National Grid Share Discussion Threads

[action] 03/3/2021 15:00

Will NG benefit with new capital investment allowance as per UK budget? BT is flying on the capital tax allowance.

[mark1000] 02/3/2021 13:40

Good news as they state the divi policy of course the switch to CPI from RPI will save cashflow but make our investment less valuable but its the best we could have hoped for. A good decision in the appeal could well see CPI cancelled and RPI continued. The share price I think assumes the worst and I see upside particularly in the run up to the divi - last year we went over 10.00 it will be interesting to see if history repeats itself.

[bluemango] 02/3/2021 09:34

With more spare funds I'd be buying these now. Reassuring update and the shares should now recover some lost ground.

[newbank] 02/3/2021 09:23

Divi to be maintained ie increasing by RPI for 20/21 thereafter Increased by CPI.

To put this into perspective the RPI in Sept was 1.1% and CPI 0.7%

They are however, challenging the ROE which they hope to resolve with the CMA by October. They are allowed to challenge parts of the proposal without effecting the rest of the agreement.

Conference call on now. Looking positive

[saltaire111] 02/3/2021 07:53

Massive relief that the divi remains. Switching to CPI increases for the future was inevitable and is not a bad result. Better than expected.

Salty.

[keelstow] 02/3/2021 07:40

Divi maintained and ofgem response. RNS released see link in news above

[bountyhunter] 25/2/2021 22:53

Bought PNN back in December then when Pierre pointed out a few home truths (thanks Pierre, I should have done a bit more research before deciding to buy but got out at evens) switched to RIO in double quick time, haven't looked back since.

[utyinv] 25/2/2021 18:47

Tanking in the US.

[bennodean] 25/2/2021 16:44

No real view on PNN Pierre. Sorry.

[pierre oreilly] 25/2/2021 13:51

O/T, Hope no one minds.

Ben - i'm watching pennon pnn. Almost certainly going to buy just after they get demoted from the 100 at the next review. i think ftse100 insts are shorting off their holding atm, hence waiting. Special situation, but i view the lowered divi extremely safe. I'll do it anyhow, but appreciate your view of it.

Psychologically, it's an easy buy for me because i sold last year at 40% higher than it is today. Sum of parts (including 3bn cash i think) much higher than the cap. Sold due to maths of disposing of a business not making any sense and price high). Buying partly because you sold higher shouldn't make any difference of course, but it does to me!

[bluemango] 25/2/2021 13:31

#7629 - thanks. I guess it partly depends on your timeframe. If you can look ahead to maybe 20 years plus of reliable income, that's good enough for me. And it's not all in run down; they're actively future-proofing as well. But don't want to clutter NG thread with off-topic discussion.

[bennodean] 25/2/2021 12:57

Appreciate the replies guys.

Not sure I would be buying PHNX... its a book in run down. And new acquisitions become more difficult to digest due to the legacy nature of the business they consume. Don't let anybody kid you it becomes easier the more times you do it.

And AAZ ? Not sure I sure I fancy a company with a large % of operations in that region

[bluemango] 25/2/2021 10:01

Pierre/Ben

PHNX, steady and safe legacy Life Insurance business, 70th by market cap in FTSE 100, currently pays 6.5% annually. Results out 8th March and should see a dividend increase.

I've learnt the hard way - unexciting is sometimes best!

[kaffee] 25/2/2021 09:38

Thank you Benno, Pierre and Ian for sharing with us all.

If I read it right then you all would be looking at ULVR, NG, IMB, BP. et al ?

[ianguerin] 25/2/2021 06:48

Pierre/Benno - AAZ ?

[pierre oreilly] 24/2/2021 23:34

ben, tr21, 8%.

Can't be replaced - going to miss the 100% safe high income.

For some reason, i thought it matured in Mar, but it's actually June, so a bit more breathing space. All I can think to do with it is safe high income ftse100 stocks. But 'safe' and 'high income' are also relative, and they may not be safe and high income tomorrow! It's a terrible time really to invest a decent slug, and worse still, it's hard to spend any of it atm.

[bountyhunter] 24/2/2021 21:26

Talking of Gilts is that the reason why NG and SSE have seen a downturn of late.

[bennodean] 24/2/2021 21:21

Pierre...do you mind if I ask what the coupon rate was on the Gilt?
And like you I am about to see a large sum (all relative and may not be large to others) about to drop in my lap. What would you suggest I focus analysis on?

[pierre oreilly] 24/2/2021 08:10

Ah, sorry, I thought the mention of actual prices this would go to was based on some actual quantitative analysis resulting in numbers popping out at the end. Fair enough if it's just finger in the air speculation. I'd say the speculation that if the Divi goes down x%, then the shareprice will go down x% is pretty simplistic. No one knows of course, but with divis getting chopped left right and centre in blue chips, I think lower yields (i.e %price dropping less or increasing more than the divi) will be the norm for the lot of them. Pension money institutions take has to go somewhere. The quality of its earnings will keep its relative performance up there with the best.I have a gilt maturing which has been the largest contribution to my income for the last 20 years. It concentrates the mind when a big lump of cash arrives n the ISA and it has to be invested somewhere, else sit there earning nothing. To my mind, the income from ng is safer then just about anything else, and will be a relatively high and safe compared to other opportunities at the moment (for those looking for an income).

[mark1000] 24/2/2021 00:51

Pierre if and its a big IF NG have to cut Divi's we would see the share price fall how big a fall we can speculate but to assume it falls by say 10% or more it would take us into the 7.00 to 7.50 range it will hurt sentiment greatly. I think you will agree that as a utility the dividend is the most important stick to measure this Company by and why we all hold the share. Good point Newbank I do agree they can pay the dividend even if they appeal but they may still have to throw a questionmark over future dividends if their appeal is not successfull they can hardly say we will continue to payout and grow dividends regardless of the result of the appeal. The market hates uncertainty and thats why the share has under performed against the market.

[newbank] 23/2/2021 23:56

Hi All,

We can only wait for the decision whether to refer to the CMA or not, which NG will announce to the City soon.

No point speculating on dividend, because when the water industry referred Ofwats decision to the CMA and won, there was no reduction in dividends at all.

Bear in mind final dividends resulting from the final results is what has been earned from RIIO I.

If you look at SVT (Severn Trent), they actually increased their final dividend by 7.5%

I don't want to speculate, but if NG did appeal then it may not be that bad a deal, as Boris's future plans for a greener energy system can be put into jeopardy if NG are not singing from the same hymn sheet, so to speak. With the massive Climate Change World Conference in Glasgow in Nov, Boris won't give up the opportunity to be seen as a world Statesman fronting a new greener world, giving him a boost in status which personifies his whole personality. AIMO

Not long to wait.

[cocopah] 23/2/2021 18:37

From the RIIO-2 document, I enclose the parts I think will be the most arduous:

• A 16% downward adjustment (on average) to the levels of funding that companies asked for in their Business Plans, reflecting our overall efficiency challenge to them to do more for less
• A great proportion of costs (33-50%) saved by network companies under RIIO-2 to be shared with consumers
• Greater accountability for what companies are asked to deliver, with around 50% of baseline allowances for gas distribution and 70% of baseline allowances for transmission linked to either uncertainty mechanisms or Price Control Deliverables. This will ensure network companies are only paid for what they deliver, and consumers are refunded for work not carried out
• An ongoing efficiency challenge of 1.2% per year across most of the gas distribution and transmission bases, compared to an average efficiency challenge of 0.8% in RIIO-1
• The cost of equity reduced from approximately 7.8% RIIO-1 (CPIH) to 4.55% in RIIO-2 (at 60% gearing), with allowed returns forecast at 4.3% to reflect expected outperformance of 0.25%.

The above is a straight copy and paste job, however without knowing what the company submitted it’s only one half of the equation. Given that NG were quite unhappy with the proposals I can only imagine they are more than a little far apart. One can’t add up the percentages because it’s not the way it works but it must build up from at least a base of say 25% impact ...🤷‍♂️

[boystown] 23/2/2021 17:58

Hi Mark1000 and thank you.

I got lucky at the end of 2019 having held for a few years when I re-evaluated the company and sold at 1040p.

FWIW, I bought back in today at 828p as it looks good value, again, to me. I have factored in a likely dividend cut due to Ofgem etc., bearing in mind, it's fallen 5.5% since RIIO-2 was published on December 8th.

[pierre oreilly] 23/2/2021 17:47

Mark and coco - What assumptions and estimates did you use to get to those estimates? Wouldn't mind seeing the numbers and working out you used. (I haven't done any yet).