Smart Metering Systems Share Discussion Threads

[lennonsalive] 06/8/2013 15:20

Latest contract win is PERFERRED, so if that company want to use somebody else they will!

[ar4plcscom] 15/5/2013 10:32

The price has now hit 300.
Can a takeover be on the cards?

[sharespeculator] 03/3/2013 16:19

Ok 10% ahead of expectations but I can't get my head round such a high valuation. £194m!! Seriously?

[pjhutchy] 16/1/2013 08:29

Maybe the markets price tag is correct. Results to about 10pcent above expectations

[pjhutchy] 10/1/2013 21:29

Wow someone sold 1.5m quids worth must be a director sell. Don't blame them on this high valuation. 95p or would be about Right for this one.

[grigor] 16/11/2012 21:39

Bad news at Melrose concerning Elster

[string] 06/11/2012 10:01

Great news, well positioned company

[energeticbacker] 18/6/2012 17:20

High quality earnings but 21x 2014 adjusted earnings per share looks somewhat rich

[lennonsalive] 17/4/2012 12:42

Stock to Watch: Smart Metering Systems

By Edmond Jackson | Tue, 17/04/2012

Despite the failure of a similar company that listed on AIM in the 2000 technology boom, 'remote metering for utilities' has returned to the stockmarket via Smart Metering Systems (SMS), also Energy Assets Group (EAS), which floated on the main market just a month ago via a £15 million fundraising.

Potentially huge prospects but will the market evolve as hoped?

SMS has just reported its first annual results since it floated last July at 60p, raising £10 million. Founded in 1995, it currently trades at about 111p capitalising the shares at £92 million. This reflects expectations of scope to transform a small company and after pre-tax profit consolidated around £1.6 million in 2009-10, SMS has reported progress to £3.3 million - implying a price-earnings multiple (P/E) a whopping 38 times this outcome, with Cenkos Securities, SMS's broker, projecting £4.9 million for 2012.

There is no yield, albeit an intention to pay a maiden dividend in the current financial year, possibly in November. But the crux for value is really whether SMS can achieve the exponential growth hopes in the share price.

While gas connections grew only 4.5% to 254,000, the total meter portfolio rose 19% to 254,000 and significantly, the client base has grown from 12 to 15 gas suppliers representing 80% of the industrial and commercial market. This is a dominant market share, should energy companies change to 'smart' applications such as remote reading and regular consumption data, so SMS's evolution will be interesting.

It explains why institutions such as Cazenove, Liontrust and Odey have been attracted to buy in, and appears similar to Advanced Technology UK, a remote access metering company (I previously followed) which applied radio telemetry and listed on AIM in 2000. This company had an ex-Siemens chief executive and Clare Spottiswoode, the former gas regulator now multifarious plc director, as a non-executive director buying shares. Fidelity Investments acquired a 20% stake.

Finding UK utilities lethargic at that time, Advanced had promising leads in developing countries, where it made economic sense to jump straight to this kind of technology. But expected growth failed to materialise and the company fizzled out in acrimony.

Trading interest in SMS therefore relates to the dynamics of value - both underlying and in terms of the share price - relative to the emerging story. Longer term it may have potential for a multiple of the near £100 million capitalisation, but the path getting there could be bumpy - offering useful trading opportunities. If the company hits snags delaying hopes then this could attract short sellers.

I would also note that shares in relatively early stage companies are prone to attract a high P/E which catches investors by surprise: when the numbers come through, even if they are very good the market can de-rate the shares just because the rating was too high.

SMS has not attracted any director or senior management buying in the market, and selling is likely subject to a lock-in period (typically a year or so after float).

However on 23 March, four key directors of EAS bought lots of 5,000 to 10,000 shares each - implying some belief in value at the current level. This latest company made £2.4 million pre-tax profit on £9.6 million revenue in the year to end-March 2011. Share awards worth a total £1,271,500 were also granted to various executives near 200p, subject to underlying financial performance, which again affirms a sense for value.

So as a 'buy and hold' prospect I would currently be more inclined to take a punt on EAS. With dire experience of this market however, I'd prefer to see more of a track record.

SMS has long-term plans for the water and liquefied petroleum gas markets and possibly the timing for this is better than 10 years ago, when Advanced Technology tried (for water). Capital investment in meters nearly doubled to £9.2 million last year, aided by bank borrowings, and its current total facilities are £16 million. Again this looks modest relative to a market cap over £90 million, requiring a dramatic return on capital to justify the market valuation.

With assets weighted to property/plant and cash, only about £2 million intangibles, SMS's net assets per share work out at about 15p - likewise a lot of expectations in the near 110p share price. Advanced was similarly bid up, to around 300p, if also reflecting the wider technology boom 12 years ago.

A cynical view is this being the length of time for enough investors to forget their mistakes (although Fidelity is not a disclosed shareholder in either company) yet the UK market could now have evolved better where previously it was premature.

SMS re-rated from just over 90p near 120p earlier this year, after a mid-February update that cited 2011 results likely ahead of expectations with further trials going "very successfully". The shares are likely also to have been squeezed higher in a tight market where the normal size is 2,000 - although you can probably trade more, at least on the offer.

After the rollercoaster of Advanced Technology, which did not deliver, I am naturally going to be cautious hearing the story again 12 years on - and of the expectations apparent in SMS's price. Yet the rationale remains for a technology leap in metering, hence these companies merit following.

As a disciplined value investor I see SMS as currently too high, but a buying opportunity could arise in future. EAS has the advantage of directors/management behind its shares currently, although as a circa £55 million company it still needs to prove its mettle.

[lennonsalive] 16/4/2012 20:06

254,000 installed, they need to ramp up more to sustain. They generate rental once installed, however if another competitor takes out the meter and replaces it with their own, they lose the rental (this goes for all companies and is such a waste of a meter).

A good couple of million installations would be good, to ensure a consistent revenue. Metering business is very competitive and not one I like to take part in again.


Does anyone know what the rental charge is per year, I'd say off the top of my head about £20. 254,000 x £20 = £5 million

[sparkstrader] 16/4/2012 16:31

Though the results are promising, it's debts are going up and up, from £4.96m to £9.25m and now £11.17m

[trustman] 16/4/2012 10:29

What do you make of results L?
Market may have trouble valuing relatively small but fast growing earnings (c3p)with value of installed base.
Perhaps a bit like valuing a company with high net cash to market value but earnings relatively modest to market cap? T.

[lennonsalive] 20/3/2012 09:25

I wouldnt have said so. The bigger companies are UU, Siemens and G4s.

[trustman] 20/3/2012 09:15

Are SMS and EA considered the bigger boys?

[lennonsalive] 20/3/2012 08:12

I've heard the bigger boys are picking up the contracts for big six. UU, Siemens and G4s engineers.

[trustman] 20/3/2012 07:31

Interesting to see new player Energy Assets come to market.
Presumably EA price on float will have an impact, positive or negative on SMS.
Any thoughts? T

[lennonsalive] 16/2/2012 22:30

opps, yes doesnt...although SMS delivered good results, far better than bglobal.

[lennonsalive] 16/2/2012 22:29

opps, yes doesnt...although SMS delivered good results, far better than bglobal.

[naked trader] 16/2/2012 19:34

Lennonsalive did you mean "does not" as the article reads as follows:-

Smart meters for energy to be voluntary

Plans to force households to have energy smart meters installed have been shelved over health and privacy fears.

The Government had promised that every household would have a smart meter by 2019 in a £12 billion programme to stop gas and electricity bills being estimated.

Officials are devising plans to allow people to reject the smart meters, which communicate remotely from households to energy companies.

The move is a victory for campaign groups and backbench MPs, who raised concerns with ministers that the devices emit electromagnetic radiation 24 hours a day and cannot be turned off.

Privacy campaigners were worried that half-hourly data on energy usage collected by smart meters could give clues about people's way of life, such as when someone is on holiday, at work or asleep. Sources in the Department for Energy and Climate Change said the proposal was shelved to avoid the programme getting "bogged down" in lengthy legal disputes.

There has been a public outcry recently about the potential health effects of smart meters in the US and Canada.

[lennonsalive] 08/2/2012 16:20

Doesnt look very good for a company which set itself up under the smart metering banner.

[gwr7] 20/9/2011 19:47

Including those of massive international competitors.

[bergster56] 01/8/2011 17:11

exactly other products are already out there doing this.

[lennonsalive] 26/7/2011 07:17

That Tech is alreaday out there and over 100k of properties have them installed.

[mrmenstig] 25/7/2011 23:32

I used to work in the gas industry until recently .
Over the past 10 years there has been a massive program of works countrywide to replace metallic gas mains with new Plastic systems but the meters were never changed unless they really had to be.
During the last few months of my employment some of the meter fitter were
talking about a similar program to replace ALL the meters in the country with new smart meters that can be read i'd imagine by some kind of handheld device from OUTSIDE your property thereby eliminating the need for you to be in or recieve an estimated bill.
Looking at a company review sms has a patent pending for just such technology again i'd imagine if they can get it passed and are able to install it the potential here could be massive.

[billbyrne] 25/7/2011 20:07

Still some decent buying going on. The IPO was substantially oversubscribed
so the buying is not a surprise, the speed with which the share price is increasing
is a little bit of a surprise though, not that i,m moaning, in fact quite
the opposite.