Pennon Share Discussion Threads

[sllab101] 20/5/2013 15:27

U.K. Water M&A Boosted by Lower Financing Rates, Goldman Says

[mroalan] 20/5/2013 14:33

out today on this rise, looks bullish though.

[sllab101] 20/5/2013 13:11

VIRIDOR'S 26 MW WASTE TO ENERGY PLANT GETS GREEN LIGHT IN BEDDINGTON

[miata] 03/5/2013 15:13

The prices at which to buy and sell are in the header.

[volsung] 03/5/2013 12:16

Kaz says for me to buy these. So like a good boy I obey

[miata] 03/5/2013 08:28

HSBC:
The Ofwat chairman's concerns on highly leveraged company structures may dampen M&A enthusiasm. We believe Ofwat is no longer structure-neutral so we believe prospective acquirers of UK water companies would be better to wait until further regulatory clarification is made on this point. We believe it is too far into the regulatory review to expect M&A activity in the short term.
Another dampening factor for the water companies is the prospect of them missing regulatory targets. HSBC said heavy rainfall had led to an increase in pollution incidents which could be taken into account when Ofwat considers any penalties for the companies. HSBC said:

We note that Severn Trent is still not meeting Ofwat's requirements for unplanned interruptions and serviceability of water infrastructure and is not meeting Ofwat's standards on eight metrics; United Utilities is failing on sewerage infrastructure serviceability; and South West Water (Pennon) is failing significantly on discharge permit compliance (satisfactory disposal of waste water) and pollution incidents.
The bank kept its overweight rating on Pennon, down 4.5p to 681p, but cut its target price to 775p from 780p. It downgraded Severn Trent, 5p lower at £18.16, from neutral to underweight following a strong performance, and raised its target price on United Utilities, up 5p to 745.5p, from 775p to 795p with a neutral rating.

[miata] 24/4/2013 14:16

Almost a third of an average water bill – more than £100 a year – goes on profit, compared with 9 per cent in the energy sector, a new report claimed today. Water bills have risen more than twice as fast as pay over the past decade in an industry which is now 'out of control', a study commissioned by trade union body, Unison found.

Earlier this year, industry regulator Ofwat announced a 3.5 per cent increase in the average annual bill – a hike of £13 bringing the total to £388 a year.

The research, conducted by the New Policy Institute, also found that water firms were making 'huge profits'. And it claimed that bills had trebled since the industry was privatised in 1989, well above increases in the rate of inflation.
Water bills have soared by 64 per cent in the past 10 years compared with 28 per cent for average earnings. If the average bill had done no more than keep up with earnings, it would now be an £71 a year lower, claims the trade body.
The report also claims that high prices are due to a lack of competition in the industry. And that many water companies have now run up heavy debts, despite previous arrears being written off upon privatisation.

[ohisay] 15/4/2013 07:26

More bid talk about UU in the Times at the weekend.

[miata] 06/4/2013 09:43

'Recycling'

[miata] 04/4/2013 17:20

The question is would UU. be a better bet.

[apad] 04/4/2013 13:03

The Viridor-Pennon separation is mostly impeded by Viridor benefiting from the very low cost of capital that Pennon enjoys.
Now is not the best time to float or sell a waste company.
This, however, will be the case in future when Viridor has an income stream from operating Energy from Waste plants. These will be a boom in EfW over the next few years and it is the best reason for buying a regulated Utility, such as Pennon.
apad

[miata] 04/4/2013 11:54

SocGen

While recent press reports have suggested Pennon could be the subject of a potential 775p per share bid approach from the Abu Dhabi Investment Authority (which on our estimates would represent a 23% premium to South West Water's 2013 adj. RCV), in general the level of bid speculation in the sector has subsided from the last round of United Utilities related bid speculation prevalent in February.

Historically Pennon has been viewed as a less likely M&A target given its large non-regulated waste activities (Viridor), however the recent press report suggested the Viridor would be subsequently divested. While we note that the separately owned Masdar Capital fund in Abu Dhabi has historically expressed an interest in the UK waste sector2, its funds under management ($540m) are relatively small in comparison to the scale of Viridor (est. £1.5bn EV).

Without existing ownership of a large existing waste management business from which
material synergies could be extracted, we would view a SWW / Viridor separation as
problematic in the near term given the balance sheet support the Pennon parent company provides (supported by the regulated South West Water activities) in funding Viridor's Energy From Waste investment programme and the likely loss of £300m of balance sheet "equity" which could result from a change of control induced redemption of the hybrid bond issue.

Although the recent performance of the United Utilities equity price suggests that bid
speculation has diminished, we note that UU CDS remains at a near record level (175bps) reflecting debt market concerns regarding a potential leveraged take-out which is not mirrored to the same degree in the equity price (either in the equity or the option implied volatility).

While the United Utilities CDS market has limited liquidity, it is unlikely that this divergent view between the debt market and equity market will be sustained. We believe the current share price does not reflect any bid premium to the estimated fundamental fair value estimate (796p), effectively offering a free call option on any potential M&A activity.

[stevieweebie2] 03/4/2013 14:16

775p would make me a happy bunny

[scoble2] 03/4/2013 08:37

bid talks on

[miata] 09/3/2013 08:34

Investment analysts at Credit Suisse lifted their target price on shares of Pennon Group (LON: PNN) from $9.92 (660 GBX) to $10.07 (670 GBX) in a note issued to investors on Thursday. The firm currently has a "neutral" rating on the stock.

Several other analysts have also recently commented on the stock. Analysts at Societe Generale reiterated a "hold" rating on shares of Pennon Group in a research note to investors on Tuesday. They now have a $10.39 price target on the stock. Finally, analysts at Bryan Garnier & Cie reiterated a "buy" rating on shares of Pennon Group in a research note to investors on Friday, February 15th. They now have a $12.40 price target on the stock.

Other stocks will, currently, give you a better overall return, particularly those benefiting from the depreciation of the pound.

[turbomouth] 09/3/2013 08:09

Large piece in Moneyweek giving it a Buy recommendation and tuck away for the long term.

T

[nerja] 15/2/2013 10:26

I thought the 650p level would act as support, now looks like a slow drop to the 600p level again.

[enami] 14/2/2013 08:41

Market not best pleased with the IMS.

"Overall trading performance of Pennon Group remains on track to meet management expectations and is in line with market consensus."

"South West Water is continuing its strong performance against the 2010-2015 regulatory contract and is well placed to outperform its assumptions."

But -

"As previously flagged, trading in Viridor has been significantly below the level of last year with recyclate prices falling back from their 2011 peak reflecting world economic and market conditions."

[miata] 13/2/2013 08:41

FTSE lost 17 points due to XDs.

[nerja] 13/2/2013 08:06

Anybody know why the gap down this morning?
TIA