Member Info for moneyspider

Elcappo - Happy to be told it was wrong, as I said before was just trying to clarify what I was told. I am not in this Industry so happy to take expert advice. The share price has dropped since the Directors sold a large chunk, I am still in with profit - should have sold before - my timing is not great but I think now it time to get out.

I'm not going to reveal my source. I'm not saying that this is fact, was just trying to get a view if any others had one. I agree the rise of the business has been very impressive and I'm sure that they have a great management team. Just was trying to time my exit as I have good margin.

I was talking to a competitor - so no link. That's why I wanted to check it out because the growth has been impressive. They claim that UTW gets commission when it places a clients energy contract with an energy supplier. Most deals are for 5 years, so they get 85% of the 5 years commission. This way I could see early growth, but if so, I am worried about the long-term prospects. Not always easy to bring on new clients each year. I am invested and wanted to time my exit. GDF Suez just bought Ecova of the US, who are larger for $355m - so trying to do maths.

Does anyone know how they book their revenue for 5 year broker deals - I have heard that they post 85% in year 1 of a 5 year deal? If so, the growth year on year will be difficult. I have been impressed with their growth but this could turn into another Aim stock to short. Any views?

It looks like the announcement this morning from OVO Energy on community power really disrupts the TEP business model. OVO are already much cheaper and also want to get into telecoms. With companies like them and Flowgroup, what will be the prospects for TEP?

I can understand your view, but this company makes most of its money placing energy contracts with the energy companies who pay a commission on the sale. There are many companies doing this and have been for many years, so I think the market is saturated. Buying a business for say £10m (producing £1m profit) has a value of £10m, when added to a PE of 40 suddenly becomes worth £40m. Not rocket science to keep buying companies when you PE is high - the problem comes when you stop and have to produce numbers that the market expects year on year. Would be really good analysis to see how much the each of the businesses have grown since purchase. There is a real political / customer backlash against increasing energy prices, so there will be a downward trend on how much commission these energy companies can afford to add to the bills to pay brokers. A reasonable PE would lie in the range of 5-10.

I have seen it before - when companies like UTW go on build/buy strategy, buying up companies producing revenue & profit. With a large PE the share price gain is far more than the value or price paid. This will cause a company to be well over valued unless it can build on purchases with organic growth. Well over valued in my view.