The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Considering a top up, but uncertain
BTC rise between now and mid 25 looks very likely. ARB has around 0.5% of global supply, so whilst there're moans about not having more, its still not bad. It's also one of very few plays providing exposure to BTC in the UK.
Equally, the debt on here just keeps mounting and halving will provide short-term headwinds until BTC price doubles or more.
Can't see this getting remotely close to historical highs (BTC 30% off, ARB ~95% off).
What are folks thinking?
I think this is a pretty extreme FUD period for BESS projects. Equally, I find it hard to believe this sector will be allowed to sink.
It is now a bit of a contrarian play. I am however looking to DCA down with small amounts over the next 3 months or so. Made first small purchase yesterday in SIPP. I won't be accessing that for years, and have multi-year horizon on everything within that account. Wouldn't go in here with regular ISA yet though, still too many unresolved headwinds. And the constraints on buy-backs may limit impact that they have once SP is over 60p again
Wish we all had this foresight before buying GRID, lol
I had bought around a pound during Covid dip. Did very well for a period, but needed to sell original holding around 130. Bought back a few around 150p, with an average at about a pound now. My portfolio performance was pretty poor during 2023. Then u hear that US stocks are at ATHs and all this stuff, its kinda frustrating. As some are saying here, the gains are often in non UK markets. A real shame
Some key points from podcast, dated 24th Jan:
Frequency market is saturated. National grid bringing enduring auction capability has reduced prices further. Revenues negatively impacted for BESS, makes dependence on market arbitrage.
Also sounds like asset location and site selection is going to make more impact on pricing in the future.
Conviction that these are short-term tail winds...although, I wouldn't say that this was communicated very confidently for the coming year
49min long recording . Can find by googling "Do higher risks mean higher returns for battery storage investors"
Market conditions are poor. Apparently revenues for 24 are looking worse than 2023 (listening a podcast on energy-storage dot com)
They still advocate business case for long term, but current situation definitely bleak.
GRID should really post announcement, unbelievably poor comms.
Am looking to add later, but only once things turn. Happy to buy at 80p (large premium to today) if more certainty is there
Having been reading from a variety of sources that the BESS sector in general is in bad shape:
A) Disconnect from BM last year saw average under-utilisation of assets at >80%, hence the emphasis towards Dec BM change
B) Pricing per megawatt down >2/3rds year on year, which will substantially impact revenues
C) Debt financing costs likely to suffer due to interest rate movements during past year or so depending upon conditions and likely lagging.
Combined, recipe for disaster
Still , that's for BESS as a sector. UK's BESS market now largest in Europe due to huge growth in 2023. With the whole sector down 30-40% (yes, GRID even more so) and BESS being a strategically essential element to the countries future infrastructure, this really is becoming a too big to fail scenario.
As others have commented, I'd rather providing an update, get the bad news out there, halt divis entirely for a year if needed and bring this ship back on the road again. This d then become perfect contrarian buy, especially for those of us buying in SIPP and happy to play the long game... but as things are the silence is beyond a joke
Now that you mention it, I do recall being unable to top up with HL when it was around 80p last year. Had to complete forms around familiarity with derivative trading etc and then the sophisticated investor questions arose as you say.
I haven't checked since, but these restrictions could still be in place.
Killing off retail investors by only allowing sells will also be a sure way of reducing the share price here. IIs just wait for it to bottom and then pick up all the gains
Thanks for thoughts...
Krusty: November that GRID should have Project Illea (or something like that) coming online soon in the States and with new licences gain a stronger forward presence there. May help?
Tinstar: Interesting, thanks for posting. Too recent to justify the drops, but a dampener none the less.
FYI: was doing a little furrher digging. So we all know the BM issue last year resulting in under utilisation of assets, apparently by up to 90% at times. An article earlier this month has also highlighted that price income for BESS projects in December actually DROPPED an additional 40% compared with November. You can Google article name: "Battery storage revenue falls to lowest since 2020 in December". This equates to around 2/3rd drop in YoY pricing. This, if not reversed, would be fairly characterised as a significant problem.
It is still peculiar though how other plays have not been hit as severely. Perhaps the internal financial situation has deteriorated more than most recent communication would suggest, making GRID more susceptible? I'm otherwise still unsure. Hit all time low today.
With divi around 9% and BESS being a major area of infrastructural need over the next decade, I'm v tempted to top up at these levels.
Anyone aware of potential reasons for this drop that could indicate something poor over the long term? E.g. delays or short term impact on divi should be compensated for within a year. Bond rerates may entice some investors away for the immediate term, but again, only for a period. I'm just completely unaware of any major issue here
Yeh, I do anticipate an underperforming update at some point, as it will take time for some of the recent developments to filter through to the bottom line. The risk was always to divi (which is secured for the year, and hopefully sustainable once pricing mechanisms are fully in play. But even if not, reduction can't be >40% or whatever necessary for this drop. Would also be short term) and risk of a raise, but that's also stated as not happening in foreseeable future. You'd think a major shareholder has bailed, yet no announcements of the sorts. Just peculiar
Comms has never been a strong point for GRID. However, SP performance since the acquisition has been atrocious. With interest rates dropping (making alternative yield plays like this attractive) and improved integration into the grid to support pricing, the underperformance here is really unexpected. Other not too dissimilar shares are way outperforming. Fine if able to top up, but not ideal for us who packed our bags before all this
Copper bottomed out in Jul 2022 and is up over 20% since then. Its been in an upward consolidation pattern since. Whereas CAML, which was still over 2quid at that time, enjoyed a short rise to almost 3 GBP but has only continued to drop since. Yes, there has been some II selling, but the price drops seem so massively underdone. Zero rise when copper goes up, but consistent drops when it goes down. A well run company but terrible stock... perhaps the team should just reinvest their earnings into some random tech with no potential. IIs would probably rate this at 50FPE as a diversified tech play. Markets are a joke some times
This morning opened above descending trendline for first time since 10th May. Has taken longer than I expected to break through the technical resistance
Possibly gradual improvement into the trading update, then the usual rise / dip around divi? Would be v disappointed if doesn't go above 220 by end of Sep
Well, they pretty much gave away a big chunk of it a few years ago... personally, I don't factor it into the equation when considering HUM. If something happens with Dugbe, that'd be a bonus. Otherwise, for me, they could screw up the same as they did before and it'd be gone
At 11p, HUMs undervalued without Dugbe. That's what matters for now
First, given that something around 80% of predictions never come to fruition, I general don't pay much notice to Broker notes.
This did take me a bit by surprise though: "Central Asia Metals Plc : Canaccord Genuity cuts target price to 190p from 265p * Central Asia Metals Plc : Canaccord Genuity cuts to hold from buy *" Why? Just generic cuts within the sector?
That said, I think the technicals here are looking favourable for a rebound to 220.