Member Info for mussy

I am struggling with AA's high debt and cash flow. It will take a long time for them to pay down debt before equity holders see increase in share price. I would prefer Centrica as it has lower debt and more predictable revenue streams so the dividend yield is highly attractive and potential further upside through rationalizing the business. My view though.

AA is highly leveraged with 15x net debt / EBITDA. Centrica is levered around 1x at a net debt / normalised EBITDA. THe reason why AA Is falling is because of its high debt. Centrica has plenty of liquidity and its debt is well managed with a long-term maturity wall.

The business will be highly overleveraged and there will be a rights issue. I would watch this space rather than get in right now. Also, there will be continued social distancing after the lock-down that will impact sales. In Wagamama, everyone sits closely together and if the social distancing rules continue by the government, they will have less sales by volume and covers.

Understood. I think two years ago I would have had a different onion and I can see your point after holding them for a while. I do think that COVID might be a blessing in disguise for Centrica in terms of: (i) management shake-up (CEO and Chairman are now gone) to allow new blood to come in and drive a business plan; (ii) forced rationalization and cost cutting including salaries and board fees; (iii) calibrating the business model to operate in a low energy price environment. In addition to these factors, the low commodity price environment and COVID impact provides a good long-term entry at the current price points.

I wouldn't have bought these shares if the current CEO and Chairman were still in place.

Toff. I disagree with you that Centrica is overleveraged. The business operates in a sector with more predictable revenue streams spread over millions of customers. As a result, it can take on more long-term leverage especially for a capital intensive business. You can't compare Centrica to Carrilion as well; not the right way to look at the business . In fact, Centrica is operating at a lower leveraged compared to other comparables in the similiar sector, see below:

Gross Debt / Normalised EBITDA
Centrica 1
National Grid 6.6
SSE plc 4.3
Suez SA 5.3
Engie SA 3.8

Toff: I just bought some shares today and yesterday. My belief is that Centrica is undervalued. On a pre-money basis, with a net debt of £2.7bn and current equity value of £1.94bn, the enterprise value is £4.6bn. Taking a normalized EBITDA of £2bn would imply the business is trading at 2.32x EV / EBITDA. Factoring potential case of further drawdown on the RCF and usage of cash, the entry multiple is very low. I further get comfort that I am investing at the bottom of the cycle where the commodity oil / gas price is low compounded by the COVID issue. I get comfort that the business has plenty of liquidity, a market leader, strong brand with further long-term opportunities through rationalization of the business through new CEO / Chairman and a more streamlined organisation. Yes the dividend is axed but so are other companies including banks. If you are investing for the long-term this is a good entry price IMHO.

Agreed - this is a long term value and turnaround play

I guess he is shorting and is a day trader. I am a long-term investor focused on facts :)

Sorry guys, I completely disagree with some of you who saying theres more downside risk here. The trading update is positive. The company has plenty of liquidity (Moody's have re-affirmed its stable outlook), the largest market share with smaller players likely to be squeezed resulting in consolidation in the future, potential upside through new CEO / Chairman appointment to drive a new business plan and further upside from normalisation of commodity cycles. If you want to hold for 5-10 year, this is the perfect time to get in is my view.

Hi Guys, would like to apologise for my previous antics, shouldnt have included the HAHA, as i know we all here to make money and its not a competition. Comissarations, and i do hope you all get to recoup your funds. I know oil stocks are nasty, but ELP had a high cash burn and a big dependance on Jag. selftoblame, i hope you recoup that 600 mate, sorry for your loss. good luck to all your holdings

I TOLD YOU GUYS NOT TO MESS WITH ELP!! LOOK WHAT HAPPENED! I WARNED YOU ALL!!!!!!!!!!!!!!!!!!!!!!!!!!

I disagree, i do still think this is a strong buy. It has broken above the 50p range suggesting a higher price target if this holds next week! Keep buying...this company is either gonna be re-rated or taken over :)

there are many nervous small holders who will jump the ship. if you cast your eyes back on december 6th PRTY shares were down and on december 7th when they announced the news they rallied 15 points higher. and you cannot depend on 3.3 m sell as this could easily be a buy as the ssytem depends on tracking the bid price and with a large volume order like that it could easily be a buy. there are many nervous holders who shedded their stock and this is good news because u need balls of steel to get through turbulance. and if you had looked at EOL results this week, one day before trading allot of stock was sheedded and the prrice went down only to go up significantly the next day!

time to join the party guys, this is the same thing happened last time when the dec results came out. and EOL also fell before its trading announcement next day big boys pulling through..

Cynic just elaborated why it is bad news...

LOL thats bad news! should send the price down a bit! If you can get away from this company you should asap! look at my previous posts

look, i do realise the sp rise but allot of people have recently bought shares just based on the drilling results. Why im really picky on such shares like this is because such companies only float on AIM for short term to invest in couple of oil wells and if they well the company goes bust as they do not have more cash to drill additional blocks. It is known that ELP only has the intention to drill 5 impact oils and the reason for the recent price rise is largely due to media and sentiment, and if no oil is found this share will collapse much harder due to the fact that all the excitement and build up recently. There are numerous shares which exemplify this. such companies live and die by drilling results and all this excitement build up by the norway media and this chat, allot of people are banking profits now as they know that if no oil is found the share will collapse like a brick. remember this company only has the intention of drilling couple more wells unlike other oil companies which have allot of cash and allot more potential wells to drill.

If this share was really valued at 6 pound, this company would have already been taken over by now. Other companies would definitely have recognized the potential of the Jaguar block and if they thought it was that lucrative to HOLD that MUCH BARRELS of oil, this company would have been bought out.

look at those huge sells, some people obviously dont wanna wait for those results to come out.

LOL, thats been VERY OPTMISTIC!