Pennon Share Discussion Threads

[barniebear] 30/7/2009 08:24

Bought in @£4.61p

[miata] 28/7/2009 09:25

20% ! Typically margins with CMC Markets vary between 1% and 10%.

And as Spreadex have a huge spread of 3.1 on Pennon rolling (CMC spread 0.75) you are wasting our time.

[spreadex1] 27/7/2009 20:39

Hi guys
Just thought you might like to know that Spreadex are taking positions on this stock at 20% margin, which means you could free up the remaining funds with your brokers if you transfer your stock.

No Stamp Duty or Capital Gains Tax!

Please call the financial room on 08000 526570 for more more information

[miata] 26/7/2009 14:45

I think Ashbox (post 283) has got it right. Worth accumulating slowly over the next few months expecting some give by the regulator.

[optomistic] 26/7/2009 10:57

Thanks for posting that MIATA, it certainly highlights a lack of urgency for re entering Pennon. However it remains on my watch list and I will probably buy in again sometime in the future but no rush!
Regards
opto

[barniebear] 26/7/2009 08:58

miata!! Not a strong BUY then!!

[miata] 26/7/2009 08:47

The water regulator Ofwat delivered a stinging shock to water companies with its tough new pricing structure, which wiped almost £500million off the value of the sector. It's good news for consumers, as water bills will fall by 4 per cent over five years and millions will be invested in the industry.

But the firms themselves had hoped to increase prices by 5 per cent next year (or an average of 2.5 per cent over the five years of the review) and were counting on the income to fund their spending on infrastructure.
Water companies have been hit by the regulator's decision

Paying up: Ofwat says companies must also invest £21bn in the water network but the tough stance has been kinder to consumers as water bills will fall

As if that wasn't enough, Ofwat says the companies must invest almost £21billion in the antiquated water network, with £4billion going on improving drinking water and protecting the environment.

It's a big turnaround - as earlier this year it was widely reported that water bills were going sky high, with Thames Water promising a 17 per cent rise for its customers ahead of posting a record £435.1million in pre-tax profit,

Water companies - all of which are monopolies - are widely perceived to be among the greedier industries.

Bills have more than trebled since privatisation in 1989, with the highest in the South-west at an average £450.

Yet the industry has been plagued by leakages. Severn Trent was fined £2million last year for lying about leakage information and £35.8million for lying about hitting key performance criteria and for poor customer service.

Ofwat's chief executive Regina Finn insisted that the companies would still have plenty of money to reach their infrastructure targets - which also include reducing leakage levels by 70million litres a day - enough to fill the Royal Albert Hall 300 times a year, and improving or replacing more than 10,000km of water mains.

'Once we finalise prices in November, we will continue to hold companies to account by making sure they deliver on their investment promises,' she said.

These demands will undoubtedly be a burden on the industry. Plain- speaking Thames water chief executive David Owens warned: 'It's early days but initial indications suggest the draft determination may not allow us to deliver what our customers want in the future. 'For example, this means we won't be able to reduce leakage at all over the next five years.'

In spite of the revelations, the sector remains attractive. But some will find their path ahead a tricky one.

Of the listed companies, Severn Trent (down 81p to 1,032p) has suffered the most, with real price cuts in each of the five years, averaging 1.5 per cent annually.

United Utilities (down 23.25p at 479.25p) has a big cut in the first year of 6.3 per cent.

'It's pretty tough, tougher than we were expecting,' said a senior water analyst. 'There are some geared companies who may be in a pretty sticky situation.

'They're looking cheap because there was a big move today, which perhaps was overdone. We won't know what the outlook is for the sector as a whole until the review is done. And the market doesn't like an information vacuum.'

And that won't be filled until the consultation process ends. Companies and customers can present their views to Ofwat and the final limits on prices will be published in November.

Lakis Athanasiou at Evolution Securities said: 'There will be a lot of horse trading between now and November.

'The profit the regulator will allow them to earn is really the issue.' Sustained deflation would be a problem, he warned, because price rises are linked to the retail price index.

And at Citi, Peter Atheron said that the draft proposals were disappointing but 'were by no means a disaster for the water companies.'

It looks as if the industry will live to fight another day. But unless it is successful in persuading Ofwat to dilute these proposals, they will have to work extremely hard to maintain their historical profit levels - and their dividends.

[ashbox] 24/7/2009 15:09

Presumably the Draft Determination is just the opening gambit by Ofwat and there will be much negotiating behind the scenes between now and the end of November. One would assume that they will meet somewhere in the middle but the share price will possibly drift between now and the end of November. Not much chance of seeing the 6 quid I paid for mine at the top of the market this side of Xmas!

[optomistic] 24/7/2009 12:45

It appears that Ofwat has not been over generous to the water companies, they could well be held back for a while. IMO Pennon could prove a good buy at this price but quite possible it will sink a little lower before stabilizing.
I do like the divi prospects and would like to be in again before the xd. Will have to see how things develope over the next 2 1/2 weeks.
Good luck with your buy WsM812

[miata] 24/7/2009 11:52

Pennon has highlighted what it sees as the key details of the Draft Determination announced by the water regulator Ofwat this morning, as they relate to its subsidiary, South West Water.

The draft determination covers the period 2010 to 2015, known as the K5 period..

The key elements for South West Water include a cost of capital for the industry of 4.5%, 'K' price increases averaging 0.9% per annum over the five years, a capital programme of around £640m at 2007/08 prices, a Capital Incentive Scheme (CIS) score of 110 (water) and 116 (sewerage) and base operating efficiency improvements per annum of 3.1% (water) and 1.8% (sewerage).

South West Water will be making representations to Ofwat over the next few months once it has absorbed the details of the report.

Ofwat will announce its Final Determination for the sector on Thursday 26 November.

[wsm812] 24/7/2009 11:22

Ex-dividend date is 12/08/09 by the way!

[wsm812] 24/7/2009 11:12

Bought back in to these again today, hoping to hold until the dividend and make some capital increase as well.

[miata] 23/7/2009 09:53

Good timing.
-------------

Water customers in the south west could see bills fall by about 6% in real terms over five years - about £30 off an average bill, under regulator plans.

Ofwat is considering curbing South West Water's (SWW) spending plans in its "draft determination" for charges between 2010 and 2015.

SWW, which supplies, Devon, Cornwall, plus parts of Dorset and Somerset, had proposed a 6% rise in bills.

Ofwat will make its final ruling on SWW's plans in November.

[optomistic] 23/7/2009 08:31

Closed my position late yesterday @ 509, can't believe I got it right for once!
Bought into VOD with the proceeds...fingers crossed for the IMS Friday :-/

[optomistic] 22/7/2009 10:32

A few directors buy 25/26 shares apiece and the share price jumps 6p LOL
What next to be announced, Ofwat outcome tomorrow?

[miata] 02/7/2009 10:53

A quality thread!!

This week:
JPMorgan said it expects rising bond yields to weigh on UK water stocks, and it thinks a likely small positive outcome from regulator Ofwat's draft determinations on July 23 is already in share prices.

The broker reduced its target price for Severn Trent (SVT.L) to 1,040 pence from 1,490 and repeats its "underweight" stance as it believes the stock is fully valued at these levels and it would switch into Pennon (PNN.L).

JPMorgan ups its rating for Pennon to "neutral" from "underweight" as its preferred sector pick given its leverage to an economic recovery through its cyclical waste management business.

[optomistic] 02/7/2009 10:02

One good thing about this thread is that there are no arguments and discord as there is on some others. LOL

[enami] 16/6/2009 11:38

UBS downgraded to Neutral from Buy - price target 510p from 495.

[optomistic] 16/6/2009 09:43

The 10p mark down at the open seemed a bit extreme this morning!
Seems to have settled at a better 481/482 now. I can't see this being under 500p for much longer....then I do wear reading glasses :-)

[optomistic] 12/6/2009 08:49

Came back into PNN yesterday @ 478 decided to put them in an ISA so only able to buy 745 for that. The 'iii' ISA comes with no annual charges so seems to me to be a good place to trade in.

[ted32] 03/6/2009 09:50

the independent gives pnn a buy in today's newspaper