Pennon Share Discussion Threads

[miata] 07/1/2014 11:55

07 Jan 2014 Pennon Group PLC PNN JP Morgan Cazenove Overweight 666.00 664.00 745.00 700.00

JPM downgrade SVT to Underweight. They retain their Overweight recommendation for PNN and Neutral recommendation for UU, although have reduced price targets for both companies by 6.0% and 1.7% respectively to 700p and 735p.

[apad] 10/12/2013 12:49

PENNON GROUP PLC

10 December 2013

25-year Residual Waste Treatment Contract signed with five Authorities across South Wales

Pennon Group Plc is pleased to announce that its subsidiary, Viridor, has signed a Public Private Partnership (PPP) contract with Cardiff Council, acting on behalf of Prosiect Gwyrdd, a partnership of five local authorities from across South Wales, to treat the councils' residual waste over the next 25 years.

The waste from the five authorities: Cardiff, Monmouthshire, Caerphilly, Vale of Glamorgan and Newport, will be treated at Viridor's Energy from Waste (EfW) facility that is currently being built at Trident Park, Cardiff, and due for completion in 2014.

Prosiect Gwyrdd will deliver an average of 172,000 tonnes of waste per year with the plant also taking up to 178,000 tonnes of commercial and industrial waste from across South Wales.

Operating at its full capacity of 350,000 tonnes, the facility will generate 28 MW of power by producing electricity, enough energy to provide 50,000 households entire electric needs. Viridor is also working with Cardiff Council on future plans for a district heating network, which could increase the power generation through electricity and heat to 43 MW.

Capital investment in Trident Park is GBP223m and the plant is being built by CNIM and Lagan Construction. Capital funding for the project has been provided by Pennon. Trident Park is expected to be earnings enhancing in its first full year of operation.

[apad] 08/12/2013 19:42

IC view
Pennon promises price freeze
Mirroring similar customer-friendly proposals from peers reporting earlier in the week, Pennon (PNN) announced a tariff freeze for its South West Water business next year. The company said this can be achieved without hitting shareholder value as water regulator Ofwat will take the lost revenue into account when drawing up plans for the 2015-20 regulatory period. Pennon will submit its business plan for the 2015-20 review on 2 December and will propose average bills below inflation over the period.
South West Water's first-half revenues rose 5 per cent to £269m and operating profit rose 6 per cent to £121m. Overall, a 1.3 per cent above inflation increase in tariffs, and new connections, helped offset the impact of customers switching to metered charging.
Recycling unit Viridor remained a drag, though, as it grappled with tough conditions in landfill. "We recognise it's a declining business," said Viridor chief executive Ian McAulay. The recycling side of the business has also faced challenges as prices for recycled materials have dropped due to competition and global economic headwinds. But there were some signs of stabilisation with recycling margins improving, thanks to cost-cutting – there are promising prospects for the energy from waste business, too.
Broker Whitman Howard expects full-year adjusted EPS of 42.9p (from 7.4p in 2013).
C Pennon's shares are up since our sell tip (606p, 29 November 2012), but they've underperformed the FTSE All-Share by 10 per cent in that time. Pre-emptive moves to keep water bills low has taken some of the regulatory pressure off and Viridor does seem to be steadying, so we move to a hold.
Hold

[essentialinvestor] 06/12/2013 08:16

OK, thank you for that.

[apad] 06/12/2013 07:06

Hi EI,
FWIW I've got an alarm set for £6. Currently 2.5% of portfolio and would like to double.
Looks like Pennon are trying to defuse the row in advance but I am relying on a Pavlovian response from the politicians.
apad

[essentialinvestor] 05/12/2013 15:36

APAD, if you are around, do you see further downside here?. TIA.

[miata] 28/11/2013 08:32

The interim dividend of 9.39p per share represents an increase of 7.2%, in line with the previously announced policy to grow the Group dividend by 4% per annum above inflation up to the end of 2014/15. The dividend will be paid on 3 April 2014 to shareholders on the register on 31 January 2014.


Viridor believes that up to 6% of electricity could come from waste sources by 2015.

[apad] 28/11/2013 08:06

Significantly more EfW to come on stream in 2014/5.
Massive Capital expenditure in pre-OFWAT review years.
Need to wait until the electricity political furore is over then it will be our turn.
Then I will increase.
apad

[ohisay] 28/11/2013 07:18

Decent results today though Viridor still underwhelming - plus..

To reflect customer preferences South West Water is therefore
announcing a tariff freeze for 2014/15, which will be achieved
without loss of shareholder value. This is due to Ofwat's support
for the company's proposal that the revenue foregone in 2014/15
will be taken into account in the forthcoming price review.

In addition to the 2014/15 tariff freeze the company is proposing
that there will be no average bill increase in 2015/16 followed
by below forecast inflation increases to 2019/20.

If that isn't transparency going forward I dont know what is.

[miata] 26/11/2013 16:31

26 Nov 2013 Pennon Group PLC PNN RBC Capital Markets Sector Performer 633.25 636.50 650.00 650.00

26 Nov 2013 Severn Trent PLC SVT RBC Capital Markets Underperform 1,758.00 1,785.00 1,580.00 1,580.00

26 Nov 2013 Pennon Group PLC PNN JP Morgan Cazenove Overweight 633.25 636.50 745.00 745.00

[ohisay] 24/11/2013 02:01

Should be an interesting couple of weeks.
If it isn't an incipient end to tapering in the US its political points scoring here.



Both Jonson Cox, chairman of water regulator Ofwat, and Owen Paterson, the Environment Secretary, have written to the water companies, calling on them to consider forgoing price increases for 2014-15 that they were granted under a price review five years ago.

In eight days' time companies will submit spending plans – and charges to consumers – for the next five years.
"With political pressures around affordability growing, the companies will need to respond at their results and in business plans," analysts at Deutsche Bank wrote.
"If the companies gave up the real component of their allowed price rises, this could impact 2014-15 earnings by [approximatley]3pc for Pennon and 5pc for United Utilities," Deutsche Bank said.

The analysts expect United Utilities to report operating profits up 7pc at £338m and Pennon to see a 3.6pc increase, to £141.2m.

After selling at 680p - and depending on PNN's results - I'd be looking at getting back in on any serious weakness - for me something around 580p.
Like others I think it could easily overshoot on the downside .

[apad] 22/11/2013 13:08

There's going to be a great opportunity to top up when a couple of politicians sound off.
apad

[miata] 22/11/2013 12:15

Don't be mystified, the political pressure is on all regulators to keep bills down prior to the next election, Ofgem's actions are merely the latest sign of that. Ofwat's denial of Thames Water's application for an 8% increase and the Environment Agency decision not to levy abstraction charges for the next two years are other signs of the pressure to hold down bills for a while.

[enami] 22/11/2013 12:12

Yes I read that on the SSE thread, that's OFGEM, I thought this was under OFWAT so I am a bit mystified.

[miata] 22/11/2013 12:05

Negative regulatory climate.

Ofgem has reportedly told a number of UK energy providers that they must take bigger measures to cut consumer bills.

[enami] 22/11/2013 11:54

What is the reason for today's slump?

I see results due next Thursday, a leak?

[miata] 10/11/2013 10:15

If you look at recent history (though not admittedly during the years of the financial crisis) you will note a downtrend into November OPtions EXpiry, this is the result of US tax laws (basically US funds realising their losses for the US tax year to offset their gains).

IF it happens this year, I expect a reversal (as the funds are re-invested) in December.

[apad] 10/11/2013 08:45

M
I agree with your comments and am looking to add on political reactions.
Why next Friday?
I would add that I see significant potential in their energy from waste projects and believe that they have kitchen sinked the costs associated with recycling already.
apad

[miata] 09/11/2013 23:48

Torrent of water price hikes in the pipeline as cost of average annual bill set to rise to over £400

The price of water is set to become the next battleground over the cost of living, with some companies likely to raise prices by an inflation-busting near 5 per cent early next year – pushing the average annual household bill over £400.

[miata] 08/11/2013 15:58

As I have previously mentioned, utility companies tend not to perform well in the run up to a five-year review announcement (there is no specific timetable for that announcement but it is expected by end January 2015).

Nevertheless any sharp dip is probably a buying opportunity.

Perhaps next Friday?

[redartbmud] 08/11/2013 13:39

MIATA

Thanks for the vote of confidence. Time will tell, but in the meantime my "safe" SIPP is being kicked around like a football by the "well intentioned and well informed" politicians.

Somebody should start up a petition to get "red" Ed and "flat" Ed out of office!

red

[miata] 08/11/2013 08:18

Don't be taken in by hype, they are not under pressure.

[redartbmud] 08/11/2013 08:04

I would have thought the HSBC comment ill advised, if the water firms are under pressure from No10 to limit prices immediately prior to them having to submit price plans next month for 2015-20.

[miata] 08/11/2013 07:39

UPGRADE.

08 Nov 2013 Pennon Group PLC PNN HSBC Overweight 645.00 645.00 760.00 740.00 Upgrades

[ohisay] 07/11/2013 15:49

Anyone see the Sunday Times article (P24)?.
More gruesome political meddling from Red Ed.



LABOUR is to broaden its attack on Britain's utilities from energy to the water industry with claims that companies overcharge and use complex offshore financial vehicles to help avoid more than £100m in tax.

The opposition's assault on water firms, led by Maria Eagle, the shadow environment secretary, is the latest phase in party leader Ed Miliband's offensive on the big businesses he blames for keeping the cost of living unreasonably high.

It comes ahead of next month's deadline for water firms to submit price plans for 2015-20. They are under strong pressure to cut bills.

Downing Street will announce measures this week to help reduce water costs for customers. Labour, however, believes there needs to be a wider assault.