Centrica Share Discussion Threads

[wigwammer] 02/8/2021 15:00

If you consolidate your core market - £7.9bn revs - op margins usually rise. IMO

[wigwammer] 02/8/2021 14:59

The market wants a smaller, more focused business with more consistent performance, a position that may result in considerable value accretion from this historic low base.. like it or not, the narrative will be building up to this... "Capital Markets Event to be held on 16 November 2021 to provide more detail on our longer term strategy and financial framework."

[disc0dave45] 02/8/2021 14:55

Yep, a brilliant strategy, sell a business in the US that was nearly three times more profitable than their UK arm, just to get debt down to £0.93bn........what a way to go!.Now what shall we tell our shareholders about nuclear?, we can't say we've fvcked up the sale process of an ever crumbling and loss making asset, no let's just say it's a good ESG strategy and we might keep it.Jeez

[careful] 02/8/2021 14:53

Bought a few today.

A miserable story, down from 400p more than 5 years ago to todays miserable level.

This has been run for the benefit of the consumer and the employees.
CNA have even had to subsidise green competitors.
An investment nightmare to be sure for shareholders.
We do not matter it seems.

I have topped up because there is still hope
But it will take a talented management and an efficient workforce.

There is potential here if they get their act together.

[disc0dave45] 02/8/2021 14:50

In finals 2020 their "strategy":-'In the year we completed three small bolt-on acquisitions in line with our strategy, adding customers in our core regions of the US Northeast and Mid-Atlantic and in states in which we have less of a presence, specifically Indiana, Kentucky, Tennessee and Ohio.'Another strategy out of the window!

[wigwammer] 02/8/2021 14:49

Yes. They sold it to lower debt, as I stated. 1% op margin on substantial sales - plenty of room to increase that margin as weak competitors disappear and the industry consolidates. IMO

[disc0dave45] 02/8/2021 14:45

They sold DE because they needed the cash to pay for their operating costs and to reduce debt, no other reason.Are you saying they sold it because it was a US energy supplier?.....don't think so going on it's profitability.For FY20:British Gas Rev £7.9bn, adjusted operating profit £80m (margin 1%)Direct Energy Rev £9.5bn, adjusted operating profit £252m (margin 2.7%)

[wigwammer] 02/8/2021 14:18

Their core business is selling gas and electricity to people and companies in the U.K. I suspect given the number of loss making competitors in the industry, consolidation and removal of competition can be a driver of earnings growth and increased stability going forward. At sub 10x 2022e, that's not an outcome that's priced in, but highly possible, IMO.

[disc0dave45] 02/8/2021 13:56

IMO They have no clear strategy in terms of what their core business will be in the years to come - sold DE which was very profitable and served circa 278k customers, but buy customer base (115k customers) from a not for profit company (retain their low bills so ergo possibly zero or minimal profit).For 3 years or so they have made it clear they will sell Spirit and nuclear, now they say they may keep nuclear but unlikely to sell Spirit this year - IMO they sold DE because they couldn't offload Spirit and nuclear and needed to generate cash to help pay for their massive operating costs (c £9bn) and to sort their BS out.The BOD are reactive not proactive, they go from one strategy to another depending on which way the wind blows, pick up their millions then move on.Still don't get the minuscule debt now, ridiculously low IMO, why?. Can't just be to appease the credit rating agencies.

[wigwammer] 02/8/2021 13:26

To lower debt in an uncertain environment. They got a decent price. Tick up. I think the consolidation of weaker players, and their disappearance from the market, will likely help to increase earnings and reduce volatility, no?

[disc0dave45] 02/8/2021 12:55

'and the potential for lower volatility earnings looking ahead.'In a highly regulated market! not to mention the N word.Why did they sell DE?

[wigwammer] 02/8/2021 12:18

Major factor overlooked - the competition are losing money in the core markets. That means either competitive exit, and/or consolidation on the cheap, and that's one growth angle. Is nuclear perceived as ESG? May well increasingly move that way. I suspect CNA is on sub 10x 2022e, with little debt, a falling deficit, and the potential for lower volatility earnings looking ahead. So a 10%+ earnings yield for utility type earnings, vs sub 1% in gilts.. nice :)

[disc0dave45] 02/8/2021 08:09

They still need Rev circa £20bn and if you believe they can hit that and maintain margin to get 6.2p eps for FY22, then buy. IMO i can't see how they will achieve that level of earnings for some years.Ps they've now stated they may keep the loss making and Capex intensive nuclear business.Good luck

[waldron] 02/8/2021 07:38

European stocks set to edge higher, tracking positive global sentiment

Published Mon, Aug 2 20212:08 AM EDT

Elliot Smith
@ElliotSmithCNBC


Key Points

Earnings are in focus once again in Europe on Monday, with Heineken, AXA and HSBC among the big names reporting.

On the data front, final Markit manufacturing PMI (purchasing managers’ index) readings for July are due from across the euro zone and the U.K. on Monday morning.

LONDON — European stocks are set to open higher on Monday, tracking positive sentiment around the world to begin the month.

Britain’s FTSE 100 is seen around 34 points higher at 7,066, Germany’s DAX is expected to add around 69 points to 15,613 and France’s CAC 40 is set to climb around 33 points to 6,646, according to IG data.

[esg investor] 02/8/2021 07:31

Revenue excluding DE was £14.9bn, not £12.9bn. and £8.2bn in the first half of this year.

assuming that 3.5p eps is equivalent to £330m profit for the full year, they could boost that by disposing of nuclear, and turning around energy market & trading and centrica business solutions.

[jayson26jay] 02/8/2021 00:09

I can save you some time, this isn't a ESR stock.

[disc0dave45] 01/8/2021 23:47

DE Rev £9.5bn which they've sold, excluding DE statutory rev 2019 (no pandemic) was £12.9bn. Margin more like 3% tops, so need at least £20bn Rev...don't see how IMO.

[esg investor] 01/8/2021 21:45

the stock is bombed out.

half year eps is 1.7p on adjusted profits of GBP166m. that suggests around GBP605m profits to get to 6.2p eps, which would only be a margin of around 4% on more than GBP15bn in revenues.

[disc0dave45] 01/8/2021 21:26

Their cost savings £100m will more than be offset by legacy gas contract alone (£100m), ECO will be +£80m to 2020, Whitegate CCGT will lose £40m, they have to pay £175m to their pension deficit and Spirit Energy and nuclear are at reduced volumes to IMO negate any commodity price increases. Plus nuclear (if they don't divest) will continue to incur losses.Do think this FY eps 3.5p is top end but as for FY22 who knows, but I can't see any significant growth, or any at all for FY22 and beyond, but wtfdik.

[esg investor] 01/8/2021 21:03

no idea. it could be due to cost savings from ongoing restructurings, a recovery in business customers as we come out of the pandemic, higher commodity prices, better volumes in upstream, or other factors.

what do you think?

i will rely on the brokers, 16 is a very good sample. they must have a good reason.

[disc0dave45] 01/8/2021 20:32

Explain how you think the business is going to more than double earnings by FY22.They've just offloaded a business that historically generated more than a third of profits, and they lose customers every year.So why are FY21 forecasts bad and FY22 aren't?.A BOD that can't give guidance because they don't have a confirmed strategy doesn't exactly inspire confidence. If you're happy to invest in a business that doesn't know what their numbers will be after 8 months into their FY then go ahead and good luck.

[esg investor] 01/8/2021 20:21

"The company have given no guidance or confirmed their strategy so any forecasts are a finger in the air IMO, especially for FY22"

that is the same with absolutely any company.

my understanding is that the consensus for FY22 is 6.2p, for a PE of 7.3, based on 16 brokers. that is a very good sample.

more the point the FY21 numbers are a bad guide, given all the changes and ongoing restructuring. just as well go for previous years FY18 or FY16 eps. FY21 is likely the low point, look at the margins.

[disc0dave45] 01/8/2021 19:36

3.5p for FY21The company have given no guidance or confirmed their strategy so any forecasts are a finger in the air IMO, especially for FY22. How will they more than double earnings by then?.

[esg investor] 01/8/2021 19:13

I understand Refinitiv is showing 6.2p for 2022. The lowest broker forecast is 4p, out of some 16 brokers, so I dont know where you are getting 3.5p?

[disc0dave45] 01/8/2021 18:46

From Stockopedia and IC