Eaga Share Discussion Threads

[simon gordon] 22/10/2010 19:40

Thorpe,

Looks a zombie after the CSR decision. Okay for scalping, if that's your cup of tea, but capital will just zombify in this share.

Sorry it didn't come off for you!

Good fortune.

[thorpematt] 22/10/2010 19:34

KBC Peel Hunt maintained its 2011-12 profit forecast at £53.8m after the recent interim management statement, rising to £55.2m the following year. The broker believed that Eaga would be a long-term beneficiary of government measures even if 'Warm Front' was phased out. The uncertainty about the replacement schemes means that, at best, the benefit may take some time to show through.

Eaga is hopeful that an obligation for energy companies to provide help to poor households, plus the Green Deal and Renewable Heat Incentive programmes, will provide opportunities to offset the loss of revenues.

Feed-in tariffs for renewable generation are being refocused on the most cost-effective technologies at the next review date.

"Eaga shares are tanking because of the phasing out of the Warm Front scheme, because the uncertainty over what will replace it gives little reason for investors to buy the share," said KBC Peel Hunt analyst Henry Carver.

"However, although it accounts for 50 percent of Eaga's revenues, margins are only 2 percent, so it generates less than 20 percent of profit, and the company should benefit from the drive towards energy efficiency generally," he added.

21-Oct-10 KBC Peel Hunt Hold 70.00p old target: 180.00p New: 95.00p DownGrade
21-Oct-10 Panmure Gordon Buy 70.00p old target: 175.00p - Reiteration
21-Oct-10 Liberum Capital Sell 70.00p old target:120.00p - DownGrade
21-Oct-10 Collins Stewart Hold 70.00p - - DownGrade
21-Oct-10 Execution Noble Hold 70.00p old target:155.00p New: 90.00p DownGrade

Not much consensus there really but only LC are selling at 70p. So maybethis will settle in a tad higher than current share price ..?

[envirovision] 22/10/2010 18:09

Had to laugh, investors chronicle were still saying these were a stonking buy at £1.03 and have done an update in this Fridays eddition telling readers to "BUY"

Lets hope no one followed them, this will end up a penny share imo.

At this level they have to be worth a short imo.

[nicobellic] 22/10/2010 17:54

Spot on analysis Thorpematt. IIRC the goodwill for HEAT was c£23MN, and the smaller acquisitions when collated were another decent chunk c£7mn. These will have to be impaired and the hit to next year's P&L is the last thing eaga need in light of the effect the psr will have on their business. Factor in the restructure costs and the 68p share price seems far too high.

[thorpematt] 22/10/2010 01:34

You might mant to read this:-




page 63:-

Reform
2.106 DECC will develop innovative ways of working with the private sector, acting as an enabler rather than the default provider. Households will be able to improve the energy efficiency of their house at no upfront cost, repaying through the savings they make on their energy bills, through a Green Deal. Extra support to reduce energy bills and help improve heating and insulation will be provided by energy companies to combat fuel poverty. This will
allow the Warm Front public spending programme to be phased out over time, saving £345 million by 2013-14.

Not quite how the RNS reads IMV. The political agenda is still there but Mr Osbourne as cleverly shunted the cost back onto the utilities and aaway from the taxpayer.

Basically what will happen IMV is that householders will be given a loan repayable via their energy providers instead. This WILL cut the budget spend by £345M by 2014. The onus will be placed upon energy suppliers to effectively stump up cash upfront. Of course EAGA will need to sell it better as a grant is better than a loan - However as we see with students, loans are stil a viable option for many.

Looking at the numbers we have MC at just 170m. Forward PEs are very low so not a lot to live up to. Debt is manageable and I expect record full year profits.

EAGA has a more diversified model than it did a couple of years ago, but this will be testing times for them I'm sure. One wonders if a write-down in intangibles may be required and forward profitablility as well as turnover will of course need adjusting. In the short-term there may actually be a surge of orders to qualify for the current funding.

Whilst I'd expect some additional oportunities to develop via the "green deal" (EAGA are very well placed in this respect)I think they will need to cut their cloth to suit - it may be that the managed services will gain whilst the more practical elements suffer.

More questions than answers at the moment, will be a test for the management...

[simon gordon] 21/10/2010 12:46

PB,

FSG is worth a proper dig!

SEPU is a zombie.

[pacificbond] 21/10/2010 12:43

Not in that, nor SEPU. Fenner has been my darling. Wish I could find more like that. -:)

[simon gordon] 21/10/2010 11:26

Yeah, get out of XCH if you are in that one :-)

[pacificbond] 21/10/2010 11:21

Simon, your threads seem to coincide with all my disastrous investments! Can you tell me of any other threads you have and I'll get out quickly!

[honiton] 21/10/2010 10:40

simon gordon

Its not in the local press at all; as of now.

[simon gordon] 21/10/2010 10:31

It is very bad news for Geordie Land, it was sad that the CEO become very ill and had to leave, they had a strong balance sheet to diversify but probably didn't have the internal skill set to do so, as the culture was based on one big government contract.

[salpara111] 21/10/2010 10:27

In the immortal words of ET.....Ouch!

[honiton] 21/10/2010 10:05

5,000 employees now.

[pugugly] 21/10/2010 09:46

Have a look at their web site. I suspect that we could be seeing a broken business model which appears to have been far too dependent on funding from the previous government. Too much of their business appaears to me to have been in the "touchy touchy lovely lovey" area.

As it appears, if they are to stay commerially profitable, there will have to be rationalisation how will they manage with the "partnership" employment structure.

[honiton] 21/10/2010 09:35

That's a quick 20% loss then cf yesterday.

If there is any form of profit warning, always sell as soon as you can.
You will be kicking yourself for the "dead cat bounce" but will be smiling at the end.

[honiton] 21/10/2010 09:35

That's a quick 20% loss then cf yesterday.

If there is any form of profit warning, always sell as soon as you can.
You will be kicking yourself for the "dead cat bounce" but will be smiling at the end.

[nokia6230i] 20/10/2010 20:59

its terrible

[etome] 20/10/2010 16:34

I try to avoid the defence and the housing sectors. Gotta spend the night to digest the spending review to identify more bombs. :)

[simon gordon] 20/10/2010 16:20

Etome,

At the time EAGA & CNT were solid looking.

Funny thing is I only held them both once or twice and not for very long.

XCH is another I started a thread on that is currently in meltdown!

Out of the three I thought XCH had the most potential but now their balance sheet looks a can of worms.

I must admit I now spend more time looking at other sectors as Support Services used to be my fav. before the Credit Crunch.

[ricky46] 20/10/2010 16:18

some ones very confident in these recovering a trade for 400000 just gone thru

[etome] 20/10/2010 16:14

Simon Gordon!! Why you always make threads for the specials like EAGA and CNT? Any other shares you have made threads for so I should try to avoid buying??!!

[gswredland] 20/10/2010 16:11

out too now! probably at the bottom!

[1964steve] 20/10/2010 16:08

Hmmmmmm....that clarifies things. Reads like a full blown profit warning. In at 91 and out at 89.5. Small loss but was sitting on nice profit temporarily hey ho.