marktime1231
16 May 2019
Profits hit Games I know you like to run down NG, fair enough I think we would all like another buying opportunity around 780p, but I read into the results a different story. The biggest threat to NG is not a shallow business performance decline operations was maybe 4% off, but on positioning its defence against the loony left ideaology of a renationalisation grab at below market value. Actually I think the chance is too remote of a Corbyn government, but the fear is again being factored in to all sorts of share prices today To renationalise all the core utilities would be so cor blimey … NG, SSE, CNA, Severn Trent, UU, Pennon … all the privately or foreign held ones like Thames Water, NPower, EDF … Add on the railways, RMG, BT, etc why not Even on just a fundamental raw asset basis this would cost hundreds and hundreds of billions, in cash … no-one is going to exchange it for paper, govt bonds would not be worth printing after a raid like this … so the McDonnell plan fails completely at this point, even the unworldly children they are appealing to would see the flaws, apart from the extremely reckless champagne marxist thinkwits like Blakeley who behave like, since they (pretend) they have nothing to lose, destroying value would be a good thing I do like greedy bosses and ripoff monopolists being frightened but only so far, thereafter NG and others need a defence. They probably have all this is hand, lots of clever plans Part of the NG defence is to sink not just debt but equity into raising its capital asset value. That was the headline. Entering the political debate too, so far just words but if I was a utility or one of their major investors I would be directing my party funding accordingly. And then how about stepping away from UK jurisdiction if not the whole company then parts which can be ring fenced from a grab … put McDonnell plans at the risk of tangling with international law, an isolationist UK could not face up to the EU or the USA for risk of being bankrupted by them … we would be set upon like Venezuela
Gamesinvestor1
16 May 2019
Profits hit “â€"“Pre-tax profit to March fell 31 per cent to £1.8bn. Earnings hit by a 7 month dispute in Massachusetts, resolved in January, to add restructuring programmes in US and UK. Underlying basis, which strips out exceptional costs and other factors such as the costs of dealing with major storms, pre-tax profit for the 12 months that ended March 31 was down 3 per cent to £2.5bn, which was slightly ahead of analysts’ expectations. The FTSE 100 group’s shares fell 0.4 per cent in early Lonon trading.â€"" Such tosch - storms are a regular occurance and are in no way an exceptional cost. Games – heading backwards this one
marktime1231
05 Apr 2019
NG -- a basket case? I think you are right to be cautious, and not just from the remote threat of renationalisation. Under the existing regime it is also under regulatory pressures, NG is being stripped of its steady earner - reduced profit margin under the RIIO formula proposal on its investment (debt) to … ? Unelected highly pensionable left-leaning civil servant “partners†running Ofgem encouraged to impose anti-capitalist controls during a theoretically liberal free market conservative government. To the point perhaps where it ain’t broke so why would a theoretical future socialist government want the expense and risk of taking it on. Or to the point where no commercial organisation would want to invest any more private money. On the plus side NG still has defensive qualities, is diversifying with business in the US, and despite all the ups and downs has been a pretty reliable dividend play, and as UD says it cycles on sentiment rather than performance. Who is to say they do not have strategies and contingencies in place to mitigate the problems you highlight? Leaving the core UK infrastructure business laden with debt in the hands of a pension fund and concentrating on the new horizon. So the conclusion must be that NG is not the “sure thing†which would see it priced up to 930p paying a solid 4.8% yield, but if it drops down to 780p again then it would be a tempting recovery bet paying 5.8%. I am a long term holder but I reluctantly dumped half my NG holding at 879p on 12 March wondering if it was about to cycle round again. The fears you raise make me worry whether there are better places to reinvest the proceeds.
El_Kel
05 Apr 2019
NG -- a basket case? Uncle_Doug: Even if Labour get in for 2 terms it ain’t gonna happen. Well, that’s certainly conviction. Not sure I go that far but I do consider any nationalisation to be waaaaay more involved and complicated than before. International shareholders will not let their investments be lifted from their pockets at a discounted price without raising a biblical sh tstorm of legal wrangling. McDonnell’s early floated ideas for renationalisation have not been properly tested because there is too much else going on, but forensic analysis will almost certainly reveal the liklihood of an immensely tangled knot that would take too many years to undo at any sp significantly under the market price. Maybe there is a spot of elbow room for current trading if there is a relatively ‘safe’ sp backstop? That said, McDonnell and Corbyn have held Venezuala + Chavez as leading lights, so absolutely anything could happen if the cons tear themselves apart tp let lab walk through an open door. Happy days.
Gamesinvestor1
05 Apr 2019
Nationalisation? Something to read before bedtime tonight : THE WEEK: Morningstar columnist Rodney Hobson says that investors should bear in mind the possibility of a Labour government because of the impact it would have on share prices Rodney Hobson5 April, 2019 | 9:22AM Jeremy Corbyn Labour Leader It’s hard not to feel sorry for Theresa May. She does nothing and she’s out of touch; she takes action and she’s panicking. The last politician to be caught in this apparently no-win situation was Alistair Darling as Chancellor of the Exchequer, and he managed to sort out an almighty financial mess. The Prime Minister has so far found a similar triumph elusive. Her latest wheeze has been to conjure up a meeting of minds with Labour leader Jeremy Corbyn, though that has gone down badly with all those who had been exhorting her to reach out across the chamber. The big danger is that the move raises Corbyn’s stature and improves his chances of becoming Prime Minister. That prospect has to be taken seriously – and it is not an attractive one for investors. A number of companies, such as utilities, have already seen their shares slip under the threat of nationalisation. This week Steve Lerpiniere, one of my Twitter followers, raised the issue in the context of a trading update from bus and train operator Stagecoach (SGC). Let’s say, first of all, that as usual the revenue figures covering the year to April 27 were patchy. The best bits were Virgin Rail, up 6.7%, and regional buses, 3.4% ahead. London buses and the rest of UK rail were sluggish, while North America continued to slide backwards. The good news is that the sale of the North American operations should go through soon. Good riddance at last. So will a Corbyn government stop Stagecoach in its tracks? With Labour as badly split as the Conservatives over Brexit, I can’t see Corbyn commanding a working majority after a snap poll. Only once, in 1997, has Labour moved from Opposition to stable government in a single election. If he does pull it off, will he be able to find the money to buy the companies he wants to bring under government ownership? As we discovered during quantitative easing, there really is a magic money tree. Pumping money into the economy to prop up essential services could be presented post-Brexit as a sensible, vital policy to save the day. Could Nationalisation Become Mainstream? Steve also pointed out, correctly, that only the Attlee government carried out wholesale nationalisation. Otherwise the policy has been confined pretty much to the party manifesto. However, circumstances change. In the 1960s it was accepted by Labour and Conservative politicians alike that some parts of the economy such as utilities, steel and coal should be in public ownership. Within 30 years both sides embraced privatisation with equal enthusiasm. Given public discontent over train services and energy costs, nationalisation could indeed become mainstream again. In my view investors should bear in mind the possibility of a Labour government because of the impact it would have on share prices. Even if it failed to carry out a nationalisation agenda, its very existence would weigh on those sectors in the firing line. However, as Steve commented, any fall in share prices prompted by nationalisation fears also creates a buying opportunity for those who think it will never happen. I’m with him on this point, which is why I am retaining my holding in United Utilities (UU.). Unless an election is forced very quickly, the Conservatives will be fighting under a new leader, and a change of leadership usually provides a boost in the polls. Labour will be led by a man who does not command the support of the majority of his parliamentary colleagues. In my view there are far more important things to worry about, most notably the decline in the growth rate of the global economy, particularly the slowdown in Europe. More than ever, investors should favour solid companies earning consistent profits in sectors that never go out of fashion. If that includes possible nationalisation targets – such as utilities – so be it.
Gamesinvestor1
05 Apr 2019
NG -- a basket case? Aah Doug, Great - I love the inane drivel, it keeps us all going m8. You are right about always needing power, at least in our lifetimes. Whether that makes NG a good investment or not comes down to the economics, which I’m not sure is being considered enough in our collective inaneness. I tend to agree that Labour would not nationalise NG, the threat of it seems ever more the err - threat! NG is however subject to the vagaries of the regulator and I don’t doubt Corbyn would act swiftly to ensure that make it be more stringent, and then you will see that the dividend is more under threat. If you reflect for a moment on the numbers I put forward, and please open them up to scrutiny, it doesn’t look too healthy for the support of the dividend going forward unless something changes and it seems unlikely that it will – perhaps fewer will draw electricity from the grid as they generate more and more independent power at their home locations – so in essence don’t you consider the draw on the grid reducing, or are we all nanoseconds away from electric car points in our garages? But to my point about the dividend sustainability - it was propped up by the sale of assets (the gas bit), but going forward do they have anything to sell to prop up the “in reality†uncovered dividend. At the end of the day - a cut in the dividend would mean a lowering of the share price. A 4% yield could easily see NG well below 6XX, instead of the rather tenous 5.8% we are sitting at today. Games - still not convinced, but not unconvinced enough to sell just yet.
Uncle_Doug
05 Apr 2019
NG -- a basket case? Here’s some inane drivel for you - we’ll always need power and these guys basically have a monopoly and a fortified moat to entry in their market. Always going to be a winner in my book. Buy on dips, sell on rises. Reap the hefty divvies in bad years and don’t worry about nationalisation. Even if Labour get in for 2 terms it ain’t gonna happen. NG has always been one of my top performers. Uncle Doug … on the flybridge
Gamesinvestor1
05 Apr 2019
NG -- a basket case? Oh well - that one went down like a lead balloon, 36 views and no comment. It’s either the inane drivel I’ve written, no one cares one way or the other, or as is usual in the stock market, no one can really tell one way or the other if a company is going to really turn out to be a good, bad or indifferent investment. My leaning is toward the latter two options, but possibly via a short term relief rally if we ever get any sense out of the UK political system - so only remotely possible then. Games
Gamesinvestor1
04 Apr 2019
NG -- a basket case? Harsh words, and Corbyn’s attention aside, does the NG company stand up to scrutiny or is it a basket case? Some points worth noting, and please correct if mistakes or wrong assumptions :- In 2018 NGs operating income stood at 3493, a slight increase from the previous year. Yet it paid out in dividends 4487 – OK it was just covered by total cash from operations of 4503, yet this isn’t sustainable longer term if the operating income stays at this level or lower. So maintaning the dividend relies on selling more stuff – can they do that after all the recent sales, is there anything left to sell? Cash – NG had a net cash outflow of £810M in 2018 and that left the cash balance down at £329M compared to £1.13Bn in 2017. So this is heading in the wrong direction. Total cash from financing was (7547) compared to Cash from operations of 4503 – taking out the dividend it still left finance costs of 3044 --where is that coming from? Long Term Debt has been fairly constant at around £22Bn over the last 5 years, but so has the net income, so it’s not really advancing. This still leaves total liabilities of around £40bn. Given operating income is pretty close to finance costs (I assume 3044) it would take much to wind up the finance costs (interest rates) for this to become all very marginal – appreciate some of this debt has fixed terms, but when any of it is up for renewal, what would happen then? I’m not sure why I own this stock, other than I bought in 78X and 79X, on an old sailors view who has since left these boards, so have a profit on paper at the moment. However, the dividend looks far from safe - and could it be nationalised or the regulator stamps even harder on the allowable returns? Games
marktime1231
28 Mar 2019
Thank goodness I think today’s reset is more to do with Comrade Corbyn and chums publishing a plan to take a controlling interest in NG rather than negotiations with anti-capitalists at Ofgem, which as you say are quite a challenge. The effect on UU and other utilities has also been marked, but then UU price was running way over value. NG remains cheap. A looney left government is still only a remote fantasy but then so was Brexit, Trump, winning hockey gold in Rio …
In_the_dark_yet_again
26 Mar 2019
Thank goodness LSE:NG In case anyone hadn’t seen it (sorry, I was away for a couple of weeks and am only just catching up), this is NG’s response to initial RIIO-2 proposals from OFGEM [link] How much OFGEM can ignore them (OK, ‘listen’ then do what they decided in the 1st place regardless) and impose whatever it wants in RIIO-2 I don’t know. The proposed ‘50 basis points wedge’ (the document explains, 50bp knocked from the original margins each and every year translates to them having to improve efficiency by 5% to 14% each year just to stand still NG claim) is key for me; if NG can get that removed then it’s not so bad overall albeit depressing that OFGEM are proposing only 5.5% real return on equity when the water sector is allowed 6.5%. Then again I don’t know how much of this is just ‘negotiation positions’ and where in the middle it will actually end up. Regards, ITDYA, somewhat comforted that the SP has held firm/drifted up since the response suggesting that maybe Mr Market is reasonably content here.
marktime1231
12 Mar 2019
Thank goodness Joined you UD, sold about half my holding, the chunk of NG in my feeder portfolio - where it was one of the less-bad performing stocks - at 879p enjoying the recent gain and turning a few stocks into cash today. Also halved my LLOY holding - a weak loss - and trimmed SSE in that same portfolio, all put to cash. This is how I will feed my ISA next month, in which I have kept up holdings of all three for the long term income (and recovery, please), thought I may as well bank now. I figured if things are going to jump about it will happen in these popular stocks.
Uncle_Doug
08 Mar 2019
Thank goodness SP currently @874. Yeah it’s been good news lately and I’m very near to dumping another 25% of my wad and letting the rest ride. Always with a view to buying back in on any dips.
marktime1231
08 Mar 2019
Thank goodness So a good decision to hang on for more good news then, the market with a positive reaction welcoming the decision to invest in Geronimo a developer of solar and wind energy assets in areas of the USA which NG is targetting. Brokers increasingly positive, my hope for a return to 930p might be an undershoot. I also get the feeling that fears about comrade Corbyn securing an election are evaporating, NG is behaving like a defensive stock again on days of turbulence. All good.
marktime1231
07 Feb 2019
Thank goodness If I had bought in at bargain basement might trim, but every comment about NG seems so positive right now I am going to hold through the next dividend cycle or until we get to another level … it looks a much better bet than UU for example, which now has a relatively high p/e and low yield. A plunging £ and depressed interest rate outlook on Brexit disarray may add tome icing to the NG cake. I was not able to get a nibble from LKH on martkets live today, no sign of him there today.
