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I think by 2025 it'll be more than 7%, because there is leverage in the tec-stack. But yes, super growth is on the cards. Over £4 in eps, what dividend will we get - 18p? LOL. £3 would be doable.

Wasn't it around this time last year we were discussing the possibility they would be in a position to pay £1 in dividends? The LTHs seemed to agree, but I recall some traders calling us in cloud-cuckoo land! A more sensible dividend would get the sp higher. They can't sit on £90m a year in cash and do nothing!

Patience is one thing, but you're right, it's never been this so lowly rated. Want a slow & steady uptrend, without the sharp spikes.

Makes it worse, Sparky!

Under review though kind of suggests it's more likely to change, than not. Fingers crossed.

Gacky - that's exactly what the CFO said, but you'll need to listen quite carefully, it's a bit muffled. 3p interim and 6p final, making 9p in total. But he then says, 'We shall see'. Given full year will beat forecasts, eps should be over 150p. Last year the 3p dividend was 10% of adj eps. 9p on 150p is only 6%, which is a decline ... ... progressive, NOT.

I think many were expecting more dividends. I was gunning for a 25% payout, so about 40p in total, and then say 35-40% payout next year - still leaves the company with a big, growing cash pile. They do say the policy is under review, though. I wonder what the institutions said to them on the roadshows on this. It's a capital light model - they are borrowing for the meters business, only need a few million a year to keep the IT up to date, and somebody asked about needing to move to larger premises (not any time soon). These sort of companies normally have high payout ratios, 60-80%, and attract income investors. A larger dividend would have lifted the sp more. Special dividend would solve the problem! But it's perhaps a little uncomfortable for BK, to pay himself dividends of that size???

No trading update is scheduled for November - just us speculating again - including me, maybe last few days of November, or first week of December. May even announce a second interim dividend payable Feb / Mar. As said, it's all up for review.

Https://www.youtube.com/watch?v=7TDz2luXCjk

Interview with IST from Friday.

Seem to be seeing more (and increasing numbers of?) larger buys of late. Usually delayed reported and over the offer price at the time stamp. Talking about £50k plus, £100k plus - unlikely to be PIs, so finally indicating institutions buying in, following interims roadshows. Only buying what they can get hold of though, 4,000 odd shares here, 7,000 there. It'll take them weeks to get 1%. Good for current holders. Uptrend set to continue, looking for 10 times forward eps as the next step in a tough market - 10 * 145p, so 1450p.

SP was slow to react last year after H1 results. When the up trend kicked in, it was a steady rise without rapid spikes. Around £1 a month till the January update. There is very low liquidity and low free float. The traders and investors will 'tug of war' the SP between them. Any large spike will be dumped by short term traders cashing out, even though still very lowly priced on fundamentals. The upgrade from 80p eps to 145p eps is huge and will take a while for the sp to reflect this and find a balance.

As for institutions, they will struggle to buy a meaningful position. As well as the holdings listed on the IR website, there are significant numbers of LTHs with large holdings bought at very cheap prices (PIs). None of these holders will sell down any of their shares at this valuation - including Mr Kalar. Institutions will have to wait till the shares are sensibly priced, when early investors can then start to exit. In similar situations, where there is strong institutional demand, founding CEOs usually release some of their holding via a secondary placing. Can't see this happening below £20 / £25.

As for the previous sp highs of early 2018, when the 2017 finals were not even out, people should perhaps look up the eps in those accounts and see what the PER was then. It was beyond bonkers.

Bottom line though now - it's on everybody's radar.

Figures from the sale of Opus to Drax. Last accounts for Opus were to March 2016. I think the sale completed early 2017, so need to add a bit on -

Revenue at £573m Gross profit of £107m, which is a 19% gross margin

EBITDA of £34m (6% margin) Meter points 265,000 staff numbers 693

Sold for 10 times EBITDA for £340m.

Average revenue per meter was only £2,162. (A rough estimate for Yu is H1 revenue of £195m on average meters (say 25,000 open, 40,000 close, average 32,500) so say 6,000 for H1, so £12,000 annualised). Yu are certainly pitching themselves in a league above Opus. Prices though are much higher now. Compares with broker estimate of £10,000 average revenue per meter.

I've said before that Yu has no need to do an acquisition, now that it has critical mass and is growing strongly organically. However, should a reasonably large player be put up for sale, they probably want to be in a position to bid for it. May explain why they are choosing to accumulate their cash pile.

This is the only negative I took from the presentation - an important issue that was un answered, kind of keeping all options open. A reluctance to pay a higher dividend will clearly put off the income investors. It's an unresolved uncertainty, may be a factor in the sp hit, down about £2.

Source - https://www.drax.com/wp-content/uploads/2017/01/Proposed-acquisition-by-Drax-Group-plc-of-Opus-Energy-Group-Limited-and-Notice-of-General-Meeting.pdf

https://www.drax.com/investors/proposed-acquisition-opus-energy-group-limited/#:~:text=Drax%20Developments%20Limited%2C%20a%20member,cash%20on%20completion(3).

Some very intelligent and intuitive questions asked. I note the question in collateral - £16.5m was advanced to suppliers. Without this cash would have been £16.5m higher! It was commented that this was due to the recent volatility in wholesale markets and this would now be reversed out, over the coming weeks and months - cash will therefore get another boost up for the year end.

Re-play already up. Gone through it again. Had to pause often and go back a minute or so to catch what was said.

Final dividend will be perhaps 6p (total 9p) - usual 1/3 2/3 split - but a hint the final will be more.

EBITDA for H2, is trending as in the past, ie could be twice H1, which would make full year EBITDA at 13.7m plus 27.4m - making full year at around £40m. Hence, their prudent guidance of at least £33m.

Capital allocation policy is under review, no final decisions yet made. Probably due before finals.

They are normally pretty quick in getting up the re-play - later this evening, say by 8pm. The question tab usually takes longer - a few days. Will be worth a re-watch to pick up on details missed first time around.

Try adding them up! 110,500 add 98,988 equals 209,488. It's a buy and a sell, ie an agreed transfer between two or three different parties. Probably iis, they actually talk to each other sometimes beforehand, on the phone, etc, agree a price and then put it through the MMs.

I've binned the spreadsheet (for now). Back of envelope -

Meter points say 60,000 at end of 2023, then add 10,000 per quarter in 2024. As broker, average revenue per meter of 10k. Will therefore go into 2024 with £600m revenue. Assume one quarter lag in new meters coming fully on stream, so Q1 meters give £75m annual contribution to 2024, then 50 and 25 (none for Q4). Total £750m for 2024 revenue. Would then be going into 2025 with 100k meters and £1bn revenue. If same growth in 2025 as 2024, then revenue for 2025 is £1,150m (more if growth trend continues upwards).

Doesn't matter where the final numbers fall, the growth is huge. Share price is mis-priced due to small free float and lack of liquidity, unable to 'balance'. But it'll get there, by being slowly walked up by traders and LTHs picking up what they can as shares come available.

Putting it more simply - they are on 145p eps this year, at under £500m. If revenue doubles to £1bn, then all else being equal, margins and o/h ratios, eps should also double. 300p therefore on the cards.

But, to repeat previous cautions - as the numbers get bigger, the range of outcomes widens dramatically, meaning it's unwise to try and forecast accurately. There are only 17m shares in issue. Every £1.7m in profit after tax is 10p in eps (approx 2.3m in EBITDA). 1% difference in margins (be this gross margin, bad debt or overheads) on £1bn is £10m - so about 44p in eps - upwards or downwards. Management's own expectations / calculations are subject to the same mathematical laws!

True, but have been a lot closer recently, especially regards revenue. However, I have lifted this from the H1 report

" coupled with its differentiated market position, will enable margin to continue to expand in the short and medium term. Therefore, the ambition of achieving revenues of £500m at a 5% EBITDA margin is no longer a stretch target for the Group and as such management will re-evaluate its ambition for 2024 and beyond."

Sounds like EBITDA margin will be more than the current 7%! Sounds like the company doesn't yet know ... ... it'll depend on how things turn out!

Thanks Sparky. Wonder if they are dropping the margin to be more competitive on pricing to win all these new customers. It's probably best to assume the brokers have been guided by the company on this, and it's not just them guessing!

See what they have to say on Tuesday. They'll use the slide deck on the website, so will have to talk about the 100,000 meter target. It's another question to ask for clarification.

Sparks - GP% = gross profit percentage margin, ie gross profit divided by revenue. Reported as 17.2% for H1 2023, 14.1% for H1 last year and 15.8% for 2022 as a whole. (H2 2022 was 18%, hence the average of 15.8 across the year as a whole).

I'm being prudent and cautious!

What's there gp% and overheads?

Sparks, as they scale upwards, the EBITDA margin should increase. They are already at 7%

Try this for size - £1bn. 18% gross margin, less o/hs of £40m, bad debt at 5% gives EBITDA of £90m ie 9%. Eps would be circa 380p

Put that on your 20 times eps! Then what about 2025? £100 any one?

How do they get £1bn for 2024. It's 10,000 meters at year end, not the start. If on target, could be 60,000 meters at end of 2023 / start of 2024. So, at least £600k revenue for 2024, but as meters grow through the year, revenue may be £700 to £800m range. Then over £1bn in 2025??? Presumably means big increases in overheads (staff) to cope?

Good luck to them trying to buy even a 1% stake, let alone 3% - at 10,000 shares a time, they have a long, long way to go!

Obviously, can't buy shares now in that amount, without putting in orders to the MMs. Lends credence to MMs holding the quotes low to tempt out sellers, to fill their buy orders. Even at today's price, it's a bargain for them, considering where 2024 will end. If 2023 continues to out-perform, 2023 eps will be over 150p, unlikely to hit 200p, but 160p, 170p is in sight.