Scottish & Southern Energy Live Discussion

Bahia_Prince 14 Feb 2020

SSE a buy-and-hold again? Hi Marktime, yes I am still holding my SSE position, and am very glad at the moment to have done so, but I don’t think I will be increasing my holding in the near future. Still not sure how long this sweet spot will last. But I think that the company have got their strategy right, and could have even better prospects in future if they can continue to build their business in renewables at reasonable cost. So still a wait and see for me. Have also held the same hold strategy with GSK over the past few years; was under water there for a year or so, but am now in a happy place with it. The regular dividend has been appreciated, but I don’t see the 80p per annum increasing with any significance soon. Again, I am happy to hold these, but no plans to accumulate further in near future. Best wishes BP

marktime1231 14 Feb 2020

SSE a buy-and-hold again? Wowee, SSE hitting a high of 1660p and several brokers all reaching the same conclusion that the target price should be in this region … the latest one MoSt who sets 1620p and “equalweight” which means hold for dividends or take some profits. For whatever reason holding on to SSE as it continued to rise was a good choice, oh how I wish I was a better do-nothing investor. And when I say a high … 5-year high, 10-year high, ? all-time-high ? This latest progress is after SSE confirmed that it is no longer a retail energy company, and confirmed 2019-20 likely financials would be about 85p a share. Which puts the forward p/e on a multiple of about 19.5. A stated dividend of 80p (56p to come this Summer) means a yield of 4.8%. So why has the so kept rising? World economy fears for all sorts of reasons? The impetus from a buyback programme while shares are in demand? Or value and potential in the business enhanced by the push towards green energy as SSE drops out of coal and restakes its bet on (offshore) wind? Fewer than 6 months ago MoSt uprated SSE to a BUY with target price of 1290p on the hope of a positive election / Brexit / Ovo / wind energy outcome. A reasonable analysis. If it genuinely calculates a target price outlook now of 1620p that was a 25% miss and HOLD sounds like it now thinks the sp is overcooked. But actually BP I think you have got this right … indeed a buy-and-hold again. Because there is a long term positive outlook eg deep value in SSE again, now it is less encumbered by regulatory interference in market pricing. My stake has already been reduced to a minimum. The chunks I bought last year at 1008p and 1139p tempted me to offload at 1346p and 1460p. Well done everyone for ignoring my warning that we had peaked.

Bahia_Prince 17 Jan 2020

SSE a buy-and-hold again? Hi marktime, it has certainly been an interesting 6-8 weeks with this share. The recovery in share price has been impressive, particularly against the backdrop of the cut in dividend. As you know, I was consistently underwater on this share for quite a period of time (2 years or so) and I had been looking to exit my position as soon as I could without losing capital on it. And now I am back in the black, but with reduced dividend income going forward, and yet I still can’t compel myself to hit the sell button. As you say, surely time to scalp a little profit (and recover my capital without loss). However, I think the sale of the Retail arm to Ovo has reduced a lot of uncertainty, and reduced the potential drag going forward. The focus on renewables will provide a positive momentum, the sale proceeds will further reduce debt, and the remaining rump will be a more streamlined operation to manage that has recently been producing circa 95% of the profits. Finally, the threat of nationalisation, which was very real only 6 weeks ago, has now gone away, at least for the next 4 years or so. The political environment for this utility is suddenly more benign. So what is left is a significantly more focussed and streamlined company, that with a restated dividend of 80p (with modest annual progressive increases anticipated) against a current share price of circa £15, will deliver me a yield of circa 5.33%. I know that I may fall out with myself at some stage over this decision, but for now I will continue to hold for income purposes. BP.

marktime1231 17 Jan 2020

SSE a buy-and-hold again? Ahem … trading peaked at 1502p today, and that is after a 24p ex-div yesterday. Reacting (over-reacting?) to confirmation of the OVO deal, and … despite a cooler comment from Goldman Sachs and Blackrock trimming their position, p/e is now over 22. Surely time to scalp profits if you have not already done so and wait for this to swing back to normal. This is not normal.

Bahia_Prince 17 Dec 2019

SSE a buy-and-hold again? The only real events in the past couple of weeks has been: Confirmation that the OVO deal will go through without further referral General Election result precluding further Labour interference/threat of Nationalisation for another 5 years. Still surprised by the extend of the rapid rise though; might still drop back further? BP

marktime1231 17 Dec 2019

SSE a buy-and-hold again? I have kept a reduced holding in my long term income portfolio, and I will add back when the sp settles somewhere sensible. It is the stake in my recovery portfolio, one I have been holding waiting for the price to recover, which I have just off loaded. Why do you think the sp has immediately jumped to 1460p? When I said this might return to 1500p I had in mind a year or two. The dividend is safe at 80p which is a forward yield just under 5.5%, maybe that is enough for most people, and I might be content to continue to hold some at this level, but there is nothing new in the performance or outlook to justify a p/e in the 20’s is there? Ofgem are not likely to release their squeeze on the margins to be made in operating the regulated networks. I think the relief at the election outcome has caused an overshoot. Well done for taking a steady measured approach , I am too impatient and hasty most of the time.

Bahia_Prince 17 Dec 2019

SSE a buy-and-hold again? Thanks for your update marktime; I previously said that I would review this again at end December as I was still under water on this one. However, I did not anticipate anything like this surge, and as of yesterday I am now sitting back in positive territory for the first in quite a long time. And bizarrely I am now unsure what do to as I think this is a now reasonable price based on the reduced annual dividend of 80p. I will reflect for another week or so (and yes, I may well kick myself very hard for that delay!!); I do not see this growing significantly further in either the near or medium term, but have held this for dividend income, which I now think will remain steady from here. Logically, sell half and keep half is probably the prudent decision? BP

marktime1231 17 Dec 2019

SSE a buy-and-hold again? Well, as things turn out it has nearly hit 1500p in the short term. Such an unexpectedly big surge in the sp I have cashed in half my holding in the recovery portfolio today at 1460p. Can’t understand why it is suddenly trading on a p/e of 21, people need to calm down and then SSE should settle back towards 1350p.

marktime1231 10 Dec 2019

SSE a buy-and-hold again? SSE sp holding up. They have submitted the RIIO investment plan proposal 2021-2026 to Ofgem calling for an extra £7 pa per consumer on capped tarrifs, in particular to pay for connecting up new wind energy generation in Scotland. That is a trivial increase but I expect Ofgem will kick back, it has already said wind farm connector costings were too high for its liking. In contrast NG’s RIIO proposal, which includes work on how to adapt the gas grid to hydrogen, were cost neutral to the consumer “in real terms”. Eh? As expected CMA have nodded through the Ovo merger which should proceed to completion Feb 2020.

kennethdonald 24 Nov 2019

SSE a buy-and-hold again? Thanks for your thoughts and of course you may be right! However I have the following comments. Given the way the market ‘looks ahead’ of the current status quo it is difficult to escape the conclusion that the market price has got ahead of itself. Only in. At this year the stock traded at 1012p, so there has been a 30% uprating since then. What has changed? On the positive side the Company has struck a deal to offload its loss making energy Services division and with Government commitments to a zero carbon future the natural resources in Scotland from Hydro and Offshore will stand SSE in good stead. Also it’s commitment to the dividend and the dividend yield on the shares will offer support for the price. On the negative side the Company has come through a period of poor performance especially on the Energy Portfolio Management sector. Looking at the balance sheet £1bn of capital has been lost to Shareholders. The short term political outlook looks uncertain with the possibility of a Labour government which would take radical policy steps with the utility industry. It seems it might be a good time to offload and review after the outcome of the election. Regards Kennetg

marktime1231 22 Nov 2019

SSE a buy-and-hold again? Thanks, my interest in SSE is still long term and a Hold at 1300-1350p but I am furious with its impenetrable report. But as BP says maybe I am being too impatient. I have trimmed all I am going to for now, and may even add some if the sp becomes an obvious bargain again. Certainly not a good idea to sell on misplaced fears of a Labour government, which is theoretically possible but highly unlikely, even a Lab-LibDem coalition less likely than a Con outright majority despite Boris flailing around on topics other than Brexit. What might Labour renationalisation plans do to SSE anyway … it will no longer be a retail energy supplier, and it might be happy to hand back its management of already-regulated network infrastructure. Does Lab plan include seizing the SSE-operated gas power stations … not sure, maybe. Apparently a sale of SSE’s gas production assets already in the pipeline (ha ha). But Lab surely cannot sequester the new wind energy assets SSE is developing at its own investment expense with various JV partners? And that is now where most of SSE’s value lies. I think. If you were looking to offload some I would wait until the outcome of the General Election, and for the sp to run up the 24p ex-dib on 16 Jan. Unless you are itching to shift your bet to …

kennethdonald 22 Nov 2019

SSE a buy-and-hold again? An interesting summary. Now that SSE has reached the 1300 level given the possibility of a Labour Government is it time to sell?

Bahia_Prince 18 Nov 2019

SSE a buy-and-hold again? Not that I am directly aware of? However, it may be that the market sees the threat of potential Nationalisation under a future Labour Government diminishing in the light of the current Conservative lead in the most recent opinion polls? BP

marktime1231 18 Nov 2019

SSE a buy-and-hold again? Offloaded a chunk just now, the sp running up because … was there positive press or broker comment over the weekend?

Bahia_Prince 14 Nov 2019

SSE a buy-and-hold again? Can’t argue with your logic there either! I will certainly review my position by end December. Best wishes to you either way though. BP