Inspired Share Discussion Threads

[rivaldo] 24/11/2019 23:19

I've been sent Peel Hunt's latest note post-interims (cheers mate). To reiterate, their forecasts are:

this year : 1.8p EPS, 0.7p divi
next year : 2.0p EPS, 0.8p divi

Their summary is as follows:

"PEEL HUNT
Buy 4 September 2019
Inspired Energy* INSE

Interims reflect a good start, n/c estimates

6m PBT £6.9m, 2% ahead of PHe £6.7m. No surprises in trading mix with Corporate EBITDA (88% FY19 EBITDA) rising 40% - supported by recent acquisitions, organic growth (6%) and operational leverage. The outlook is positive with a rising order book and notable progress with recent acquisitions underpinning estimates. We confidently retain our Dec'19 PBT of £16.6m to give EPS of 1.8p. Shares trading on 8.4x Dec'19 continue to offer material upside given the pace of growth, new market opportunities (including cross selling) and further scope to consolidate end markets. Buy

Trading Details H1 FY19 revenues increased 33% to £21.6m with group EBITDA increasing 35% to £8.8m. Adjusted PBT rose 30% to £6.9m (PHe £6.7m). The Corporate Division (89% FY19 EBITDA) continues to perform well with EBITDA rising 40% to £9.0m (driven by 6% organic revenue growth despite the FY18 cold weather benefit). Despite some dilution from Inprova the underlying margin was flat at 48.1% given operating efficiency and the growing business scale.

The Corporate Order Book has increased to £55.4m (from £53m at Dec'18) driven by contract momentum (a number of new notable blue chip wins) and customer retention rates remaining impressive (c85%). We observe the increasing diversification with clients spanning manufacturing (Muller), leisure (Nandos), finance (KPMG), retail (B&Q) and the Public Sector (Kings College). SME Division (15% EBITDA) reflected the decision to streamline and refocus on more profitable activity. EBITDA increased to £1.Om from £0.9m. H1 FCF of £1.3m was impacted by the accrued FY18 acquisition costs (£1m), slightly higher working capital outflows (partially reversing in H2) and exceptional acquisition integration (£0.9m). Net debt of £25.1m was broadly in line.

Strategic development. The recent acquisitions (Inprova Dec 2108 and Ignite 1 August) are trading in line with expectations. Moreover, these acquisitions look strategically well timed given the pace of market development towards more specialist integrated and optimised services. Future organic growth aspirations (6-8% p.a minimum) is underpinned by the 6% growth in Units of Opportunity (Meter Points with whom Inspired has a commercial/transactional relationship), the increase in meters under management (+16%) and the 38% increase cross selling opportunities (now valued at £50m).

Positive Outlook The outlook remains positive with management expecting another set of record results. We maintain our Dec'19 EBITDA of £19.8m, PBT of £16.6m (cons £16.7m) to give EPS increases of 1.81p. No change to our net debt expectation of £26.0m (1.3x EBITDA). No change to FY20 expectations. The rating looks highly attractive given the growth projections and cash generation, but there is also scope for further positive surprises via M&A and customer development. Our target price of 25p is underpinned by a DCF model (justified by the nature of the order book and activity)."

[rivaldo] 22/11/2019 08:21

Miton's holdings RNS is just a function of their recent change of ownership - their holding has remained exactly the same as previously disclosed (which in itself is encouraging considering it's so large).

Melody9999, I don't believe Labour have any chance at all of taking power, and certainly not with the necessary majority to actually implement their disastrous plans.

However, I've posted these interesting thoughts from poster "hewn" before which summed things up rather well:

"it’s important to understand exactly what Labour has pledged itself to and the models it is currently examining. The 2017 manifesto committed Labour to taking energy “back into public ownership” in three stages:

Regaining control of the distribution networks through changes to their license conditions.

Supporting local publicly owned energy companies and co-operatives to compete with existing private providers.

Permitting publicly owned companies to purchase regional grid infrastructure and bring the regional and national grid into public ownership over time.

"But as ever, change may also create winners. A new breed of municipally operated or co-operatively run energy companies would increase the market for experienced firms to advise on the structure and work of the new entities as they’re created and begin operation."

So the existing suppliers are not going to disappear and assuming they are able to leverage their larger buying power to remain competitive, there will simply be greater choice of suppliers and contract options for clients (requiring more analysis of quotes - a core service of Inspired) and perhaps to increase the focus of existing suppliers on adding local / social value. Potentially a very positive change. Fill your boots before everyone else realises what is really afoot!"

[owenski] 22/11/2019 07:54

Zero to 13.7%

[melody9999] 22/11/2019 07:15

Miton buying Thornton's holding?

Also Labour has planned to nationalise the big six energy firms, the national energy grid, the rail and water industries, the Royal Mail and the broadband arm of BT.

Will INSE have a business under a Labour govt?

[yump] 21/11/2019 12:58

That's a heck of long overhang from 2017 if its started clearing and the share price performance actually hasn't had anything to do with the business performance or its attractiveness as an investment.

[rivaldo] 21/11/2019 11:30

Peel Hunt's latest forecasts are:

this year : 1.8p EPS, 0.7p divi
next year : 2.0p EPS, 0.8p divi

At 17.5p INSE are still only on a P/E of 8.75 for the year about to start, with a divi yield of 4.6%.

[cheshire man] 21/11/2019 10:40

Mello certainly brought attention to us :-)

[gargleblaster] 21/11/2019 10:34

Yes I saw riv's comments. CEO very impressive. Ignite potential looks good and he was convincing that they will seize the opportunity that this offers.

[owenski] 21/11/2019 09:24

Rivaldo gave a good feedback on that presentation, good perspective of the business.

[brucie5] 21/11/2019 09:11

After 18, 22 in sight.

[owenski] 21/11/2019 09:09

Appears to be a change in direction anyway, would be nice to see a bit more than PI buying volumes.

[1gw] 21/11/2019 08:35

Nice start to the day.

[rivaldo] 20/11/2019 22:42

Good to see the further tick up at the close after a 30,000 share buy.

I think Owenski has hit the nail on the head. Just because the Thorntons built up the business very capably doesn't mean that they were necessarily the right people to take it forward as a much larger enterprise.

The new CEO has done this before successfully, in the same sector, so knows exactly what to do to achieve the same exit route.

[owenski] 20/11/2019 16:38

Thought Janet Thornton was a very capable entrepreneur.

However, INSE's current direction may mean it requires a different managerial skill set. This sometimes happens as businesses evolve, it's not a slur on JT.

[caterham88] 20/11/2019 16:34

Rivaldo, didn't you think the CEO's answer to the question about what happened to the Thornton's was somewhat arrogant? His response was that a business of this size needs professional management, but the Thornton's have built a brilliant business. The RNS's at the time weren't explicit, which will always be a concern to me.

[rivaldo] 20/11/2019 10:38

Moving up, and looking good online. You can sell 120,000 at 16p, but only buy a maximum 50,000 at 16.9p.

[buoycat] 18/11/2019 10:00

Thanks Rivaldo.

[rivaldo] 18/11/2019 09:20

RNS - Gresham House have been increasing their holding quickly.

They now have 15.6%, or 111.45m shares - so they've bought 10m shares in the month or so since their last holdings RNS.....

[rivaldo] 18/11/2019 07:15

No discussion as far as I remember. I think this interesting post elsewhere from "hewn" summed things up nicely:

"it’s important to understand exactly what Labour has pledged itself to and the models it is currently examining. The 2017 manifesto committed Labour to taking energy “back into public ownership” in three stages:

Regaining control of the distribution networks through changes to their license conditions.

Supporting local publicly owned energy companies and co-operatives to compete with existing private providers.

Permitting publicly owned companies to purchase regional grid infrastructure and bring the regional and national grid into public ownership over time.

"But as ever, change may also create winners. A new breed of municipally operated or co-operatively run energy companies would increase the market for experienced firms to advise on the structure and work of the new entities as they’re created and begin operation."

So the existing suppliers are not going to disappear and assuming they are able to leverage their larger buying power to remain competitive, there will simply be greater choice of suppliers and contract options for clients (requiring more analysis of quotes - a core service of Inspired) and perhaps to increase the focus of existing suppliers on adding local / social value. Potentially a very positive change. Fill your boots before everyone else realises what is really afoot!"

[buoycat] 18/11/2019 00:26

Was there discussion of any implications should labour win the general election?

[1gw] 17/11/2019 15:53

Thanks rivaldo.

[cheshire man] 17/11/2019 15:24

Thanks for taking the time to give us your feedback,,,,,,,,all looks very positive going forward :-)