Severn Trent Share Discussion Threads

[redartbmud] 02/6/2013 21:16

MIATA

I fully understand what you say about debt, but I am if the opinion that you cannot increase it indefinately.
At present utility companies are able to borrow at relatively low rates. They have a job to do, which is to improve the quality of their business.
However, customers are reluctant to continue with ever increasing bills. Interest rates will start tpo rise eventually. Excessive debt levels will impact on credit ratings. Regulatory bodies can contro;l earnings potential.

We have seen many bubbles burst in the past.

[miata] 02/6/2013 20:12

You would not be bankrupt just because your debts were more than your worth, only if you had no means of earning enough to ultimately repay your debts.

SVT has a guaranteed inflation-linked earnings stream.

[mroalan] 02/6/2013 19:57

yes thats allways concerned me, if debt is more than the company is worth,how does that work?if i operated that way i,d be bankrupt, but its not a one off for svt,it appears quite common.

[zeppo] 02/6/2013 13:40

Canadian bidders buoyed by Severn Trent's rising debt | This is Money


www.thisismoney.co.uk/.../Canadian-bidders-buoyed-Severn-Trents-rising-...


So debt is meaningless when you have massive cash flow from 'captive' customers?

--------

Now waiting to see why DVW's figures are later than the others.


z

[miata] 31/5/2013 12:36

Exactly.


Severn Trent, the water giant which this month rejected a Canadian and Kuwaiti takeover approach, today told investors it's worth well over £7 billion - nearly £1 billion more than the price thought to have been offered by the foreign bidders.

The utility, which keeps the taps running in 7.7 million British homes, was approached earlier this month with a bid said to be worth just under £20 a share, or £4.7 billion, from Canada's Borealis, the Kuwait Investment Authority and the Universities Superannuation Scheme, a UK pension fund.

Severn Trent rejected that bid, saying it "completely fails to recognise the existing and potential value" of the water firm, and today pointed out its regulated capital value - the figure that the industry regulator Ofwat uses to work out the worth of the utility - was up 4% from £7.1 billion in 2010 to £7.4 billion this year.

Severn Trent's departing chief executive Tony Wray also highlighted that it was set to hit £8 billion by the end of the current regulatory cycle, in 2015.

[redartbmud] 31/5/2013 11:40

Trader

Just another thought - They will not want to mount a hostile bid, so they may be haggling over the price as I type.


red

[zeppo] 31/5/2013 10:14

What happens to the Net Debt as shown in Financials above and the fact that there is -net cash per share.

I have shares in the smaller water company DVW and also UU.


Would anyone consider taking out DVW which has a larger minus figure for cash per share?

Is the cash flow from existing customer bases so strong that gearing, debt and minus cash figures are meaningless?

SVT's Net Debt is much bigger than their Market Cap., DVW's is slightly bigger.


SVT
Market Cap. 4,905.13 m
Shares In Issue 238.81 m
Prev. Close 2,049.00
PE Ratio 21.46
Dividend Yield 3.69 %
EPS - basic 95.70 p
Dividend PS 75.85 p
Dividend Cover 1.26
Cash Flow PS 275.83 p
Return On Equity (ROE) 27.30 %
Operating Margin 11.75 %
PEG Factor 0.67
EPS Growth Rate 32.00 %
Dividends PS Growth Rate 8.20 %
Net Debt 6,771.80 m
Gross Gearing 89.48 %
Quick Assets 950.10 m
Net Working Capital 401.20 m
Intangibles / Fixed Assets 2.00 %
Turnover PS 766.97 p
Pre-Tax Profit PS 90.11 p
Retained Profit PS -39.57 p
Cash PS 169.01 p
Net Cash PS -74.29 p
Net Tangible Asset Value PS * 289.86 p
Net Asset Value PS 353.42 p
Spread 2.00 (0.10%)




DVW

Market Cap. 66.72 m
Shares In Issue 4.62 m
Prev. Close 1,445.00
PE Ratio 17.04
Dividend Yield 4.19 %
EPS - basic 84.80 p
Dividend PS 60.50 p
Dividend Cover 1.40
Cash Flow PS 194.13 p
Return On Equity (ROE) 15.85 %
Operating Margin 15.48 %
PEG Factor -2.39
EPS Growth Rate -7.12 %
Dividends PS Growth Rate 3.60 %
Net Debt 67.96 m
Gross Gearing 75.79 %
Quick Assets 14.67 m
Net Working Capital 0.72 m
Intangibles / Fixed Assets 6.16 %
Turnover PS 478.61 p
Pre-Tax Profit PS 74.09 p
Retained Profit PS 25.42 p
Cash PS 207.10 p
Net Cash PS -99.08 p
Net Tangible Asset Value PS * 419.84 p
Net Asset Value PS 536.37 p
Spread 50.00 (3.40%

z

[redartbmud] 31/5/2013 09:44

Trader

There is no rush. They have until 5.00pm on 11 June, as you say.
If they have any sense they will be doing thorough due dilligence. The only fly in the ointment is the next regulatory review, but I preume that they took a view when they revealed their hand anyway. Who knows how much information they may or may not, have on that score.
If you took back to the takeover of Northumbrian it seemed to rumble on forever, but went through in the end.

I bought back 50% of my recent sale at £20.27+bits. It seems like a reasonable risk to me.

red

[tradermichael] 31/5/2013 09:36

Well xd is 21 June, so when would you expect a move? (OFFER DEADLINE 5.00 pm on 11 June 2013 ). They don't have to pay us a dividend if a deal is done ahead of 21st! Are you saying that the Consortium would scoop all the cash?

[redartbmud] 31/5/2013 09:19

Purely speculation, but £21 plus the current dividend would not be out of court for the purchaser and might just do the trick.
They can't do much about the dividend now.

red

[funtimejonny] 30/5/2013 13:54

Yes. So am I. Apparently fell slightly short of analysts expectations! I imagine the bidder has his accounts team crawling all over this to decide where to pitch a final bid for the company. Watch.this space...

[tradermichael] 30/5/2013 09:40

I'm happy with the results today.

[birdsedgeuk] 28/5/2013 22:02

Good luck thursdayJust been looking at site traderdiary.co.uk

[funtimejonny] 28/5/2013 17:12

Yes. I think ur right zulu. And decent divvi in the mean time. Price not gping ballistic atm, but I guess its a waiting game for next couple of weeks.

[zulu001] 28/5/2013 16:43

Its a waiting game, if this one fails there will probably be another one along later.

[funtimejonny] 28/5/2013 16:38

Very quiet on here. Considering that major t/o bid in play. Anybody think thist/o will succeed or bot.

[zulu001] 17/5/2013 18:25

Are they all piling in?

---------------- ---------------- ----------------- ---------------
9717/19p
ordinary Call Option Written 181,600 20.9777 European 10/07/2013
---------------- ---------------- ----------------- --------------

If you are writing (rather than purchasing) a call option aren't you in effect piling out?

[warrensearle] 15/5/2013 20:57

Crikey how many RNS today instis piling in

[praipus] 15/5/2013 19:38

Newton Investment Management holding 6.95% of SVT

I track the rest of Newtons disclosed holdings on the WAM thread:)

[miata] 15/5/2013 11:47

CAZENOVE

The consortium's willingness to table even a conditional bid in the face of regulatory uncertainty may reflect the high level of demand for low risk, inflation protected assets. We see this as positive for the other UK listed water companies, United Utilities (UU/ LN) and Pennon (PNN LN), which are trading at a 13.6% and 14.2% premium to March 14 RAV respectively compared to SVT on a 27.7% premium to RAV.

[miata] 15/5/2013 11:41

Severn Trent has rejected a takeover from a consortium of foreign and British buyers.

"The board of Severn Trent has reviewed the proposal with its advisers and concluded that it completely fails to recognise the existing and potential value of Severn Trent," the company said in a statement.

Broker Liberum, in a note to analysts, said it was likely the consortium would make a further offer before a June 11 deadline set by Britain's Takeover Panel to make a firm bid or walk away. "We have seen many such bids in the past decade and no bidder has ever given up after just one offer," it said.

[camlor2] 14/5/2013 21:39

Dont be sure,not a time to short,think this is the real deal this time,not much left of SVT,being selling all of the assets off/GRAFHAM CARBONS/STS/BIFFA/All property going up for auction,pension froze/TONY WRAY leaving !!!

[miata] 14/5/2013 13:10

A bid approach for utility Severn Trent has been flushed out by a leak. Anyone with a taste for schoolboy puns is laughing like a drain. The mouths of investors are meanwhile watering at the prospect of a £5.3bn buyout.

Credit Suisse.
The price speculated in the press (£23) suggests a high valuation relative to historical valuations, at a 36% premium to the adjusted 2014E RAB, but in-line with the recent acquisition of Sutton and East Surrey Water. Historic transactions have been at average c25-30% RAB premia –which would suggest a price of c£20-£21/share, on our numbers) It has not confirmed the offer price of c£23 speculated in the Telegraph, saying no proposal has yet been made.


The proposed price would reflect an EV of over £10 billion – the biggest transaction in the sector's history. With a fair value of 1,530p – and the stock closed at 1,825p/share – suggesting a c45% probability of an offer is already priced in

Goldman
£22.50-£23/share valuation for Severn Trent is close to our M&A value of
£22.16, which is based on a 30% premium to the March 2014 RAV. A 30-35%
premium to RAV (the bid range) would be in line or slightly above historical
bids in the sector

Historically none of the previous approaches in the water sector that have
been announced in the last 10 years have failed in taking over the water
company. The main downside risk to the M&A outlook is whether Ofwat in
resetting regulated water prices next year makes gains from leveraging up
the water companies' balance sheets less attractive. The next main paper
from Ofwat is due in the summer (2013). In our view the upside risk from
M&A versus the downside risk in fundamental valuations is fairly reflected
in the share price of United Utilities, and more than fully reflected in the
share price of Pennon. We place our rating and price target on SVT under
review. Additional risks to our price targets for SVT and UU are a bid from
private equity/infrastructure fund, inflation above/below forecast. For
Pennon they are a bid from private equity/infrastructure fund, stronger
waste profits, inflation above forecasts.

Citigroup
With CEO Tony Wray due to leave in 2014 and, in our view, Severn Trent as the
best positioned publicly listed water company post the PR14 regulatory review in
2014, we expect a formal bid to materialise and given the timing and the current
rate environment, £23/share and 35% premium to RCV seems possible, in our
view.