Share Name Share Symbol Market Type Share ISIN Share Description
Pennon Group Plc LSE:PNN London Ordinary Share GB00B18V8630 ORD 40.7P
  Price Change % Change Share Price Shares Traded Last Trade
  0.60 0.07% 898.00 1,904,465 16:35:10
Bid Price Offer Price High Price Low Price Open Price
895.80 896.80 907.20 887.60 895.00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Gas Water & Utilities 1,478.20 260.30 51.10 17.6 3,782
Last Trade Time Trade Type Trade Size Trade Price Currency
16:51:00 O 76 895.908 GBX

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Date Time Title Posts
10/10/201919:09Pennon into orbit ?965
28/9/201908:45Pennon - South West Water & Viridor Waste137

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Pennon Daily Update: Pennon Group Plc is listed in the Gas Water & Utilities sector of the London Stock Exchange with ticker PNN. The last closing price for Pennon was 897.40p.
Pennon Group Plc has a 4 week average price of 770p and a 12 week average price of 695.20p.
The 1 year high share price is 907.20p while the 1 year low share price is currently 681p.
There are currently 421,113,773 shares in issue and the average daily traded volume is 2,577,190 shares. The market capitalisation of Pennon Group Plc is £3,781,601,681.54.
drectly: It is 100 ADR's equiv to 200 PNN shares, probably the first trade for a few days. The price converted looks the same as London, so my guess, the previous trade in the states when PNN price was much lower. I was not aware PNN was listed in the states. All just my guess, hopefully I am wrong, but I do not think it means anything.
gopher: I wonder what effects index trackers have in amplifying the share price fall. There is a general de-rating of the utilities sector and bond proxies irrespective of individual merit
ohisay: RBC today. UK Water: AMP6 Draft Determination this Friday Upon the transfer of coverage, we discuss how Ofwat's AMP6 draft determination announcement this Friday (29 August) relates to PNN,UU and SVT. In summary, we continue to view PNN as our preferred UK water stock and we downgrade UU to Sector Perform alongside SVT in light of their fair valuations (bar M&A). Pennon - Outperform, 890p price target • Draft determination: PNN has already received its draft determination in April, so it is unlikely to be a material event for the company. • Viridor on track to exceed target of 15% market share in ERF: Viridor's strategy to deliver an additional £100m of EBITDA by FY17E versus FY12A remains on track, and en route, we see the company taking a 17% net market share vs its 15% target. Our report also discusses (1) the capacity gap in the UK waste landscape and how Viridor is geared to take advantage of this; and (2) the UK Capacity Market. • Most progressive dividend policy: We believe PNN's balance sheet supports SWW's AMP6 totex programme, Viridor's ERF buildout, and the extension of PNN's RPI+4% dividend policy. UU - Downgraded to Sector Perform, revised 890p price target (vs 870p previously) • Draft determination: The cat is out of the bag for UU given that Ofwat has pre-published UU's wholesale wastewater totex gap of £769m on 3 Aug. This gives UU two months (instead of one) to find a resolution with Ofwat. Our model now assumes that half of this gap is resolved. • Maintaining dividends on real basis in AMP6. This is underpinned by UU's FFO/Debt which should stay above 11% (vs S&P's BBB- target of 9-10%). • Downgrade to Sector Perform: UU's share price has rallied since Jan-end when Ofwat published its risk/reward guidance. We believe a middle ground on the totex gap between Ofwat and UU is progressively being priced-in. Bar M&A, we see little positive catalysts in the near-term for UU to outperform the SX6P index. SVT - Sector Perform, revised 1950p price target (vs 1850p previously) • Draft determination: We will be looking to see if Ofwat accepts SVT's £6.2bn totex plan, and if Ofwat allows for favourable legacy adjustments, particularly on wastewater. • Tight credit metrics though options exist. We estimate that SVT's FFO/Debt averages ~9.3% in AMP6 and therefore be able to maintain real dividends. Our report discusses how lowering its cost of debt and ODIs could elevate the metric above 10%. • Strong RAB growth underpins investor interest. Real RAB CAGR of ~2%, the highest of its peers,should continue to attract investors seeking sustainable asset base growth in a credible regulatory environment. • Trading at our revised 1950p price target: SVT is trading at 14% premium to FY15E RAB, in line with the implied premium in our price target. Bar M&A, we believe SVT's valuation at these levels afair.M&A - Valuation at your fingertips We believe the potential for M&A will continue to provide downside protection for the UK Water stocks. We see positives in the sector's credible framework with real annual RAB growth, a view that consolidation in the industry is potentially more acceptable, and what appears to be continued appetite for companies with predictable long-term cash flows. Using historical takeout premium of 27%, these equate to following valuations: PNN: 940p (+14% upside); UU: 1060p (+17%); SVT: 2374p (+22%). Priced as of prior trading day's market
miata: RBC Overall, the results highlighted the stability in UK water business and the strength of Viridor's expertise in rolling out the EfW power plants. FY14 weakness in the recycling and landfill operations will be the market's focus today particularly at PNN's 9AM conference call; however, we are encouraged by management's view that recyclate prices have stabilised to some degree and look to this operation bottoming out. Given the lack of catalysts in the UK water space for SWW bar changes in M&A discussion, we look to the recovery of the recycling operations and the continued delivery of the EfW developments (and their ultimate contribution group PBIT) to be future positive catalysts for the stock. FY14 result highlights l South West Water recorded PBIT of £227m, which is in line with our £228m estimate. Given that Ofwat published SWW's AMP6 draft determination in April, there were no additional disclosures to note, and we would expect this business to continue delivering stable cash flow and steady RCV growth. Final determinations for SWW will be published on 12 December. l Viridor including JVs recorded £44m in PBIT which is in line with our estimate. We highlight the following three business segments. o Energy-from-Waste (EfW) – Developments are on time and on budget. 70% of spend on EfW projects under construction are now complete and ~80% of require waste inputs for the committed plants are now secured. Five plants, being Runcorn I and II, Exeter, Ardley and Cardiff, have reached advanced stages of build and are expected to come onstream this financial year. EfW developments remain on target to deliver £100m to Viridor's EBITDA within three financial years. o Recycling – Volumes were down 3%, with recylate prices averaging £93/t for FY14A (versus £99/t last year). Management noted that prices have stabilised to some degree but remain under pressure. Viridor will focus on cost reduction and revenue optimisation for now. o Landfill – The company recorded £48.6m in exceptional impairment and provision charges (worth ~1% of PNN's share price) due to aggressive pricing from competitors. Last year, Viridor recorded around a £189m charge for asset impairments and provisions (primarily in landfill). Note, landfill operations make up only 1% of our valuation for the group.
miata: Looking to the more distant future the dividend yield should lead to a lower share price As interest rates rise PNN becomes less attractive compared with bonds and PNN's borrowing costs will rise. Of course the regulatory review will also be a major factor determining the share price and utility shares tend to decline in the year preceding a review.
miata: 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: Thanks for that LL I am in the Waste Industry myself, hence my interest in PNN, as of Feb 01 the Chinese and Indians are back in the market and are driving the price of recovered goods up, this will aid the share price from Viridor point of view. PNN I think are protected somewhat are they are in a sector that is hedged against inflation. I will watch FENR with interest and may well jump in during the next few weeks, I am hopeful of a slightly better entry point looking at the chart.
miata: Liberum. Putting recycling into perspective, Pennon Group announced a Viridor-inspired profit warning pre-H1 results and this warning centres on recyclates. Recycling accounted for 27% of Viridor's pre-central cost EBIT in 2011/12, at £33mn. This is just 12% of Pennon's EBIT. On our analysis EBIT from their recycling division will fall from £33mn to c.£15mn in 2012/13E. We had an EBIT of £35mn for 2012/13 in our numbers pre Pennon's IMS and this reflects a fall of £20mn in EBIT, a 8% fall, from our previous estimates and is worth approximately 3p/share EPS. We believe that recyclate weakness has been weighing on Pennon's share price for over a year. We see recyclate profitability at 4-year lows, and with just 15% of Viridor's profits now expected from recycling in 2012/13 there is limited downside in Pennon's earnings from this theme. This recycling profitability situation is unlikely to remain unchanged as competitors to Viridor restructure their loss making divisions (e.g. Shanks) or enter financial distress (e.g. Biffa). Even if recyclates were to contribute zero EBIT going forward, then we still see an EBITDA for Viridor in 2015/16 of £200mn based on the current construction of 2mn tonnes of capacity Energy-from-Waste plants. We see an equity valuation range of between £6.30/share (IRR 5%) and £9.30/share (IRR 25%) at March 2015 with a range in valuations from no premium to South West Water's RCV of £3.0bn and 7x EBITDA for the waste business, to 25% premium to RCV for water with an 8x EBITDA for the waste business. These IRRs have nothing in for further EfW build of PPP wins.
miata: 09 Nov Pennon Group PLC PNN HSBC Overweight 0.00 677.50 830.00 820.00 Upgrades HSBC has upgraded its recommendation on Pennon Group to 'overweight' from 'neutral' after the recent stock derating. Shares in Pennon have fallen in value by over 7 per cent in the past month. The City broker has lowered its share price target to 820 pence from 830 pence. Analyst Verity Mitchell said: "On 29 October, as expected, Ofwat published its revised proposals for licence changes. It proposes, among other things, to set alternative forms of price control for wholesale activities. "In 2012, 76% of its operating profit was generated from South West Water, its regulated business. "We estimate this proportion will fall to 59% by 2016 following the commissioning of a number of Energy from Waste projects. "Pennon stock performance has been adversely affected by challenging conditions in waste, which are perceived to be more cyclical than the UK pure water plays. "Our target price implies a potential return of 18.4%, which is above the neutral band; therefore, we upgrade our rating to overweight from neutral."
ohisay: Good article.. Ofwat plans to publish its final consultation on the regulatory framework in December. For Pennon, any proposals for further competition in retail supply are important because of the footprint of its customer base. Operating in the South West of the country, Pennon has fewer heavy industrial customers, with its base skewed to private households. In the current regulatory periods price rises have been linked to retail price index (RPI) inflation. However, the Office for National Statistics has proposed changes to the way RPI is calculated, which could mean that the new method of measuring inflation could be lower than under the current system. This has also created a layer of uncertainty. This cloudy outlook has led to a number of rating downgrades by analysts on the sector players over the past few months. Unique in the UK-listed water companies, about 40pc of Pennon's business does not fall under the Ofwat framework. This, obviously, reduces the regulatory risk. Also, although the price of recycled materials has been weak because of the subdued economic back-drop, analysts are hopeful prices can improve. Indeed, there was good news from Viridor yesterday which has helped reverse the recent decline in Pennon's share price.
Pennon share price data is direct from the London Stock Exchange
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