The £150m raise last year reduced net debt and allowed for a big increase in capital expenditure. Energy suppliers need to get their skates on to install smart meters by the 2020 deadline. Panmure has 1060p target.
SMS Smart Metering Systems.........gapped up on the open and looking strong today. Wonder if its been tipped. lovely bowl chart with first target SP resistance at 890-900p. Trades on a forward P/E to 2019 of just over 25 and a PEG of 0.36. EPS forecast to rise 70.5% 2019. Ive dipped in.
2017 (A) 2018 (E) 2019 (E)
EBITDA £40.03m £49.80m £82.42m
EBIT £23.82m £27.60m £39.20m
Dividend Yield 0.55% 0.74% 0.86%
Dividend Cover 3.98x 3.16x 4.58x
PER 45.57x 43.08x 25.27x
PEG 10.28f 7.47f 0.36f
Net Asset Value PS 185.98p p p
From a quick look at the results, profits were down, before and after tax. They're up if you exclude exceptional items, which are mostly "Finance costs: other". I think the fall in profit doesn't matter too much so long as there's a good return on the investment in meters, and a payback period that isn't too long. That's because of the £124 million "Payments to acquire property, plant and equipment" which I think is for meters (going by the statement about the placing). I can't see how to figure out the return on investment in meters so I'm not buying the stock (which isn't the same as saying it's a bad stock).
Yeah that's why I sold SMS too.... made small profit. SCT I did better on but sold at 396. Bought a smaller chunk of SCT back recently as think might go even further. My other big regrets of selling too early at the mo are FDP and PHTM altho did well out of both (esp PHTM) and you can't win em all as you rightly say. But it doesn't stop you thinking you can!
Well, you cannot win them all although it is annoying when you have identified and bought the shares. I hope you still banked a profit. SMS have not been easy to own with some negative news on smart meter mis-readings and volatile share price which the latter put me off buying more.
SCT is one that has continued to rise and put on another £1 in value since I sold.
I guess I wasn't a million miles away with my thinking on this, and backed up by that article. It looks like a potential loss in the making and I can't see me investing in it.
Good luck with your investment though, I guess you got onto this quite early so already have a healthy gain.
If I were you I would put a tight stop loss on this, because I imagine one day down the road it wil be found out.
The one benefit I did consider was remote meter reading, but this also is of no financial benefit to the customer and questionable to the supplier, given most people send meter readings online. The company is contractually obliged to visit the actual meter along the way, so that doesn't eliminate all the cost of physical meter reading anyhow.
It's quite amazing what schemes and systems can be dreamed up and marketed if enough companies lobby government and get things standardised without having to realistically justify the cost.
It may be that the payback period proves lengthy, but even so, allowing customers to make informed energy-usage choices and save the planet at the same time, feels like a fair demand of the energy industry by Ofgem. Consumers can refuse a smart meter, there are currently no cost grounds for doing this while installation is free and there are no subsequent related charges. The industry will doubtless look to recoup costs, but these will almost certainly be applied to all users, irrespective of whether they have a smart meter installed.
Jim, It illustrates the business model better yes.
But can you explain what the benefits are, that are tangible and measurable, in terms of how it makes the customer and the suppliers life easier, and how it saves money for both parties.
If there is questionable economic benefit, it could be that stretched energy suppliers decide not to continue supporting these payments. The government is already threatening the big 6 with caps that have caused share prices to fall markedly today.
I'm obviously missing something and I'm open to understand this better, but to me - what is the point to the customer of having a meter that shows a bar chart of energy usage and tells you when you have your lights and kettle on? Is there any evidence that it reduces energy consumption to a significant degree, I mean other than fuzzy marketing spin?
From the suppliers perspective there is a big cost (Hive for example is deeply unprofitable at British Gas -- Centrica itself is a poorly run company) and how is this cost absorbed -- by the customer, or the supplier in an attempt to appear current in the eyes of the customer in the face of competition from the 5 other energy suppliers?
Games - I guess it's a question of - what is the benefit, show me the money as they say!!
SMS owns the meters, but rents them out to the big utilities on long term contracts that comfortably exceed the pay-back period for the original installation. In this sense its money for old rope. Meantime its a land grab for installation work to meet goverment targets that the utils are obliged to meet. SMS has bought in house the installation teams that used to service them - so even more money for old rope. The government sees this as part of their green programme.
Just thinking out of the box for a moment, are all the sales that SMS records, simply piling up the inventry of the big 6 energy companies who are all competing with each other to look like they have an equal or better technical offering to the punter with these sexy little boxes which they stress the customer must have?
Given the track record of the big six to waste boodles of public money, handsomely supported by a regulator who is funded by the big six and has as many teeth as a newly born baby?
Are we looking at a possible big collapse in demand when they all realise they are making a loss after passing these off to the customer who decides enough is enough and wants it off his bill?
IOM -- Not an officianoado on SMS and smart meters in general, apart from their design is pretty straight forward, having worked at Texas Instruments in the past.
Can you list the top 5 essential reasons why Smart Meters exist -- I'm not fully aware of them, other than the companies do heavy promotions to get their punters to install them.
Irrespective of the reliability and accuracy issues mentioned in the recent posts, does this obviate the need for a chappy to come out and read the meters?
I look at Hive (more on the control side) etc which is a big loss maker for British Gas and wonder if this is a short term trend while everyone gets stuffed up with one of these things that ultimately gets parked in a drawer when the battery runs out or the customer gets sick of dusting around them.
I mean how useful is it to switch on your kettle and watch the bar chart jump to the right telling you, you are using more lecky?
I mean what's the alternative he ponders, cold tea?
Games -- Playing devil's advocate of course, as someone is going to come back to me with an irrefutable benefit no doubt? -- well they are, aren't they? Eh?
Quite a bit of negative news on BBC & Twitter from home owners Smart meter readings, thousands of pounds of use in just one day. Investigation started by SSE into the possible software update error which may have caused this to effect a small number of home owners.
Do not know whether SMS equipment, software update was involved but it is the type of negative news that puts doubts in people's mind.
Wonder whether there might be a brief share price re-action for SMS during the course of today until the situation becomes clearer.
Could be over re-action so be aware of over sold conditions. Might be good to get RNS comment from SMS early to either distance themselves from this weekends error or put more meat on the bone information to what happened.
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