Pennon Share Discussion Threads

[zeppo] 23/3/2015 10:20

Update n divi policy well received!

Z

[ohisay] 03/3/2015 08:45

GaryCook - because there's a fair chance of a T/O here.?



Still RBC best choice utility.

[garycook] 26/2/2015 09:23

Can any PNN Shareholder explain why they invest in a 3.5% Dividend play,when they can get over 9% investing in Infinis Energy(INFI)

[yf23_1] 17/2/2015 23:35

Bullish Rising 3 Methods on the candlesticks today.

[yf23_1] 22/1/2015 12:58

God knows, go ex-div on 29th for 9p so its not that

[zeppo] 22/1/2015 10:19

??? Fall?

Z

[zeppo] 22/1/2015 10:19

??? Fall?

Z

[gateside] 19/12/2014 20:00

Wonder which one will be first to reach 1000p - PNN or NG. ?

[ohisay] 19/12/2014 15:31

Very quiet board considering a few of us are making lots of money here.
if thats what it takes I'm happy to be just making money.

[ohisay] 15/12/2014 17:17

.We reiterate that whether to M&A or not to M&A, PNN looks attractive. On one hand, it has the highest capital upside based on the historical 27% M&A takeout premium-to-RAB and post-FV of debt adjustment. On the other hand (i.e., absent of M&A), in our view 1) it has the most sound financials as the expected completion of Viridor’s ERFs will mean stronger EBIT and EPS growth of 5-7% versus largely flat for peers; and 2) its strong 6% FCF yields allow for the most dynamic dividend policy (RPI +4%) to continue into AMP6 and lower ND/EBITDA to 4.3x by FY21E vs. 5.7x in FY14A.
Round-up of the three UK Water companies
Our updated estimates to reflect the FD (see pages 18 (PNN), 23 (UU), and 29 (SVT)). We have made no changes to our price targets, and reiterate PNN as our most preferred UK Water name.
• PNN, Outperform, 1000p price target, 20% total return - We remain comfortable with our street-high price target, recognising that PNN will deliver and delever. We have confidence in SWW's ability to outperform in AMP6, noting that it has the most attractive ROE range amongst its two peers. As well,as the planned ERFs are delivered, PNN's strong 6% FCF exceeds its 4% yield (based on the continuance of its current RPI+4% policy into AMP6), thereby supporting balance sheet delevering longer-term./

[ohisay] 12/12/2014 09:20

Rob Wesley, head of policy at Water UK which represents operators in the sector, suggested Ofwat had set a reasonable balance between consumers and investability in the sector.

[huttonr] 07/12/2014 16:50

CH4p
The Ft note was a reprint from the IC - did you notice the mistaken decimal point:

Broker Macquarie expects adjusted EPS this year of 0.37p, down from 0.43p in 2013-14.

I'm expecting upwards of 40p.

[ch4p_85] 07/12/2014 15:45

See no one reads the financial times here then. Buy recommendation in ft money magazine.

[yf23_1] 28/11/2014 15:25

Yeah, Goldman obvously been fillin its boots
A case of I don't do as I say, I do as i do.

[ohisay] 24/9/2014 09:34

Probably something to do with it.At 740p I'll be filling my boots.

[zeppo] 23/9/2014 10:28

Lower at present.

Any ideas?

z

[ohisay] 28/8/2014 08:32

RBC today.


UK Water: AMP6 Draft Determination this Friday
Upon the transfer of coverage, we discuss how Ofwat's AMP6
draft determination announcement this Friday (29 August) relates to
PNN,UU and SVT.
In summary, we continue to view PNN as our preferred UK water
stock and we downgrade UU to Sector Perform alongside SVT in light of
their fair valuations (bar M&A).
Pennon - Outperform, 890p price target • Draft determination:
PNN has already received its draft determination in April, so it
is unlikely to be a material event for the company.
• Viridor on track to exceed target of 15% market share
in ERF: Viridor's strategy to deliver an additional £100m of
EBITDA by FY17E versus FY12A remains on track, and en route, we
see the company taking a 17% net market share vs its 15% target.
Our report also discusses (1) the capacity gap in the UK waste
landscape and how Viridor is geared to take advantage of this;
and
(2) the UK Capacity Market.
• Most progressive dividend policy: We believe PNN's
balance sheet supports SWW's AMP6 totex programme, Viridor's ERF
buildout, and the extension of PNN's RPI+4% dividend policy.
UU - Downgraded to Sector Perform, revised 890p price target
(vs 870p previously) • Draft determination: The cat is out of
the bag for UU given that Ofwat has pre-published UU's wholesale
wastewater totex gap of £769m on 3 Aug. This gives UU two
months (instead of one) to find a resolution with Ofwat. Our
model now assumes that half of this gap is resolved.
• Maintaining dividends on real basis in AMP6. This is
underpinned by UU's FFO/Debt which should stay above 11% (vs
S&P's BBB- target of 9-10%).
• Downgrade to Sector Perform: UU's share price has
rallied since Jan-end when Ofwat published its risk/reward guidance. We
believe a middle ground on the totex gap between Ofwat and UU
is progressively being priced-in. Bar M&A, we see little
positive catalysts in the near-term for UU to outperform the SX6P index.
SVT - Sector Perform, revised 1950p price target (vs 1850p
previously) • Draft determination: We will be looking to see if Ofwat
accepts SVT's £6.2bn totex plan, and if Ofwat allows for
favourable legacy adjustments, particularly on wastewater.
• Tight credit metrics though options exist. We estimate
that SVT's FFO/Debt averages ~9.3% in AMP6 and therefore be able to
maintain real dividends. Our report discusses how lowering its
cost of debt and ODIs could elevate the metric above 10%.
• Strong RAB growth underpins investor interest. Real RAB
CAGR of ~2%, the highest of its peers,should continue to attract
investors seeking sustainable asset base growth in a credible
regulatory environment.
• Trading at our revised 1950p price target: SVT is trading
at 14% premium to FY15E RAB, in line with the implied premium in
our price target. Bar M&A, we believe SVT's valuation at these
levels afair.M&A - Valuation at your fingertips We believe the potential
for M&A will continue to provide downside protection for the UK
Water stocks. We see positives in the sector's credible framework
with real annual RAB growth, a view that consolidation in the
industry is potentially more acceptable, and what appears to be
continued appetite for companies with predictable long-term cash flows.
Using historical takeout premium of 27%, these equate to
following valuations: PNN: 940p (+14% upside); UU: 1060p (+17%); SVT: 2374p
(+22%).
Priced as of prior trading day's market

[ohisay] 17/7/2014 14:59

I notice it was tipped in IC last week.

The turnaround at Viridor and attractive prospects for the water business both have the potential to act as re-rating catalysts. And, in typical utility stock fashion, there is a decent dividend yield as back-up, too. Pennon offers just over 4 per cent dividend yield and a current dividend policy of increasing the dividend by a best-in-class 4 per cent above inflation.

Pennon, in common with the other listed water companies, has said it will not update its dividend policy until early 2015 when it has fully evaluated the impact of the 2015-20 price controls. But unlike the other water companies, City analysts see no risk of Pennon having to cut its dividend as a result of the new price controls. Indeed, Macquarie's forecasts assume a 7 per cent increase in the dividend in the 2015-16 financial year, which will be the first year of the new regulatory period.
With regulatory risks receding and M&A speculation heating up, the shares have had a good run this year. But there is still upside to go for. Pennon trades at a lower premium to its regulatory asset base (RAB) than peers United Utilities (UU.) and Severn Trent, likely due to some uncertainty on Viridor's prospects. If Pennon can deliver on the Viridor turnaround, that gap should close.
And if we get into take-out valuations, Macquarie believes Pennon could be worth £11

[ohisay] 15/7/2014 23:00

Thanks Apad - yes Viridor stand alone prospects mean PNN much more
attractive as a straight water company acquisition so beloved of Canadian pension funds Qatar etc.
Really well run company - easy to undervalue - I reckon 890p completely reasonable unless interest rates rocket - I really don't see that in the next 2 years.

[apad] 15/7/2014 13:07

I wish they would stop recommending PNN!
I am buying every time I have some cash, ohisay.
UK is having to play catchup on EfW plants - last time I looked we had 10% of needed capacity, so I reckon the income stream that will come in 2015/6 is just the start.
They have managed the drop in crazy recyclate prices very well.
Standalone! What the Tintins have missed is that Viridor benefits hugely from the low cost of borrowing that PNN enjoys cf it's hard strapped competitors. EfW is very capital intensive, for a future income stream, so it's in a real sweet spot.
What might happen is a foreign takeover and sale/float of Viridor.
Then the story will be over and one of the best current and future income streams on the market will be gone forever.
Currently 4.5% of portfolio.
ex div 6 Aug.
Keep buying!
apad

[ohisay] 15/7/2014 12:13

This is that RBC note.



Our view: We maintain our positive view on SWW which we value at a
20% RCV premium. We have increased our Viridor valuation to £2.3bn
(from £2.1bn) to reflect progress in EfW roll-out. This incorporates a
conservative view on Recycling and Landfill which together now account
for only 5% of Viridor EV. We reiterate our Outperform recommendation
with a revised 890p price target.
Key points:
South West Water: Smooth sailing
Following the release of its draft determination on 30 April, we see few
variables remaining for SWW for the AMP6 regulatory period (FY15-20).
SWW has been a top quartile performer in the industry in AMP5 and
we believe this gives credence to the company's ability to continue
performing well in AMP6. We forecast ROEs of around 8.5% versus SWW's
estimated range of up to 10%. We also expect RCV to grow at ~0.5%
real CAGR in AMP6. We value SWW at a 20% RCV premium to reflect its
enhanced status and lower cost of debt.
EfW progress pushes Viridor valuation up to £2.3bn
FY15 looks to be a busy year and should represent the peak in EfW
capex at around £310m (total Viridor ~£340m). We expect Viridor to bring
onstream five EfW plants this year and it remains on target to add £100m
to EBITDA by FY17. At this stage Viridor may have the potential to stand
alone as an independent entity which could result in a return of value to
PNN shareholders of ~50p/sh.



Bought a few today at 790p.

GLA.

[sllab101] 04/7/2014 15:15

FLASH: RBC Capital Markets reiterates outperform on Pennon Group, target raised from 810p to 890p - See more at:

[ohisay] 02/7/2014 08:12

Ex divi 8th August.

The Board has recommended a final dividend of 20.92p, up 6.2%,
subject to shareholder approval at the Annual General Meeting.
Together with the interim dividend of 9.39p, this will result
in a total dividend for the year of 30.31p, an increase of 6.5%(1)


The final dividend will be paid on 3 October 2014 to shareholders
on the register on 8 August 2014.