Hi ipc - that's some expectation for the full year! I neither agree nor disagree. I said earlier that it's getting more difficult to predict, so I have a wide range as possible, which is £460m to £560m (depending on the quality of the new customers). eps could be any thing from 120p to north of 160p.
It's a case of letting the market walk the sp upwards. Going with brokers' 80p at 15 times gives £12 as a short term target, pending H1 results, when no doubt brokers will be forced to upgrade again. There was massive buying demand yesterday, so it's on a clear up trend now. As the sellers are exhausted at each price level, the price will then move up to tempt the next tranche of sellers to take profits. There's no need to bid the price up too fast, so long as there's sellers at each price point. They can't buy what is not being offered for sale, with such a small free float! This is going to be interesting!
I think we're on the radar now of income seeking investors.
Hi Sparks, yes, clearly the 80p eps from SP Angel is low. Their gp% looks low to me (they did 18% in H2 last year and I see no reason for a decline). They have only upgraded revenue to £405m, from £392m - I don't call that 'significant' and the RNS certainly hints that £500m is in sight this year. I would say that £460m, at least, is a safe call for now, not wanting to over estimate. The meter points are up over 50% - all organic, that is just super sonic growth, and so H2 revenue is bound to be well up on H1, perhaps not by 50%, but getting on for that. A 50% uplift H1 to H2 is revenue over £500m for the year. And of course new customers will continue to come in during H2. All this means is that 2024 will be way up again, as all these new customers contribute a full twelve months of revenue to next year. As the RNS says - they have substantial revenue visibility for 2023 and beyond. Even better, if these bookings and new customers have signed up for two or three year contracts, 2025 numbers are in the picture also!
Not sure what they'll do about dividends. Maybe 30p to 40p in total, so say 10p to 15p for the interim, and then a further big increase in 2024.
HA ha - £220 - £230m !! Sorry.
Sparks, that's my reading of it too. But something has spooked a load to sell. Revenue is the most critical number the market will have been looking for to confirm the figures. Deliberately withholding information is not good for investor relations!
RNS - Another above market expectations, and that's above the £400m in the previous broker notes. So, say £460m ish, would indicate H1 revenue at £420 to £430m. Clearly, £500m revenue is in sight this year, maybe more. The 5% margin will be exceeded too - so let's say £500m at 6% gives 2023 EBITDA in region of £30m. eps on this is 130p - 150p range.
Taking a load of sells at 780. Will be late reported buys coming through at 790 ish. Usually an hour or so delay?
Tried dummy sales, and they'll take 6,000 shares at 780. 10,000 shares went to NT. I've no cash, so can't try a large dummy buy.
RNS - seems to omit the most important number - revenue for H1. Very, very annoyingly odd, even suspicious!
Latest on broker mis selling scandal
https://www.msn.com/en-gb/money/other/trade-groups-demand-ofgem-tackle-energy-brokers-ripping-off-small-firms/ar-AA1eeOwn?ocid=msedgdhp&pc=U531&cvid=12035c5e210b41209eb5418cea2ab7bd&ei=13
No issues with that suggestion - 190 - 220m, though I will be disappointed with a figure below 200m. Remember that they will err with caution, and give a figure say up to £5m less than what the actual number turns out to be!
The key here is that the numbers will confirm the brokers numbers of at least 400m, and therefore at least 61p eps. I can't see the sp remaining on 12 times forward rating with the 61p confidently 'in the bag'.
It's then a waiting game for the H1 results proper. Gross margin is paramount. In the brokers notes they have 16% for 2023. However, H1 2022 was 14% gp margin and H2 was 18% (which gives an average for 2022 as a whole of 16%, which is in the final accounts). Now, if they are still getting 18%, another 2% on 400m is £8m, so about 50p in eps - putting 2023 eps at comfortably over 100p and on only 400m revenue. Increasing the revenue from 400m puts 2023 eps way over 100p.
The problem here is how sensitive the bottom line is to even a 1% change in margins, which is further magnified by the small share count. As revenue increases, more so! Forecasting is difficult. But we can safely take brokers numbers as 'in the bag' and they are 'at least' numbers. It will take the full H1 figures to see the true picture!
Peace & quiet is a good thing. A quiet confidence and consensus seems to be here. The traders, trolls and scavengers have gone. I think a lot of traders lost money on the dip after results and the sell off post AGM (no trading update) and having been burnt, unlikely to return (to the share or the board).
Will be the first confirmed numbers from the company, which should back up the brokers' 60p eps figures. Obviously hoping for the sp to react and start to head towards a forwards earnings multiple, rather than backwards. 15 times would be a good start, and a gradual trend towards 20 times come early 2024 (with the added bonus of further upgrades). Hence, say 15 times the 60p, gives 900p as a short term target. I am expecting upgrades with the interims in September, but who knows? Brokers may upgrade with the TU? If so, more than 900p !!
Ipc - yes, likewise. It's a scheduled full TU, so along the lines of what we normally get in July (and January) each year.
The pent up demand line was a key phrase for me, from May. With the gov support ending March, many customers signed short contracts to end at this point - this will be across all suppliers. Hence, bookings will be Yu's own customers renewing, plus a windfall of new business picked up over the last 6 months - my theory anyway!
Gacky - I'd say the total of £255m looks too high. The company will still be losing customers who cease to trade (ie go bust leaving a bad debt). These lost customers will obviously produce no revenue going forwards, so you may need to knock some off for this. This will then leave you with a figure at say £220m - exactly as IPC's suggestion.
For what it's worth, my guess / 'model' is giving about the same - £210m to say £230m tops. Any way you slice it, it should be over £200m, meaning full year will then be comfortably over the £400m current broker consensus. They are clearly picking up significant business from other suppliers.
Just hope they give figures at the TU - ie, revenue, average bookings, maybe no. of meters installed (Yu Smart), and total number of meters on supply (this figure in particular will indicate the level of new business, which if up by a good few thousand, will point to H2 being well up on H1, so full year getting close to the £500m mark is back on the table as possible).
As long as gross margins hold up and bad debt percentage is in line, then full year eps is north of 100p on these numbers. In fact, even H1 eps is north of 60p on these numbers (which is a laugh, as the brokers are at 60p for the full year)!
sp is basically going to go ballistic - certainly after H1 results, if not sooner.
Last posted in May, saying "I'm still sticking with £95m revenue for the year, and EBITDA will be at the top of range guess of 19-21m."
Need to tweak this up a tad, so revenue of £97m at least, and £100m is a possibility. Allowing for losses on Oonex, and going with the 20% guidance, then EBITDA will be in that order, 19-21m.
Revenue is growing at £30m a year (last year and this), even without Europe. Running the numbers for 2024, at say £130m - £140m revenue, then the leverage really comes through, with EBITDA doubling and eps nearly tripling! Then add in Europe ... ... ...
It's a case of when, not if, the market sees through to 2024 and begins to price in this growth. This time next year, the sp won't be any where near the 100p level. In fact 200p should be dust.
TEP results out. Eps 99p, dividend 80p.
"The Board adopts a disciplined approach to the allocation of capital, with the overriding objective being to enhance long-term shareholder value. Our primary objective when allocating capital is to fund sustainable organic growth. Beyond that we have followed a long-standing progressive dividend policy in order to return surplus capital to our shareholders. "
Hoping for a similar policy from Yu re dividends paid out.
TEP has traded around 20 PER for years, been a holder on / off for years. Never seen TEP so cheap as late (dipped below 1500p) which I find strange given these results were bang on the company's guidance. Possibly due to higher interest rates - a higher dividend yield is being demanded, so this means a lower share price. Same will read across to Yu.
Hi Sparks,
two points to bare in mind - they need cash for Yu Smart. Picked up from somewhere that the meters are around £300 each to buy and the payback in savings from renting them from someone else etc are about £100 per year, per meter. So 3 year break even. They have suggested they may use debt to finance meters, basically a three year rolling loan / big overdraft, to free up cash even further. This implies to me this would be to pay out most profit as dividends - ie. say 70-85% payout ratio of eps, which is in line with other utilities, and will bring in the income dividend seeking investors which the company has suggested it wants on the register. They may though stick with being debt free and use cash flow for Yu Smart.
Not all the cash is theirs. The ROC payments will accrue from April to December, so at December a big chunk of the cash is ROC monies payable the following August. A better figure to look at is net current assets in the balance sheet, ie cash plus debtors, less trade creditors, including ROC monies payable. What is left is the company's. At December 2022, net current assets were only £1m (£75m current assets and £74m current liabilities), which would have severely limited the 2022 dividend (to 3p). In 2021, it was £2m net current liabilities, which on some definitions, is technically insolvent! This year, net current assets should rise by the profits (less Yu Smart spending, any tax paid, less dividends paid etc), so the cash available for 2023 dividends is clearly there.
£1 dividend has been discussed before on here! 2024 - it's on the table as very possible! 30p, 40p is not unreasonable in my mind for 2023 (though obviously the final dividend won't be paid till June next year, interim payable say November / December time). Question will be answered in due course!
Decided to re-invest most of my dividend ... ... Well actually, I'm trying my hand at 'trading' them! Will pull it back out after H1 update or perhaps leave it till H1 results. It'll be a bit like having got a bigger dividend, assuming the trade goes my way!
Brokers are now at the £400m revenue mark for 2023. Further upgrades will be significant. Though the last TU lacked any real numbers, we know that bookings are at record levels, and this has continued on till at least the end of May. This is far, far more than their own customers renewing contracts which expired in Q1. They are also picking up very significant new business from other suppliers (presumably they also had a lot of customers on short contracts up for renewal in the early part of the year). This rate of bookings is enough to double revenue over the course of the year, into 2024, off the 2022 base. BK did say in the last Vox interview he sees revenue doubling / tripling 2 to 3 years out, and the vibe from the level of bookings points this is happening. It means that £500m for 2023 is back in play as possible, and that brokers are way, way too low for 2024 and 2025.
With this sort of growth, I don't think they will do an acquisition of another supplier - they don't need to. Past acquisitions were to gain scale to critical mass, which is now in the rear view mirror. Also, as happened last year, they bring in a lot of sub standard customers, which either leave or end in a bad debt - an ugly and now unnecessary cost. Any acquisition will be a related business, such as the metering business bought last year.
Just my thoughts, so may be completely wrong!
If no major acquisition, then 2023 dividends will be increased very substantially. As a minimum, 30-40% of adjusted eps. And allowing for more upgrades, total 2023 eps should be north of 100p.
Just to be clear and remove ambiguity - there is the usual H1 trading update due in late July. Actual H1 interim results are expected in September.
Re the numbers etc - I expect they will be well above people are expecting. The last TU was strangely worded, kind of coy about just how well things are going.
Speak of the Devil - GW just popped up on Vox Markets, video, Yu mentioned.
Different sort of traders I guess.
We've been in a pretty wide 'trading range' for a good number of months now, say from 450 to 650p at the widest extremes. Looking at the chart, exponential MAs (20,50,200 day) looks like we are breaking above the 650 and the MAs are lining up all the right way to start a period of a sustained uptrend. This will bring in other types of trader - momentum traders who sit on the trend, until the MAs switch against them.
"With clarity and expectations now re-affirmed, the share price should resume a general uptrend through to September, not with standing dips and panic sell offs along the way. 600p resistance / support needs to go first."
And finally, 650p top of trading range needs to go.
Video also on Vox Markets.
His target price is similar to brokers. Looks like it's based on a multiple of 7 EBITDA and about 15 PER. It's also a 2025 target!
Both brokers are not adding back the 'loss' on derivatives, which is simply reversing the unrealised gain on hedging which was marked to market in the 2021 accounts and increased in the interim 2022 accounts. It's not real, and should be added back, which the company does in how it presents adjusted eps. PER of 15 is way too low as well. I would suggest 20 PER is about right for a utility with growth (15 without), but others may argue for a higher PER as the growth rate is above average - fair point, but I don't think we'll get it!
Broker forecasts are way off for 2024 and 2025. The company's current run rate of growth is revenue growth at over £150m pa, and increasing - as hinted at in the trading update. 2025 revenue should be over £800m at current growth rates. The trend is increasing, so if continues, 2025 at not too much of a stretch could be closer to £900m. (2023 revenue at £420-450m, 2024 at circa £600m and 2025 circa £800m)
A further and significant upgrade will accompany the interim accounts in September (especially if the gross margin exceeds the brokers' 16% - it was 18% in H2 2022, and margins are said to be growing).
Finally got the delayed AGM trading update! Sensible broker figures, more in line with my doodlings.
Revenue clearly at the £400m mark, with scope of some further upgrades as the year progresses, as further bookings will drop into the back end year months (though increasingly limited as the rest of the year pans out). Safe in my mind to lift revenue to £420m. Overheads consistent and bad debt % likewise with my figures.
Last year, the H2 gross margin was 18%. If the gross margin is maintained at this (or even continues the trend upwards) then a real big surprise is waiting down the line for investors (2% plus on £400m is another £8m in EBITDA to add to broker numbers). However, some hedging losses will hit the margin when, as expected, customers on contracts from last Q3/4 cease to trade on very high rates (the excess power bought (on hedge) will be sold back at much lower spot prices). This last point is my biggest concern here, not just the bad debt but hedging losses on excess power Yu will have contracted for. But so far, it all seems lost in the overall mix of things.
Looking at the SP Angel note, I don't think they have added back the derivative write-off in adjusted eps, so this needs increasing - about 76p by my reckoning.
The market is still having problems believing the forward numbers here. July update usually gives a revenue figure, which will provide some proof, but it will likely take until the interim accounts (Sept) before the share price properly reflects 2023 expectations. By this, I mean a PER of around 20, so upwards of £14. Still barely on 20 times 2022 numbers!
With clarity and expectations now re-affirmed, the share price should resume a general uptrend through to September, not with standing dips and panic sell offs along the way. 600p resistance / support needs to go first.