Centrica Share Discussion Threads

[waldron] 24/9/2020 15:13

Oliver Haill

15:20 Thu 24 Sep 2020

Centrica shares trading in deep value territory, says JPMorgan

New management has begun to turn things around and full-year results next year the analysts "expect to see the benefits of restructuring on earnings and a strategic update"


Centrica PLC (LON:CNA) was upgraded by JPMorgan Cazenove as its shares are “trading in deep value territory” and the risk/reward is seen as being “skewed to the upside”.

Analysts at the investment bank, who moved their rating to 'overweight' from 'equal weight', said the company has clearly underperformed compared to its energy company peers with retail exposure over the past several years, with a demotion from the FTSE 100 in June to cap it off.

This is because of “failure to adapt meaningfully in the face of heightened competition and regulatory scrutiny in UK retail, exacerbated by exposure to commodities through upstream activities”.

But new management in the last six months has begun to turn things around, the analysts said, with business simplification and material restructuring, including a deal to sell its North American business for US$3.6bn and another to buy the energy supply customers of Robin Hood Energy.

This “should bring stability, if not growth, to the core, consumer facing business”, the JPM number crunchers reckon.

The analysts' bear case assumption implies 25% downside to the current share price, with a base case that involves the target price being cut to 60p from 75p but still providing 50% upside, while a bull case sees 100% upside.

Centrica's shares currently trade for 9.5 times 2021 forecast earnings and a 3.6 times multiples of EV/EBITDA, despite, it was pointed out, an unlevered balance sheet.

“Our main catalyst is FY20 earnings next year, where we expect to see the benefits of restructuring on earnings and a strategic update.

“In addition, execution of disposals of E&P and Nuclear should simplify the group and remove a major source of earnings volatility, driving a rerating.”

Proactiveinvestors

[action] 24/9/2020 07:14

I thought direct energy deal is done deal ..

[the grumpy old men] 24/9/2020 06:45

Centrica: J.P. Morgan moves from neutral to overweight with a target of 60 GBp.

[bookbroker] 23/9/2020 20:00

Be surprised if that occurred, with corporate activity taking place I do not see why unless Direct Energy deal fails to complete,

[noreply1] 23/9/2020 16:05

Closed at days low... don't bode well... back to 30p ?

[yawn1971] 22/9/2020 12:56

Wahoo we are up ...

[bookbroker] 22/9/2020 09:13

Cash flows should be recognised, not insignificant.

[bookbroker] 22/9/2020 09:09

Staggered this company not received a bid, sum of parts larger than assets, although liabilities quite high, but with 20 Mln. customers you would think Eon would find this a mere morsel.

[bookbroker] 22/9/2020 07:47

Engineers need to understand that they will be signing new contracts with another company unless they accept the terms being offered, and they will be worse off. This company needs all the staff to play their part in its future, otherwise there will not be one. CNA would be better off hiving the maintenance side off!

[bookbroker] 21/9/2020 12:17

Absolutely crazy this price, they are about to sell an asset that is worth more than the entire mkt cap of this company. I do not believe that the remaining assets and debt should be valued at zero, if that is the case then the Govt will have to ensure that the engineers for CNA should be hived off into a separate entity, and be contracted in by the existing business. CNA generates a lot of cash, so they need to sort out this contractual issue. It has gone on too long!!

[bookbroker] 21/9/2020 11:41

Just friggin ridiculous, be better off just reducing the number of engineers full-stop, rather than re-negotiating contracts. They can easily train up apprentices to fill any gaps in the service.

[bookbroker] 20/9/2020 14:15

Hopefully the Direct Energy transaction will complete soon enough, and their employee issues will be resolved amicably, that should transform the prospects for CNA.

[grupo guitarlumber] 20/9/2020 12:12

sp seems to moving in a tight range

strong support 40.93p

strong resistence 45.91p

current share price 41.79p

[mercer95] 20/9/2020 09:09

In the UK, more than 46,500 people have died in a country of more than 66 million.
In Sweden, there have been more than 5,500 deaths in a country of 10 million, which is one of the highest death rates relative to population size in Europe, and by far the worst among the Nordic nations.
Retired doctor David Goldsmith and Eric Orlowski from University College London wrote: "Lest this strategy seem like just the traditional risky Swedish exceptionalism, we in the UK would do well to remember we nearly trod the same path.
"Right now, despite 'strict (but tardy) lockdown' in the UK, and the more measured Swedish response, both countries have high seven-day averaged Sars-CoV-2 death rates when compared to other Scandinavian and European countries."
But they said that only after the pandemic and the impact of the measures taken were fully understood, after one or two years at least, would it be fair to judge which had been the right approach.

[mcmather] 20/9/2020 06:35

Disagree. Re Sweden, you can still extrapolate a significant amount from their data for comparison, but especially as they are the closest country to the UK who did not shutdown.

This is a good piece of where the UK is now; "There might come a time when we need more stringent rules for the population, but that time is not right now. If we do need a national shutdown of some sort, remember there is a ready-made opportunity in the week after Christmas when many of us take an extended break in any case"...

[mercer95] 19/9/2020 15:31

Sweden’s population 10.23 million,U.K. population 66.65 million so any comparison is pointless IMO. Ultimately people should take responsibility for their own well being & not be dependent on the government to tell them,going into some form of lockdown until a vaccine is developed is just common sense to me.

[mcmather] 19/9/2020 14:34

Early data suggested that this was a particular problem for the aged, more so those with a prior condition or two and, also, in areas with poor air quality (Wuhan, Lombardy, Madrid). This largely remains the case today but on a much reduced level.

Early data also pointed towards a crude fatality rate of around 0.3%; ie similar numbers to a bad flu season; and the NHS ultimately managed to cope with such in 2017/18.

Sweden admit that they messed up with care homes. Otherwise, they seem to have dealt with matters mindfully / of the bigger picture; no lockdown, no schools closure, no business closure, etc. They stressed the need for all to act responsibly and are in a much better place today compared to the UK.

Given where the UK is today, I believe we chose the wrong option in March 2020.

[mercer95] 19/9/2020 10:50

Gave the NHS some sort of buffer zone, it’s a moot point because no one knows what would have happened if they hadn’t implemented a lockdown,would you rather nothing changed & we carried on as normal?

[mcmather] 19/9/2020 08:44

What did lockdown achieve?