National Grid Share Discussion Threads

[viscount1] 14/9/2022 10:49

"it's £42.8b (current market cap £38.5b), of which nearly half is denominated in USD, which clearly is not good news."

Important to understand that they have USD debt because they have a substantial US business. If they did not have USD debt then they would have huge FX exposure.

[utyinv] 14/9/2022 10:46

As many took a hit over covid, the commercial landlords could have cancelled any lease payments during the time when businesses were shut. Yet again its the middle classes that take the hit to pay for furlough and Sunak’s family income

[newbank] 14/9/2022 10:31

Unastubbs,

As Uty has mentioned its geared that way because of how the Government and OFGEM have set the rules. The revenue that NG receive is based on a complex calculation that is linked to inflation. Customers will have to pay for what cap OFGEM set.

In the past the calculation was far more simple and allowed investors to clearly see the returns , ie, it was based on RPI-X which if the level playing field was to be reintroduced ( which by the way was supported by both Conservative and Labour Governments)then at Current Inflation of RPI being 12% the old calculation would be approx RPI-2% = 10%. But again inflation is not at the norm. The war in Ukraine has pushed up Energy Prices as we know but the massive debt incurred by generous Furlough Payments is easily eradicated by high inflation. That is why many believe the BoE was in cahoots with Sunak and Boris to keep interest rates low, fuelling inflation.

Boris was trying to be the ever populist and appeal to the masses even though his policy, which was never adopted by any other progressive nation, was seen as far too generous.

On other BB's posters have written about analysts saying furlough should have been set at about 35% purely to cover Food, Housing costs and energy payments, so why 80% when no one could go on holiday, hospitality was shut, travel was restricted? Andy Haldane the BoE chief analyst warned the Governor and Government in 2020 that inflation would hit 11% at the end of 2022 due to the money printing used for Furlough. Andrew Bailey said he was wrong, insisting that inflation would peak at 5% and only be transitional. Haldane was sacked. Time has proved either Bailey is a complete fool or he is trying to hoodwink the nation by promoting Sunak's and Boris's disaster recovery, trying to undo a terrible and costly decision to give money away, by mass inflation.

[unastubbs] 14/9/2022 10:08

I'm interested in investing. just want to understand the risks. I've had these before and they did the job in a low interest environment. Things are different now.

[unastubbs] 14/9/2022 10:04

but how does that work in an inflatonary environment? much of the debt is fixed coupon but 36% is not, and if they are only able to make a limited return on equity by statute, isn't the risk that higher interest repayments will snaffle the customer receipts?

[utyinv] 14/9/2022 10:01

Also current market cap is too cheap. All uk stock is cheap. Look at FTSE in 2018 look at it now. Then compare to other indexes.

If a a car Maker ( Tesla ) can have a mkt cap of £1 trillion its not illogical that one of the most efficient Energy Transmission systems in the world should be valued at £72 billion. That would make the share price £20/share.

[utyinv] 14/9/2022 09:54

Unastubbs,

Utilities in the UK have always been geared high because the Gov and regulator require it that way. This is so that the Company can make the necessary capital investments but spread the cost that customers have to pay over 40 years.

All the debt is akin to a guarantee that customers will have to reimburse the company through revenue over time.

If the Country want a reliable and efficient transmission system then customers will have to pay for it.

[unastubbs] 14/9/2022 09:37

Doesn't the debt frighten you when it comes to this stock? According to this

www.nationalgrid.com/document/146596/download

it's £42.8b (current market cap £38.5b), of which nearly half is denominated in USD, which clearly is not good news. Then there's the cap-ex which is £30b-£35b but which itself must be subject to strong inflationary pressures.

With eps at 65.3p and a dividend of 50.97p one has to wonder, prima facie, how this stacks up?

[gbh2] 09/9/2022 16:09

Poor reaction to the FTSE today, in fact it's my worst performer.

[1carus] 08/9/2022 12:52

Hopefully Liz tells OFFGEN to back off so that NG can make more profits to both pay more dividend, raise it's Market Cap and to allow it to invest more in infrastructure here in the UK as it simply isn't worth their effort as things stand.

[medieval blacksmith] 06/9/2022 19:41

It's one thing stating you will keep the dividend going in line with a measured variety of inflation, but of course it is another thing actually being able to afford to.

[unastubbs] 06/9/2022 17:41

very helpful indeed, I appreciate it. regards Una

[utyinv] 06/9/2022 12:55

Unastubbs,

Yes there is. A form of CPI which includes housing costs ie CPIH.

NG were contacted in April from someone I know saying that CPIH in April was 6.1% and they agreed but said the divi is based on the average year to date, so even though in April it was 6.1% 11 months earlier it was only 1.5% hence the average 3.1%.

However, as CPIH is running at approx 10% the average for this year is totting up.

More info may be published on 10th Nov at 1/2 year results

Hope this helps.

[unastubbs] 06/9/2022 11:49

can anyone point me to the dividend policy? is there a stated aim to link to inflation?

[newbank] 05/9/2022 14:11

gbh2,

Well said!

Long overdue.

[utyinv] 05/9/2022 12:54

Not speaking too soon but does the mkt favour Liz?

All eyes on Weds. Some fearing a fall reminiscent to 1992 (anniversary), but could also be just scaremongering especially if weeks later any losses are recovered and the mrkts start to grow. Would love to see the FTSE hit 10,000 if the yanks can do it, the UK can do do too. IMO our stocks are far too cheap.

🤞

[gbh2] 05/9/2022 08:00

Doesn't take much to drive NG down these days, they need to switch to a quarterly dividend.

[gilesy911] 04/9/2022 16:31

US closed tomorrow though

[unastubbs] 04/9/2022 16:23

markets will melt tomorrow, djia down 600+ points post ftse close

[gilesy911] 04/9/2022 15:49

The Markets like Truss

[gilesy911] 04/9/2022 15:48

12.30pm tomorrow

[medieval blacksmith] 01/9/2022 18:10

Oh dear, such a loss.