Share Name Share Symbol Market Type Share ISIN Share Description
Drax Group Plc LSE:DRX London Ordinary Share GB00B1VNSX38 ORD 11 16/29P
  Price Change % Change Share Price Shares Traded Last Trade
  3.40 1.17% 293.40 2,732,818 16:35:04
Bid Price Offer Price High Price Low Price Open Price
293.40 294.00 298.00 290.00 290.60
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Electricity 4,702.90 -2.80 0.10 2,934.0 1,165
Last Trade Time Trade Type Trade Size Trade Price Currency
17:49:09 O 281 293.40 GBX

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Date Time Title Posts
04/8/202017:02Drax - Coal power and yield3,432
23/7/201820:59Drax (DRX) One to Watch on Tuesday -
23/2/201608:07*** Drax ***938
12/9/201411:42Zak Mir says CONVICTION BUY on Drax Group (DRX.L)4
12/1/200709:16NIce Yield and Upside from 490p ?76

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Drax Daily Update: Drax Group Plc is listed in the Electricity sector of the London Stock Exchange with ticker DRX. The last closing price for Drax was 290p.
Drax Group Plc has a 4 week average price of 249p and a 12 week average price of 193p.
The 1 year high share price is 364.60p while the 1 year low share price is currently 118.90p.
There are currently 396,914,186 shares in issue and the average daily traded volume is 1,215,174 shares. The market capitalisation of Drax Group Plc is £1,164,546,221.72.
catscats: does anyone know why the share price is so weak...i can only guess that it is being sold by ex Woodford funds (St James Place) since Woodford has sold his in the EIF. Or maybe investors don't believe that the suspended gov subsidy will be re-instated...or broker downgrades....?
minerve: The correlation between Drax share price and commodity prices appears to be broken. Since January, Drax shares are +10% vs -10% of UK power and gas. In our view, this decoupling is unjustified and we see significant downside risk to Drax’s share price.
robi_n: Only sharing my views but am holding myself anyway. In the mid term earnings are secure and will grow as well as dividends. Share price will follow. I'm just having some problems shrugging off all the gloom I've seen over the last few years.
robi_n: I doubt it stays over 300 over the next couple of months. I saw it plenty of times with this company. Lousy interims then five or six months steady share price decline... Its only chance is OCGT debacle. They keep on repeating they're doing it IF they got capacity payments contract which obviously they DON'T get. It's clearing lower and lower each year and they aim for close to 30 per KW. Never gonna happen unless they massively lower they hurdle rate (but is it profitable then?). Either way this whole OCGT is gonna fail. That means two things: -first PnL will be hit down the road with all they'll have spent on this (pending on balance sheet right now) - second cash will be preserved which can be returned to the shareholders That said I see it that way: poor share performance for at least half a year, yet another capacity auction failure and another buy-back announcement at year-end results.
scotches: I wonder about the quality of Mir's research here. "This compares with the present share price of 315p, a sharp contrast to the 800p plus only last year." Must have missed that day it hit £8. hTTps:// (If you adjust the http bit it will stop the advfn block on links)
topvest: Yes, why the share price is so strong is anyones guess. The outlook is very bleak.
via con: So DB downgrades after being positive a week ago. A bit of a volte- face by them it would seem "Power price crunch becoming increasingly severe Capacity concerns have been in focus over the last week, with National Grid’s NISM signaling a tightening UK power market. However, weakening gas prices have driven a further material leg down in UK power prices which is likely to heighten the pressure on Drax’s earnings and cashflows. We may see a capacity driven bounce in power prices, although in the medium-term we expect more LNG exports from the US to add to the pressure on gas prices. The shares have rallied by c.10% over the last month and now look expensive. We downgrade to Sell with an unchanged 220p/share target price. Market pressures mounting Drax has executed well on the parts of its biomass conversion strategy within its control. However, the company is suffering from low power prices and regulatory challenges. The EU state aid process is still ongoing for its fixed price biomass contract, leaving all of its units market exposed. Power prices have weakened by 5-10% over the last month alone, with gas prices dropping by greater than 10%. Our unchanged estimates assume a c.15% improvement in UK power prices versus forwards, as medium-term gas prices rise and the power market tightens, although the shares now look expensive even on this basis. Financial projections: state aid approval and power prices key uncertainties We forecast Drax making little in earnings over 2016-18, although we still forecast positive free cashflow of greater than 20p/share p.a. as capex spend moderates. Changes in power prices and the outcome of the state aid process for Drax’s fixed price contract could each have a significant impact on our estimates. If the EU approves the contract at the original strike price, power prices rise strongly, and/or Drax announces a significant cost cutting programme this could lift our estimates. If power prices remain in-line with current forwards or the fixed price contract is not approved, the squeeze could be more severe. 220p/share target price unchanged; downgrade to Sell; risks We leave our DCF based target price unchanged at 220p, although the rally in the share price over the last month, and drop in UK power prices, makes us worry more about potential downside scenarios. Our DCF based valuation assumes Drax converts three of its six units to biomass with two operating under the RO and one under a CfD (with a contract price of GBP95/MWh real). The main upside risks are higher UK power prices, positive regulatory news, or cost cutting. If Drax secured its fixed price contract at the original strike price this could add 90/share to our valuation"
via con: GS note this morning We expect no recovery in UK power prices and reduce our UK power forecasts by c.10%. We expect demand to continue to fall (peak demand in 2014 was 12% below the all-time peak in 2006), and believe that even significant plant closures are likely to have little impact on the power price owing to the flat merit order. The only value for most existing gas and coal plant is from capacity payments which we expect to remain at a low level. Drax, as a 100% UK power generator, is the most exposed to our new lower outlook for power prices. We cut our 12m price target to 230p (from 300p) and downgrade to Sell. Drax has underperformed the utilities sector by 35% YTD, reflecting falling power prices and unfavourable regulatory changes. We highlight a further potential negative catalyst: the EU decision on regulation for Drax’s final biomass unit. We see the risk/reward skewed to the downside: we believe the share price is discounting a best case scenario on this decision (fixed price CfD approved at £105/MWh) while we see more than 60% valuation downside if the CfD is rejected by the EU.
scotches: "The investment case for biomass power generator Drax Group "remains intact" despite the recently announced changes to the climate change levy...says an analyst from Investec. ...the UK government's renewables policy is "of critical importance" to Drax's share price and says despite the changes, the attractiveness of the company is still there although there is now higher political risks. "We still believe that, in the context of 'affordable' UK decarbonisation paths, Drax is an attractive asset given its biomass conversions, and its option on carbon capture and storage," he says. Investec says Drax remains "just" as a Buy on its rating system, but it lowers its price target to 300.0 pence from 450.0 pence."
sportbilly1976: Here is the transcript of the chat on Drax (the dark spread chart didn't copy across): BE Drax Group PLC (DRX:LSE): Last: 404.50, up 14.6 (+3.74%), High: 404.90, Low: 389.40, Volume: 1.22mBlockBE Getting squeezy though. Now up 5.2% BE The idea in the Times this morning is that RWE or GDF Suez might be weighing a bid at 550p. BE Now, post Rexam who knows …… PM hehe PM Hesitate to diss a Parky story BE Yup. Indeed. Though Centrica more likely than GDF, I’d have thought. BE Quick line from Cazenove on the rumour. BE The reported price represents a 28% premium to current market price (390p). It is unclear whether the report is actually credible or not (yesterday’s share price strength may have been attributable to the 9% increase in winter 15/16 UK clean dark spread), but if anyone was ever going to bid for Drax, now would be a good time in our view given the share price weakness following a dearth of bad news in the last 12 months and collapse in commodity prices. However, we would be surprised if either RWE or GSZ were to bid for Drax because it would be a significant investment, yet strategically both groups have expressed a desire to reduce exposure to European generation. BE Here’s that dark spread graph versus Drax shares BE BE Which is via Macquarie PM What is that telling us? PM BE It’s telling us that UK wholesale power prices (for want of a better phrase) had ticked higher and Drax hadn’t. BE Macquarie is a buyer on valuation. BE Drax is not for the faint hearted and it has been a volatile performer. It has two main drivers to valuation: i) dark and bark spreads and ii) biomass conversion clarity. Both of these have been recently hit as a combination of low oil price/mild winter/DECC taking control of its budget have reduced outlook expectations. There are two reasons why we believe current levels offer an attractive entry point. We have a new 465p price target (down from 550p/share) and an Outperform rating. BE With a fixed carbon and biomass cost, spreads are heavily linked to gas prices. Whilst gas prices rebounded somewhat since January, leading to an improved dark and bark spread, the Drax share price has not. Drax is more efficient than 15GW of other coal power stations. If current 25-year-low spreads fall further, we think these will not cover cash costs and those without capacity payments (7GW) could close, tightening the market. BE We estimate Drax has an EV of c.£1.6bn and a headline EV/EBITDA of 6.7x 2017e. We estimate they could sell their pelleting plants, worth in our view £300mn (double-digit IRRs on £225mn investment). Drax has hedged its pellets at £8/GJ, although the majority of these costs are in $US. At current rates we estimate this could be worth up to £200mn, or 15% of Drax. Removing this derivative would increase biomass costs overall – not unhelpful in EU negotiations, which, if allowed, we see coming in at £100/MWh real. PM Certainly been volatile BE With hedged 1-year forward cashflow of c.£50mn, the EV of a ‘stripped̵7; plant would be £1,050mn. At current spreads we estimate a 3-ROC plant EBITDA of £218mn once capacity payments kick in, rising to £278mn with a CfD at £100/MWh – leading to a potential EV/EBITDA of between 3.8-4.8x. BE Our valuation is 465p/share with a 50% probability of 3 ROCs (410p) and a £100/MWh CfD (517p). We see potential that dark spreads will rise through rising gas prices or less efficient coal fired power stations closing. BE Yeah, as the ROTR mention, the swing factor in Drax numbers on biomass subsidies make it tricky to value right now. BE They also have FY on Feb 24 BE So I’ll suggest this is just a valuation bounce / squeeze, and await the Rexam style 11.30 rns to make me look stupid.
Drax share price data is direct from the London Stock Exchange
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