Member Info for Monkshood

Day ahead electricity prices March 3rd-
For 18.00-19.00hr (peak price point)
2020- £50 MWh (note this was before the lockdown)
2021- £154 MWh
2022- £524 MWh
Average day ahead tomorrow £304 MWh – historically, typically between £40-50MWh

A couple of other points from their presentation.

'We are off to a strong start in 2022 and expecting to continue our current trajectory throughout the new year'

'While I defer specifics on the closing time line to the Rentokil team and the earnings call they have scheduled later this week, I will share that all work streams remain on track for the previously communicated expectation for a closing in the second half of 2022.'

I agree popper but surely if they have to write it off/make provisions of nearly 300m, does this just show as a reduction in AUM, hard to believe it would no impact on profits?
Given their leanings to ESG they should be less exposed than many to Russia but the figure is only the fixed income element not their total exposure including equities.

‘In the fourth quarter of 2021, Terminix reported five percent year-over-year revenue growth and three percent organic revenue growth.(4)
Termite and home services revenue growth was nine percent, predominantly all of which was organic growth. Termite and home services completions increased 11 percent, driven by higher demand for termite services and increased cross selling of home services to existing customers. Termite renewals increased seven percent, due to increased volume and improved price realization.
Residential pest management revenue growth was five percent, reflecting organic revenue growth of four percent. Organic revenue growth was driven by improved price realization and improved trailing 12-month customer retention rates.
Commercial pest management revenue growth was two percent.’
It will be interesting to see how RTO have done, especially in commercial which they specialise compared to Terminix who have more focus on residential.
Costs-
‘Production labor increased $5 million, primarily due to labor market driven increased turnover year-over-year and investments in trainees to improve staffing levels in advance of 2022 peak season. Direct cost productivity reduced expenses $6 million year-over-year, driven by improvements in fleet management, lower fuel prices primarily related to favourable fuel hedge rates, and productivity from the insourcing of certain national accounts customers.’
Note- they had lower fuel prices because of hedging in contrast to Rollins who said that fuel increased their costs by $4M, but more cost due to staff turnover.
-RTO/Terminix have a scheme in place to retain key senior personnel-

RTO’s results on Thursday so provided they are at least in line with Rollins/Terminix they should be OK.

As I understand it the issue for LGEN is not the storm but is their 270M exposure to Russian dollar bonds - these have dropped 45% this week.
Can anyone shed more light on this, I assume they will put some provisions for these in the results?

It is also dependent upon the rolling average price .
I gather the II's were the ones most keen on buyback vers divi- is this for tax reasons or because they want to offload some into the buyback without the price falling much?

A good Q&A session after the results presentation.
A few points –
The are currently applying around a 30% discount to the current forward pricing for the next few years. They indicated that 10% of this is because it is hard to get the full realised price with wind generation, the rest is just being cautious. If the price is achieved they said ‘’we will be making a lot of money’’ !
No plans on changing the circa 50% production un-hedged.
The change in corporation tax rate had previously only been modelled for the mid term, now it is the entire time scale as they do not see it being reversed.
A couple of downwards tweaks to the nav; one was for ‘curtailment’ in NI, this is where they do not get paid there if it blows so hard they have to turn the turbines off, the other was because they were consistently finding that wind farms were being taken off grid to add more turbines, upgrade power lines etc. As both of these were regular enough they discounted the nav to permanently embed them.
Without the rise in energy prices last year they would have had 1.2x divi cover(Net cash £166.5M), with ‘normal’ wind levels (and the actual prices received ) it would have been 2.5x divi cover (Net cash £347M)- this compares to the 1.9x £257M they actually achieved .
Current production is clearly very good and they have not suffered any damage in the high winds They received £182MWh in Jan, with the problems in Ukraine the price today is £250MWh (they averaged around £156MWh last year).

RBC has upgraded the price today from 150 to 170, I can see others following.

I overestimated net cash because they use 1.9x dividends paid for the year rather than the headline dividends with respect for the year. (this is because they pay the last divi in the next financial year).
Other than this it was pretty much as flagged in the December factsheet.
For values affecting the nav they have slightly increased the inflation rate but then have also increased the discount rate . They are no longer giving a single forward energy price (as TRIG does) so it is hard to determine this component.
Management fees increased from 19 to 26M so they must be happy....
After todays events forward energy price look set to remain elevated so they should have extra cash to reduce debt or invest this year.

All on track -I like they also give and use, analysts projections, rather than vague 'in line with management expectations' that some companies use.
IP revenues continue to be the weakest area but these are now a smaller part of the business and should pickup with covid receding.
'The Group has started the current financial year well and is trading in line with market expectations for the year. This reflects strong performances from our Language Services and Regulated Industries divisions which have offset a weaker performance in our IP Services division (which represented 16% of Group revenues in the last financial year).'

I made a mistake above, in addition to the two debt issues - they did dilute in April 2020 by nearly 14% .
However, at the start of 2020 their results had not had time any time to show a contribution from their $400M takeover Marshall Retail which almost doubled the size of their international travel business (in retrospect not the best timing!).
Even with the bad weather in the US TSA data indicates that US airport footfall is now back to 85% pre-covid levels and so is close to the level before Omicron where their revenues has significantly increased and they were trading profitably.
European flights are still about 30% down but are recovering well from the lows in January. Gatwick plans on opening their South terminal next month. Tourist travel through the ports/tunnel is starting to pick up as well.
The 'Pret Index' indicates that London stations and airports are pretty much back to pre-Omicron levels and look set to increase rapidly towards Easter. With highstreets and hospitals also returning to normal SMWH should be well placed going forward. It will be interesting to see what their revenue/profits are in a couple of years as it is quite a different business than it was pre-covid.

Although there is a clear market for the cabinets I have never thought that clean room was viable option. There are other players who are far ahead of them n this already. I used to work in a large academic institution and they had installed a similar system in their teaching labs by the early summer of 2020. There are already even AI controlled robots that can go around hospitals sterilising the floors with UV.
They did flag that the HBE had been less profitable because of logistic issues plus I guess that money is getting spent on capex as they start to gear up again.

Chapel, you raise a key point as to why I think it is a much stronger business than in 2020.
It was in late Jan 2020 that they did a placing on the back of opening at Mandalay Bay. They now have a track record with this larger LBE format, which backed both by the expansion and extension of this contract, they can use to demonstrate their business model to other aquariums and zoos. Their resilience through covid must also reassure partner sites.
I agree with Stalin, once they announce a decent sized zoo offering the price will quickly rise.

I clearly had a betters night sleep...
It was pretty much what was flagged in the December update.
I took a more positive view that the increased at Shark Reef capacity means that things must be going well there and so is likely to be reflected elsewhere (although I guess the O2 site is out for a while).
The past two years have been about survival, they have managed it well and are in a better shape than at the start of 2020 both with new products and a better understanding of the LBE market.
If it does not go down well then I will be topping up as I can only see the company growing from here.

We should get a brief trading update with the AGM on the 23rd.
The share price is down 28% since the start of the year, given that they are a profitable company with a positive balance sheet and their results at year end were quite good I am not sure why they have been so heavily sold off. The integration with SDL seems to have gone well and the projected cost savings have been made.
Broker forecasts range from a low of 690 to a high of 810 (median of 762) so we are way below these predictions.
My other main software pick had been Aveva which I thought had lots of potential with synergies following their take over of OSlsoft and their major customers being energy companies- but that has faired even worse!
I ditched Aveva (although may revisit once the integration has progressed further) but have averaged down a bit with RWS, I am hoping that some positive comments at the AGM may mark the bottom of the drop.

Yep, was hoping for a rise to this over 2-3 years so more than happy to have my jam today and reinvest in other bounce back opportunities.

Not sure you have got them with this update. Admittedly the comparison to Q3 last year when they had a 25% increase in revenues was going to be hard but I think that it needed more than ' revenue outlook for the full year that is in line with expectations' to give it a lift.
ARR is a bit of a fudge and although it nudged up a little it has to be looked at in the context of this comment at half year ’Growth in AVEVA's ARR is expected to increase as Subscription offers are introduced for products from the acquired OSIsoft business and the proportion of SaaS sales rises.’
This has been my worst investment over the past year, I was hoping that with the oil and gas companies flush with money that the revenues here would pick up strongly but so far this does not seem to have been the case. Decided to sell out after the small rise first thing as I am not sure there is enough in this trading update to reverse the negative sentiment around the company.

Yes, EU flight numbers coming up nicely, Pret Index for UK airports looks good and a strong return in US footfall despite the continuing cold weather across large areas (which MNZS also benefits from by de-icing).
The results are on the 8th March and the deadline for the offer is the 9th (which will be no coincidence) - they are going to be an interesting couple of days.

With Ian Hetherington death just before Christmas it is perhaps not surprising that things could have slipped.

I am surprised that the price has not pushed higher on both a future divi of 5.5% (RPI linked) and an expectation that the NAV should increase at the next quarterly evaluation.
It has been a nice windy start to the year and it looks to continue to at least he end of the month. Day ahead electricity have ranged from 160-200 £/MWh, their business model is for a value of around a third of this @ 60 £/MWh. At the current values about 2/3rds of their income is merchant where they benefit to the full upside of these prices.
They must have generated around 180m net cash in H2 (to give a divi cover of 1.9) with a similar average price (161£/MWH) for the half. With the extra capacity that has come on line, the better wind conditions and the high prices surely they should easily exceed 100M in the first quarter? They need 300M net cash generation to give a 1.7 divi cover for this year (their target), any extra will be used to reduce debt and hence increase the NAV. They may need make a small downward revision due to corporation tax increases (although it is not clear how much of this has already been adjusted for in their previous revisions for this), but every 100M of net cash off their debt is worth 4-5 on the NAV/per share.

Yesterday NAS-
'Menzies' board and management team have chosen not to engage with NAS or share any information to corroborate their differing views on the company and industry, and therefore valuation.'
Today Menzies-
'In addition, the NAS Proposal fails to take account of the execution of Menzies' strategy and the significant potential value creation driven by:
· The full impact of management actions not yet reflected in Menzies' valuation;
· The return of underlying volumes to pre-pandemic levels with Menzies well positioned to benefit as a global player in a market with proven structural growth; and
· The pipeline of higher margin opportunities that we believe will generate approximately £80 million of net new annualised revenue from commercial opportunities and approximately £150-200 million of new revenue over the short to medium term from several business development opportunities.'
So it depends on what value Menzies and their key shareholders thinks this adds to the price.