Pennon Share Discussion Threads

[dartboard1] 09/10/2020 11:17

Good reason for the directors to keep hold of some funds and do an acquisition, hopefully not a silly one. The directors wouldn't want their salaries to be reduced down to FTSE 250 levels...

[gateside] 08/10/2020 17:24

So with the surplus cash being returned to shareholders, I assume then PNN will be demoted to the FTSE250?Wonder what effect that will have on the share price?

[dartboard1] 08/10/2020 16:23

Which in a perfect world is reinvested in earnings accretive acquisitions or capex that generates ROI... take your point though. Also, will they be subject to a big capital tax gain on the sale?

[essentialinvestor] 08/10/2020 16:04

An expectation the sum returned will be lower.

[dartboard1] 08/10/2020 15:20

Correct, although I think the MC has moved since I did it...Current market cap - 4,320mLess net proceeds of 2,764mGives MC following return of 1,556m88/1,556 = 5.7%Note that using this new MC and continuing PBT of 193m 1,556/193 = 8This seems way too low compared to peer group, so please if anyone can point out any errors from the back of envelope

[essentialinvestor] 08/10/2020 14:31

Right so let me get this straight, the net proceeds of Virdor = £3.7 Billion
- £1 Billion in debt repayment and £33 million in pension payments leaves £2.665 Billion. If that remaining sum is returned it equates to a yield of 5.9% on the 21.11 pence annual dividend?.

[dartboard1] 08/10/2020 14:18

I calc it as 5.9%This is assuming all surplus from viridor is returned to shareholders via buyback, will be less if there are acquisitions instead.21.11p going forward = 88mAlso assumed the retirement of 900m in debt and 36m pension contribution from sale proceeds (announced).This is my largest holding...

[essentialinvestor] 07/10/2020 15:06

Has anyone calculated what the yield is on the new dividend policy,
thanks in advance.

[sllab101] 25/9/2020 14:07

No news on cash untill November

[dartboard1] 25/9/2020 07:43

Yep, no surprises... but keen to find out what they're looking at doing with all that cash

[gateside] 25/9/2020 07:09

Solid trading update. Good sector to be invested in right now.

[lasata] 25/9/2020 07:08

Decent results?

[rimau1] 18/9/2020 17:18

RBC Capital analyst Alexander Wheeler reinstated coverage of Pennon Group with an Outperform rating and 1,150 GBp price target. The analyst believes Pennon is trading below its fundamental valuation, with upside potential from accretive acquisitions as the market awaits further clarity on it will do with the remaining GBP 2.7B of Viridor cash proceeds.

[rimau1] 07/9/2020 15:06

£10 was an absolute gift

[rimau1] 25/8/2020 16:04

Yep, but its at an interesting level. They have £3.7bn of cash for a £4.2bn market cap. 21p dividend on £10 is 2.1% yield growing above inflation and that is before a shareholder return of x so the liklihood is a growing yield from a higher base. For a low risk alternative to a bank account i would buy these all day at this level. Unlikely to get any steer on return levels or earnings enhancing acquisitions until November so i would drip feed as it continues to fall. Risk reward good here IMO

[essentialinvestor] 25/8/2020 15:35

All the excitement here about the Viridor disposal is long gone.

[rimau1] 21/6/2020 12:14

Ok dik. Do let me know if you short this because i will be interested to see how that ends for you!

[gateside] 21/6/2020 10:25

I'll probably reinvest any capital return back into PNNAgree high chance of takeover and well run company. Good low risk investment.

[diku] 21/6/2020 10:22

No correct board...I put on my specsaver glasses...

[rimau1] 21/6/2020 10:17

Wrong board Diku!

[diku] 21/6/2020 09:58

Is it time to short this?...remember all the euphoria brings it back down to Earth...double top or triple top?...

[rimau1] 21/6/2020 09:16

Yes of course it will drop when it goes ex div. when you withdraw £10 from an ATM your bank balance goes down by £10! This is not a very small part of the investment case (that today the sum of the parts is still greater than the whole). The point is, post sale and post capital return my investment case is that over the next 2-3 years there will be a small lean efficiently run utility with an inflation linked secure dividend of 3%+ that will be of interest to many suitors such as infrastructure, pensions and private equity companies. Management is strong and the money they set aside for growth opportunities should be invested well. The uncertainty is only The level of the new rebased dividend and the form of the capital return. Given bank interest rates are zero and markets are almost at pre covid levels IMO i think this is an interesting low risk play. I added at £10.80 over the past 2 weeks To my initial £9 entry and i think this is a nice part of a balanced medium term portfolio. All IMO

[bluemango] 20/6/2020 18:27

Sold out a couple of weeks ago mainly because of the uncertainty but also the lower yield to come. Yes there'll be a special dividend for those holding on but surely it'll drop like a stone once it goes ex-div so it'll be like paying with one hand but taking with the other?

[rimau1] 20/6/2020 10:10

Expecting sale completion any week now and details on the capital return and dividend policy. Still comfortable topping up under £11 and looking for £13 over the summer. Absence of a share buyback and a 3%+ dividend and there will Be a rerate when everyone does the calcs and factors in M&A of a much smaller sized efficiently run utility. Bit of a calculated gamble i admit but risk reward under £11 is to the upside IMO.