Member Info for Ashershares

Yes that is a great representation of it and shows the flexibility in the approach. It certainly is preferable at current juncture to sell the assets at NAV to perform buybacks but it is a limited approach in the sense you can only sell so many assets. Naturally the ideal approach would be to have enough cash being generated to cover dividends and buybacks below NAV. The point is, at some point we will need to grow asset base again which is not so great if it is a time when the market is charging more than NAV to do it, but appreciate this is a sliding scale / moving objective.

Having digested the results more and done further research, I think its a real mixed bag.

Whilst its great in the short term to be able to sell assets at (the most recent Jun25 NaV) and buy back shares below NaV / reduce gearing with the proceeds, this only offers a short term benefit. We are selling cash generating assets and therefore reduce cashflows in the future. We would then need to find productive assets below Jun25 NaV in order to start to re-grow the cash generating base of the company. Upside can obviously still come from higher power generation or higher power prices from current assets but neither of which are in mmgt control. Does this approach just change the rationale for holding the share to be a pure income play and we actively chose to increase our income prospects by simply re-investing dividends? Much more like a bond with a slightly higher risk vs reward profile, maybe, and if we make that choice then that is also fine. Many may argue this should be the case all along but at 25% discount to NaV and 9% divi, one could be forgiven for adding this as a value play with expected growth in a sector that is fundamental to an island nations national security going forward.

Unfortunately UKW seems to continuously fall back on below budget power generation, interestingly since 2013 they have only outperformed budget twice whilst underperforming 10 times and meeting budget once. One has to question how budgeting can be so poorly calculated and to the more sophisticated investor tranche, may limit their ability to invest in the company. At the very least, it reduces confidence in forward looking estimates from the company.

The recent decline in NaV from lower longer term power prices of approx 7p per share, i.e significant proportion of the overall NaV decrease comes from an independent consultancy on future power prices combined with UKW's expectation of capturing those prices and power generation expectations. UKW is unique in the field here where it only uses one consultancy / expert whereas our peers use multiple and take an average. The upcoming results from peers will be interesting to shed light on their expectations of longer term power generation prices, this could actually have some marginal benefit to UKW if we see generally accepted higher prices from peers who used more consultancies to estimate.

I still very much like owning UKW and this sector, I think there will be periods we trade back above NaV and 2025 to be is showing signs of the year sentiment bottomed and inflected. I understand how we got to where we are today (which is by no way a disaster, just an underperformance) with the competitive nature of the asset mmgt industry and the stimulus backed US stock market, once we started to underperform then managers could no longer hold the stock for the drag on performance it showed vs Nivida and the likes. That certainly was our opportunity to step in ok a 10 year basis. I hold the same view today.

Whilst its great that they buyback shares at 1.15 and sell assets at the equiv of NaV so around 1.43, my main concern is that how does this company look to grow in the future? If we divest revenue generation then we cap potential upside in the returns (or at least natural growth - i.e not growth from random spikes in energy prices). We will eventually have to go back to market to buy assets or even build from ground up, otherwise where is the growth story to this company?

I am a long term holder and will continue to be, but I do feel like I am always reading "low wind", wondering if we just have the wrong wind projections! ha

Potential for a somewhat interesting open tomorrow. Energy prices in europe / UK could be pressured upwards with the growing tensions in Iran / Isreal with the strait of Hormuz extremely important for energy imports to the region. Maybe homee grown energy supply starts to take some level of importance again.

It might be due to the break of the 100dma. Very bullish candle formed yesterday on the break of the 114.7 horizonal resistance and 116.7 100DMA

So far >10mm shares vs avg of 3.5mm according to my BBG terminal. Not sure how to read into that give we are 20% off the lows, normally volume is good to represent a change in trend or the beginning of continued momentum. Given we are unchanged on the day, it isnt likely to be the latter.

Thanks for all the replies great, some great points being made. I do agree the electricity pricing reviewing is an important factor, whilst that goes on the uncertainty isnt encouraging asset managers to hold this either. I think however though, with respect to interest rates, a-) this gets built into the NAV of UKW but also b) we had very little reaction to interest rates stalling and declining. I think this was more just an easier narrative to explain vs the actual mechanics. I do still believe the underperformance of the sector vs things like broader equities or tech forced a lot of reallocation of funds too

Good to see the share price bouncing 15% off the lows, very likely means we have now found value buyers step in and potentially the "forced" selling is done. At 100p it was a 10% div that here in the UK if you put in ISA you can receive tax free so very attractive. Also not to get too excited as many charts have this V shaped recovery since Trump dialing back the tariffs for a brief time.

Naturally like many holders I have been think around why the shares underperformed so poorly over the past 12 months or so and the sector as a whole.

Whilst some of the more obvious answers have been around higher interest rates discounting future cash flows and consistently lower than average windspeeds have seen underperformance in productions, this alone should not explain the discount to NAV seeing as some of the many touting reasons are build into the updated NAV on a rolling basis. This also doesn't mean I don't believe they haven't contributed to weaker sentiment in the space, they certainly have.

I think the larger issue is two folds. Firstly, in the industry you are consistently barometered vs your peers and largely the SNP500, with the Mag7 sending the SNP500 / US equities in general skyward, asset managers over invested in the renewables space were falling behind peers and were forced into selling the renewable sector and buying into "winners". Fair enough, thats short term behavior that is real in the asset management industry.

Secondly, which i think is more important to UKW and maybe sector as a whole but the growth story is gone / the ability to scale the business. This is further represented by the use of capital to buy back shares (which i still agree with them doing whilst below NAV ) rather than using that capital to invest in new projects to increase capacity going forward. Lack of scale / growth is not what the market wants in companies outside of FTSE 100 bluechips and government bonds. But UKW essentially turned into an 7-10% yielding bond that may suffer from price declines and competing with tax free gilts yielding 4.5-5%. Whilst great for retail who arent competing for AUM, terrible on a risk adjusted basis for asset managers. Then the selling caused more selling as it underperformed further and maybe even systematic CTA selling as the techincals weakened.

food for thought - happy to hear what others think

Great - thank you

Question here though is how it effects the actual mathematical equation for share price. The benefit from share buybacks is the fact the shares get taken out of circulation and thus the MC is divided by a lower number of shares. Are the treasury shares including in total shares outstanding?

I think the buybacks themselves make a lot of sense considering they have been actually disposing of assets at NAV. My question around the buybacks wrt to value to shareholders is the need to actually cancel those shares? Right now, i believe they are being held in treasury. I would suspect for the benefit to be felt (outside of purely reduced dividend) but MC / lower number of shares, they need to cxl these shares.