual volume of energy supplied, which in my opinion is the primary service they provide plus no KPI’s which seems ridiculous to me.

You stated: “Cash is looking good, if they continue on track then circa £100m at year end (albeit with circa £25m of ROC included) still leaves a sizeable cash pile”.

Why £25m ROC included?, next month they will pat £43m, then surely as sales increase it will be in excess of this for FY25? (apologies again if misinterpreted what you are saying). As for cash it may be as you say but how much will they need to keep on the books in order to not breach their liquidity covenant associated with the Shell desk. Plus as posted previously I can’t imagine Shell are hedging for zero charge / commission and only entered the deal on the off chance YU default and they acquire assets. Neither brokers to my knowledge are mentioning an additional cost associated with the deal which I find very odd, I may be barking up the wrong tree but you tell me what’s in this deal for them if not a profit and potential asset/s (which according to the YU BoD isn’t likely to happen - them defaulting on profit, liquidity etc).

Yep agree completely, no need for folks to get personal.

Well Dodger you wait for your 12-13 and then make the most of it...Unfortunately it ain't going to happen:-)

Typos - ROC pay £33m not £43m. Shell deal not Shell desk.

Sorry it’s posting using my phone and not aware you can edit postings.

DD you need to read the RNS again it was 60% rev growth v H1 23

So lib-pan are forecasting 370m for H2

Yes lib/pan have gone cautious with 6.5% out of the 6-8range

Skin it how you want growth is excellent but restrained on lower commodity prices which will start to flip shortly if history repeats as we move toward autum and winter.

Also you are wrong on YU not reporting actual energy usage I have pointed this out before it is in the AR or do you expect this in TU as you do like to treat YU as a special case compared to any other company as never seen Annual energy consumption outside an AR.

It is clearly stated average MP is around 11k again fully documented in broker notes, some will be far less some a lot more

Oh yeah why do I bother posting as apparently I do not own a single share and sold years ago.

Incredible waste of the time.

Over and out

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

Rude and very unwelcome everywhere he travels

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.

@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

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.

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?????

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

ShareNicelyNow was right. 23 Jul 2024 21:20

"it may well fall another few pounds"

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.

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.

"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.

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