Sdcl Energy Efficiency I... Share Discussion Threads

[cc2014] 10/12/2024 11:02

I imagine you are not the only one Chucko

tbh I'm a little frustrated right now. Someone keeps selling down the renewables sector for whatever reason in volume and I'm surprised it hasn't come to an end by now.

I'm quite a patient person and I know that sooner or later the mood will change but nothing seems to have any impact. FGEN have sold another asset at just above NAV and yet the market is again completely disinterested.

[chucko1] 10/12/2024 10:34

CC, I've now rid myself of the easy gains (buying at sub 50p was basically a statement that panic had overtaken clear thinking), but the core holding is a keeper for a long while yet.

[cc2014] 10/12/2024 09:08

I am more in the place that the sector sell-off is Trump as I've seen no other explanation.

What's puzzling me most is that it needed the fund manager to tell the market their income stream was largely independent of energy prices to reset the share price. It appears none of the analysts bother to read anything any longer relying on presentations to get their information.

As I sit here writing now someone is out collecting stock this morning at above yesterdays' close, usually an indication they want plenty.

[spectoacc] 09/12/2024 16:07

Flamboyant rhetoric :)

Not convinced much of the sector fall is Trump-related - few of mine have much going on in US, & those that do (GSF; SEIT) aren't much affected.

Eg BSIF, FSFL etc.



"Kepler View

In the weeks before SDCL Energy Efficiency Income's (SEIT) results announcement, the Morningstar Renewable Energy Infrastructure peer group in which it sits experienced significant discount widening, seemingly a result of the US election and investor worries about the different approach the new administration is expected to take to renewable energy. Share prices of other renewable energy companies were similarly hit. While it's quite likely in our view that this is a sector-wide over-reaction, SEIT has some specific differences in its business model compared to the peer group.

First, the vast majority of SEIT's revenues do not rely on any form of subsidy or incentive, and its projects are primarily rooted in their commercial attractions. Second, SEIT has very limited merchant exposure, with most of its long-term revenues contracted, and low direct exposure to power prices. SEIT is really an equity investor in platforms that provide corporate customers with efficiency solutions, so it participates not only in the contracted revenues that come from these solutions, but in the growth of the platforms themselves. Third, SEIT's project-level debt is mostly amortising and so is repaid over a period of time, with many of its assets and investments extending well beyond the life of the debt, giving the trust different options in the future to enhance earnings. The team also point out one of the first moves made by the new US administration was the formation of a new Department of Government Efficiency, so 'efficiency' appears to be a positive theme in the US, which SDCL counts as its single largest country exposure at 67%.

Without getting into the flamboyant rhetoric, it is fair to say that the incoming US administration has an agenda much less focused on 'energy transition' and whatever the practical realities that unfold over the next few years, this is a negative for investor sentiment right now. We think SEIT's business model, while aligned with energy transition, is relevant to customers with concerns about energy security, either more locally due to extreme weather events, or more widely due to geopolitical instability, as well as more straightforwardly simply helping customers to reduce costs. Thus, in our view, SEIT's business model doesn't really align with the main negatives of investor sentiment, and as the board's plan to address the discount unfolds, the current discount could prove to be a significant opportunity."

[igoe104] 06/12/2024 22:23

SDCL Energy Efficiency rallies as fund plays down Trump threat.

[chucko1] 06/12/2024 16:37

Yes, but gold dust for those with a trading mentality.

[2wild] 06/12/2024 14:44

Quite so. Now up 18% from 49.6p Lower few days ago. Amazing how a few forced sellers can wrecker share price.

[cc2014] 06/12/2024 14:04

Considering how many shares went through at prices lower than this, the amount coming back on the market for a quick profit is very low.

It's a strange world.

[2wild] 06/12/2024 11:08

Trading above 57p. Looking good for 60p,before going Ex dividend nextwee.

[skinny] 05/12/2024 15:01

Specto :-)

[hpcg] 05/12/2024 14:42

Price action today isn't encouraging me to sell. It's some pretty good follow through and suggests perhaps a return to the support line at 60.

[spectoacc] 05/12/2024 13:36

Thanks. Post #515 ;)

[igoe104] 05/12/2024 13:00

Edison note.

[cc2014] 05/12/2024 12:41

I'm being offered 55.96 to sell 100k shares against a spread of 55.8-56.0p

Interesting

[cc2014] 05/12/2024 09:37

hpcg. I'm sure you have been at this game long enough to know there is no clear answer to your musings on whether to hold or trade. It's a question I ask myself over and over but if we knew the answer to it out pots would be 10 times the size they are now.

Clearly for the last couple of years the renewables have been in a downtrend and therefore buying when oversold and selling into the bounce has been the way to go.
Whether that trend will continue is unknown.

I do not think the trend will continue and so I'm going to hold and try not to sell out too early on the rise. I am not going to try and be clever by selling out and then buying back on the dips. Not until the share price reaches 65-70p anyway.

This is also because with dividend yields at around 12%, that's 1% a month so the cost of being in cash is now significant. One might argue of course that the cost of cash is irrelevant and perhaps a better matric might be the opportunity cost of whatever other safe share it is you like.



With regard to SEIT in particular, I think it worth waiting a while to see if
a) GASC come in for more stock as they were possibly in a closed period, noting when they bought a large quantity earlier in the year they were a bit tardy in putting out the RNS's

b) SEIT's biggest issue is that they need an investment partner as they have more opportunities than available cash/debt. GASC should be able to facilitate something around this if it is indeed not themselves.

All imho of course.

[2wild] 05/12/2024 00:31

What good news? September's figures were Burley changed from June. As per my post on Tuesday, a relief rally was always likely in the absence of terrible news.

As for your dilemma hpcg. It probably depends on your conviction level at 63p. Apart from the irrational price fall has anything changed to alter your view of the company's prospects? Perhaps top sliced 10 to 20% of your new combined holding. With another top slice just before going ex dividend.

[hpcg] 04/12/2024 19:18

I expect the price to fall back again. So many times this calendar half a stock has seen eager buying of self evidential good news only to revert to a downward trajectory as selling by significant holders overwhelms the trickle of continuing ex-news buys. The question for me is do I act on that and sell my purchases of last week for a 10% turn in short order, or be satisfied with that timing and locked in price, versus for example what I purchased at £0.63 all in a little more than a month ago? Trading swings in value is something I find hard to execute on.

[2wild] 04/12/2024 19:16

I was thinking 60p before going Ex dividend next week. Halfway between 12 month low and 12M high prices.

[wshak] 04/12/2024 17:36

I think they will be if General Atlantic are buying again.

They may have been inside before.

[spectoacc] 04/12/2024 17:24

Including a 900k O reported after hours, at 55.5p, which can only be a buy (IMO).

Suspect seller still there, but difference now is the buyers.

Hoping for 65p+ here, over time, plus divis.

[cwa1] 04/12/2024 17:19

Decent volume gone through today too

[badtime] 04/12/2024 15:19

Dipped toe in at 50p ..now wish I had put my foot in lol

[stemis] 04/12/2024 15:06

The issue isn't really about the quality of the businesses (which non of us really know) but valuation. Onyx 'may' be a great business but does >40 x ebitda represent a reasonable valuation for a business which "During H1 2024 their operational assets performed below budget due to a combination of lower solar resource and technical underperformance at some of the sites"?

The market clearly believes not.

[cc2014] 04/12/2024 13:26

The way I see it is that it sometimes helps to stand back and look at the investments

Take Onyx. The actual issue here is that it's too successful and SEIT cannot provide the capital to meet all the work available. What a problem to have. SEIT made it clear in the presentation they have no obligations to provide additional capital. A co-investor would be the best route.

Next the steel plant to which SEIT provides energy recovery. This industry like a number of the other dirty industries on the old Eastman Kodak business park (and newer energy intensive customers) is going to be a big beneficiary of Trump tariffs. If the US imports less steel by definition that's good for SEIT's tenants and thus SEIT.

I could go on.


It is my opinion that this trust is misunderstood by those who cannot be bothered to find out what it actually does and have some information from a data provider in front of them and that's all.

I for one am happy to take the opposite side of the trade from them. Of course as Chucko says it's about timing. If you stupid enough to by buying above 100p, then you are probably stupid enough to sell at 50p, which is what it seems Rathbones are doing