Yu Energy Share Chat (YU.)

Sparky

I’ve never ever said that Shell are out to destroy YU, as SNN has also posted: YU breach their covenant and Shell get the business. As per Note 25 in the AR. That’s a fact not an assumption.

Rawson messed up that’s a fact not an assumption, Shell couldn’t make their own energy retail business work at a profit so they offloaded that’s fact not an assumption. nobody yet knows how well Shell have performed compared to say SmartestEnergy that’s a fact not an assumption, nobody knows they rue cost of the deal that’s a fact too. Hopefully the TU and H1 will in part answer this latter fact.

Folks who have used energy brokers are suing their suppliers that’s a fact too and the majority of YU customers use energy brokers.

https://www.bbc.co.uk/news/uk-england-tyne-68072768.amp

I don’t want the sp to fall, not unless I’m short, likewise I wanted the sp to go up when I was long and thankfully it duly obliged.

I’m not positive or negative on YU short / medium term have stated that quite clearly. I’m trading the momentum whichever way that is. Can’t be any clearer really. If you believe my posts have any influence whatsoever then you are in the wrong game.

Today’s volume hasn’t been too bad but it’s not likely to make a new high (which I thought it might). Perhaps tomorrow on news it will, who knows. I’ve also posted my views on that too.

40 mins to go and then all bets are on.

We can discuss a lot of your concerns tomorrow DD as I notice more and more your making bold assumptions left right and centre. Yes assumptions not fact but your personal assumptions

Roll on 0700hrs tomorrow and please remember DD this is a TU not some detailed H1 report you get that Sept.

So silly comments like why have they not mentioned what commission they are paying Shell or what the net margin is

It will be a basic statement, turnover, profit, EPS, meter points numbers and all unaudited and also probably FY outlook

Why do you seem to think Shell are trying to screw over YU ? Do you think BK would bet 200m on red ?

It’s a partnership I don’t know why you think Shell are out to destroy businesses, never heard such trumped up rubbish in my life.

Well if that’s your view of how companies work together we may as well all give up and go home because your view is every one is out to screw everyone.

Utter insanity. And why you keep positing it everywhere time and time again is beyond me as it only serves one purpose you want to SP down simple as that so you make money.

Let’s be pretty blunt about it.

Sparky

Sparky

Thanks for flagging some risks but IMO the majority you cite are sectorial and applicable to most businesses.

You mention covemants and if breached most get resolved amicably - IMO the Shell deal is my main area of concern on a few major points: 1/ In this case if they breach covenants, which nobody actually knows the specific details, then Shell will simply and happily walk away with the business, no amiable discussions there!. 2/ You then mention there’s a risk if the CFO screws up, well within a month of his appointment he stated (the business stated based on his financial forecasts) via RNS that they would be making a profit the following year FY19, they made a £4.97m loss!. Yes it was 5 years ago but personally I’ve little confidence with the CFO and perhaps the market does too?. 3/ How good are Shell at hedging for YU?. They couldn’t make a profit for their own energy retail business, they piled in over £1bn to try and make it work and failed. They sold to Octopus who made a decent profit in 2022 (be interesting to see if they did in 2023 after taking on Shells customers).

Then there’s potentially major issues with YU’s customers being miss-sold contracts by using energy brokers (most of YU’s customers use energy brokers) and claiming compensation (it’s been highlighted recently in the press). Perhaps the brokers are all above board and it’s not significant, but I’d be somewhat concerned if the Ombudsman /FCA get involved.

Do have other concerns I’ve researched but these two are the main ones. Yes I’m not a long term holder, so yes it’s arguably not my concern anyway, but I do research thoroughly as that identifies trading options / potential for the short term. Folks can DYOR.

As for my current position Sparky, I’ve already stated that quite clearly.

Also YU isn’t exactly priced like a tech stock on a PE of 30,40 50 or higher again another safety net.

Ultimately YU IMHO is a low risk play compared to most sectors as a defensive play ie other sectors will feel the horrors way before YU.

I have given previously my biggest fear, they grow to fast to soon which has multiple knock on effect across the entire business.

Energy prices collapse again can’t see this for many years or until the world becomes more stable

UK spirals into recession and bad debt become a major issue

Could go on and on but the key with risk is the probability and currently the closest threat to YU is growing to fast.

Next biggest threat is a labour government taxing to death anyone and everything stifling investment in the country, inflation monster returning and higher interest rates killing businesses

Shell deal I see as a partnership but yes potential risks if the CFO screws up but hats like any business breach covenants, most get resolved amicably but huge red flag if covenants breached.

BK get worn out and accepts a low ball offer nothing we can do about it as he hold all the cards with 53% same with an offer he can block it.

Of course there are. Make the most of the elevated charges and margins due to higher energy costs, there is scope for growth, like to see Smart meter installs for other suppliers.

Any negatives?

Any positives ?

Long or short overnight ? Or no position ?

Don’t quite know what “shackles” you are referring to Sparky - Clearly those Directors who sold a significant chunk of their holdings (the CFO’s sale in particular along with their retail Director) in April and May felt differently.

Folks may find this quarterly report by Begbies Traynor (Red Flag Reort) of interest, for the likely impact to businesses like YU and other investments you may have.

“Over 600,000 UK firms face financial strain amidst challenging economic climate”

Https://www.investegate.co.uk/announcement/rns/begbies-traynor-group--beg/latest-red-flag-alert-report-for-q2-2024/8322175

Wonder if £19 will hold today?

The shackles have been of for some time now so confirmation tomorrow that it’s game on for 100,000 would be most welcome. YU always over deliver have done for several years now and I expect 2024 is going to be the defining year for the market to realise YU isn’t some lumbering energy company but a company rapidly heading towards being a significant player in the SME arena , and that the SP is ludicrous and has been overlooked for years by the market.

So, the last trading day before the long awaited H1 trading update. Little trade on Friday due to the computer outages around the world. Interesting to see where we end today. I hope tomorrow at 7am we see the cash figure has gone above £100m, the number of meters is up from 31/12/23 (53,400) to above (77,500.) That would be a net H1 increase of 24,000 meters. The same in H2 would mean ending the year with over 100,000 if they do the same in H2.

Last year Yu Group added 14,000 meters in both H1 and H2. It would be a big step up, but fingers crossed they can achieve that. Cash conversion around 98%. Hoping to hear if there are any issues with bad debts, hopefully these are being managed effectively. Also, want to see a big upgrade from Liberum in their accompanying note. Price target moving up from £20.50. Also hoping for some guidance as what is going to happen regarding special dividend and small share buyback. 20p special and a £4m share buyback would be enough for me. I am happy for the company to hold the cash for the time being.

This update should see the next leg up. GLA.

Interesting point about the definition of WC. Sometimes it seems to be used almost interchangeably as 'cash in hand'.

Thanks SNN for the chart and your thoughts on the Shell deal.

I’m not as relaxed or confident about the Shell deal, but hey I’m not a holder. But do think they need to disclose more detail about the deal (yes I accept that they can’t reveal everything but so far they’ve said very little - it’s a key element of their business).

I’d always gone on WC as current assets less current liabilities - so I thank you for highlighting there’s actually more variants! - every day is a day for learning. But again there needs to be more clarity as the business grows this requirement could become quite substantial.

Well, working capital is a vague term, with more than one meaning. Is it gross W/c - ie one month of cost of sales, or net - ie one month trade debtors, less the trade creditors? In which case W/c is negative. Yu paid Smartest after Yu received payments from its customers. It could mean effectively one month of gross profit. Does it include or exclude the accrued ROC payments? Frankly, it's pointless worrying over this, as a holder. It's clear to me it's in Shell's interest to help Yu scale quickly - to boost Shell's income. Shell are willing to finance the working capital to this end. If there is extended credit given to Yu, this may be to help Yu gain more blue chip customers, who will be themselves on extended credit from Yu. There's no way in my mind that Shell deal has any 'negatives' in it, for the company.

Chart - https://www.google.com/finance/quote/YU:LON?sa=X&ved=2ahUKEwjroYD7krCHAxWKWUEAHQSkA4cQ3ecFegQIORAf&window=5D

Click 5 day.

Correction - right the first time. Yu Energy Holding then owns the supply company (Yu Energy Retail).

It's Yu Energy Holding Limited, which is the Gas shipping / pipeline subsidiary company (and also a holding co itself) which is named in the charge. Details at note 14 in the AR. So not as drastic as my last post!

SNN

Thanks for that. Interesting thought but is the months WC value in addition to what WC they require?.

May be missing something but if the months WC is the collateral why have they also had to provide their assets as security too?.

Just curious, as posted it’s the Shell deal that concerns me more, mainly because they’ve not disclosed anything other than there’s no cash collateral requirement (which also confuses me because what exactly is working capital if not cash on the balance sheet).

Anyway, I’ll see now what tomorrow brings. Sorry as well but I don’t see that range on the weekly chart (looks more like £16 - £19, no expert mind.

DD - yes, but only roughly scanned it. As I said in the original post, it looks like the group holding company (Yu Group plc) has pledged 100% of the shares in the main subsidiary trading company as security. ie if Yu defaults, Shell basically gets the entire business! It also seems a standard template document, with their names filled in in the right places! The chance of default is remote, in my view, Yu's own customers would have to default en-mass to trigger it.

There is also a cryptic line in the original RNS about Shell deal " £52.25m of cash previously lodged under the Old Facility has now flowed back to Yü Group, with further material cash benefits to be realised over the next month". I suggested at the time that the extra cash benefit to come in a month may be Shell giving Yu one month longer credit terms than Smartest did (just a suggestion). Shell could easily fund that credit itself / get it from its own suppliers. And this may be the one month's W/C Yu has to hold? If the cash figure in the TU is way up on expectations, then I'll have my answer.

Cheers, DD.

The five day chart looks to be indicating a flat channel forming between 1850 and 1900. Who knows? May remain in this range until the TU now.

SNN I meant to ask:

Did you manage to read the Shell security charge document? (I’m sure you posted link, apologies if it wasn’t you). I did at its above my pay grade, I thought KAL Portfolio was mentioned but did only scan the document - do you know what YU asset the charge related to?.

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.