Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Engie. We currently have 10 research reports from 1 professional analysts.
Engie has published its Q1-17 trading update. The figures were below expectations as, despite the 3.2% increase in revenues to €19.5bn, EBITDA declined by 3.6% to €3.3bn and operating income declined by 4.6% to €2.2bn mainly driven by low hydro production in France and the shutdown of one nuclear reactor since September 2016. The earnings results were below market expectations. Despite the weak Q1 earnings performance, the group confirmed the full year guidance (EBITDA of €10.7-11.3bn and net income of €2.4-2.6bn) as the first quarter was impacted by multiple timing impacts. However, the company’s financial situation is seeing a substantial improvement as net debt decreased by 17.7% ytd with positive operating cash flows, improving the credit ratios. This positive effect was visible despite the decrease in earnings.
The company has presented poor results, but with decreases that are lower than expected. Revenues decreased 4.6% yoy to €66.6bn, EBITDA was down 5.2% yoy to €10.7bn with a 2.7% yoy decrease organically, and adjusted net income at €2.5bn (-4.3% yoy). On a reported basis, the group finished once again in the red with reported net income at -€0.4bn driven by €3.8bn of impairments in power plants, nuclear assets and merchant activities. The dividend is maintained within expectations at €1/share for 2016 and €0.7/share for 2017 and 2018. The good news comes from the guidance, as the group expects to return to growth with EBITDA reaching €10.7-11.3bn and net income in the €2.4-2.6bn range, despite the erosion effect from the disposal of assets already achieved.
Engie, through a consortium with the Saudi Electric Company (SEC) and Saudi Aramco, has won a contract to build a 1.5GW cogeneration power plant using CCGT technology in Saudi Arabia For a total investment of $1.2bn, this would take the achieved cost of the project to $1.25m/MW, which is extremely competitive. Engie would hold a 40% stake in the project, with SEC holding 30% and Saudi Aramco the remaining 30%, which implies that Engie would have a $480m investment envelope in the project. The construction contract is attached to two 20-year contracts, whereby SEC would buy the electricity and Saudi Aramco would buy the steam and hot water produced, reducing the exposure of the project to wholesale price movements, although the achieved price for the contracts have not been disclosed. The power plant is expected to be commissioned in 2019, with the operation and maintenance of the power plant being transferred to SEC in 2018.
Engie has published its 9M trading update with revenue falling 11.1% yoy and 10.3% in organic terms ro reach €47.5bn, with EBITDA falling 5.4% yoy and -2% organically to €7.7bn. Nevertheless, operating cash flows decreased by 8.3% yoy to €6.8bn. Net debt fell by €1.9bn (-6.8% ytd), but the net debt/EBITDA ratio improved (2.38x). The results were negatively affected by commodity prices and compensated by higher infrastructure tariffs. The group confirmed its 2016 financial targets: adjusted net income group at the low end of the range of €2.4-2.7bn and EBITDA of €10.8-11.4bn.
The difficult half year of the group has been confirmed, mainly at the top-line level as it misses expectations with revenues decreasing 11.9% yoy to €33.5bn. However, the impact has been reduced due to an optimisation of the cost base with EBITDA reaching €5,651m (-7.8% yoy), mainly affected by lower commodity prices (with achieved prices), and a reduction in gas margins. Lower depreciation expenses and a reduction in impairment charges were achieved so that the operating profit increased 5.2% yoy to €3.38bn, pushing upwards in its path net income to an 11.3% yoy increase to €1,237m. On an adjusted basis, operating profit fell by 3.5% yoy to €3.5bn, providing a 1.9% organic growth, while net income decreased by 7% yoy to €1.5bn, which is in line with expectations. A €0.5/share interim dividend in cash will be paid. On the cash flow side, on top of lower earnings, the group had a negative one-off of €1.1bn of margin calls and derivatives which plunged the operating cash flow towards a 32% yoy decrease to €4.79bn. The decrease, added to the 9.6% yoy increase in capex and besides the €1.45bn from disposals and the repayment of €1.43bn of outstanding debt, made free cash flow finish in negative territory at -€657m. Despite the difficult results, the group has confirmed the full-year results with EBITDA at €10.8–11.4bn and adjusted net income in the €2.4-2.7bn range. Following the new strategy of the company, Engie has a new segment reporting in line with the new organisational structure.
Engie has provided mixed results as revenues reached €18.9bn, which is a 14.3% yoy decrease and falls short of expectations by 12%. However, given the conditions, EBITDA was strong as it fell by 1.7% yoy to €3.5bn, although on an adjusted basis it grew 2.3% where the positive results were supported by the restart of 3 reactors in Belgium and cost-cutting measures, which is in line with consensus. Moreover, operating income increased 0.4% yoy to €2.4bn and +5.9% on an adjusted basis, beating forecasts by 2%. On the other hand, operating cash flows decreased by 55% yoy, but this was mainly driven by WC movements due to the use of derivatives to cover the fall in commodity prices, and higher gas inventories. It is expected that the negative WC movements will be reversed over the year. Net debt decreased by €0.7bn due to cash generation and the first effects of the disposal programme. Following this publication, the group confirmed all its FY16 guidance: EBITDA between €10.8bn and €11.4bn, adjusted net income between €2.4bn and €2.7bn, a 2.5x net debt/EBITDA ratio and an A credit rating and a €1/share dividend to be paid in cash. The group has confirmed its intention to issue an IPO on Electrabel in 2017 (the Belgian subsidiary). The process has been started as the separation of the management of the subsidiary has already been achieved and the group is currently in legally creating an independent and separate entity.
Weak top-line performance as both revenues and EBITDA miss estimates. Revenues decreased 6.4% yoy to €69.88bn, 4% short of the forecast, with EBITDA having a similar decrease as sales (-6.6% yoy), missing forecasts by 1.2%. Adjusted operating income decreased by 11.6% yoy to €6.32bn, but the 4% fall is less dramatic than expected; however, on a reported basis it finished in negative territory due to impairments (-€8.7bn) and restructuring costs (-€870m), pushing the reported EBIT into negative territory to -€3.24bn. Due to this, the company had a reported net loss of -€4.62bn but, on an adjusted basis, net income reached €2.6bn, representing a €17% yoy decrease, 1% above estimates. Cash flows remained strong despite the decrease in EBITDA, as operating cash flows increased by 18.6% yoy helped by a substantial improvement in working capital (+€1.16bn). The improvement allowed Engie to cover a 58% increase in net capex and its dividend payments. A €1/share dividend has been proposed, to be paid in cash with a similar one expected for 2016, while dividends have been cut for 2017 and 2018 to €0.7/share to provide investors with visibility during the transition process. A radical transformation process has been put in place with €15bn of asset disposals, an increase in investment objectives, in addition to a move towards a lighter capital-intensive model with a more decentralised approach. On 2016 guidance, the group expects to achieve EBITDA between €10.8bn and €11.4bn with net income between €2.4bn and €2.7bn. An A credit rating is targeted with a 2.5x net debt/EBITDA ratio.
The Q3 trading update has confirmed that 2015 is a difficult year for the group. Sales fell by 1.5% ytd to €53.5bn and -4.6% on an organic basis. Gas and LNG revenues decreased by 38% ytd and Europe by 2.1% ytd, offset by strong performances in International (+10.4%), Infrastructure (+7.7%) and Energy services (4.1%). EBITDA reached €8.1bn, a 7.5% ytd decrease, mainly due to lower power and commodity prices and the effects on E&P and LNG activities, in addition to the unavailability of Belgium nuclear plants. Despite this, operating cash flow remains strong at €7.4bn, 8% above the previous year's levels, being able to withstand the capex increase. Nevertheless, investment has been adjusted to growth opportunities, as there has been a further reduction of €200m in E&P (an additional 10% decrease). Impairments are expected on the FY results due to worsening market conditions, with a downward adjustment of the carrying values of certain assets, although the amount has not been stated. However, it is important to remember the group has a robust balance sheet, one of the strongest in the sector. The group maintains its full-year guidance: EBITDA between €11.5bn and €12bn and adjusted net income €2.75-3.05bn, although it now expects the latter towards the lower end of the range. The dividend policy is maintained, with no objective to change it as cash flow generation remains strong.
Less dramatic than expected H1 results, as the group continues to feel the downward pressure from both electricity and commodity markets. Revenues decreased 2% yoy to €38.52bn, which is in line with expectations. EBITDA decreased by 4.79% yoy to €6.12bn, although the decrease is less than expected. The operating profit of the group decreased by 13% yoy to €3.61bn, but is still 4% above consensus. But the best results are provided on the bottom line, as adjusted net income reached €1.8bn, which was a 28.2% yoy decrease, but still 20.2% above consensus. The reported net income nonetheless reached €1.11bn due to the €700m impairment on gas assets. Net debt decreased by €700m ytd to reach €26.8bn, which is 3.18% better than consensus (net of hybrids), with a decrease in the effective interest rate to 3.0% from 3.14% in December 2014. The group will pay an interim dividend of €0.5 per share and confirmed its FY 2015 guidance: adjusted net income of between €2.85bn and €3.15bn and a dividend payout of 65-75% of the adjusted net income with a minimum payment of €1 per share. Furthermore, an agreement has been reached with the Belgian government confirming the extension life of two nuclear reactors (Doel 1 and 2). Furthermore, concerning the nuclear contribution settlements in dispute for overpaid nuclear taxes, the group has also achieved an agreement concerning the nuclear tax payments: €200m for 2015, €130m for 2016 and a 40% margin from 2017 onwards.
The restructuring of the group is gaining momentum. Engie has just acquired a 95% stake in SolaireDirect with 100% of the voting rights for something just below €200m. With this, the group becomes the leader in French solar power and increases its renewable footprint worldwide as SolaireDirect already has a presence in 15 different countries. The news follows the possible IPO of the group's Belgian generation production as it expects to list its Belgian nuclear assets under the Electrabel name.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Engie. We currently have 10 research reports from 1 professional analysts.
CyanConnode* (CYAN): Leader of the narrowband (CORP) | Ideagen* (IDEA): Consistent strength in delivery (CORP) | K3 Capital* (K3C): Director changes (CORP) | Lighthouse Group* (LGT): Trading update (CORP) | Somero Enterprises* (SOM): Strong June trading shows a pick-up in US market activity and affirms FY forecasts (CORP) | Castleton Technology* (CTP): Solid prelims (CORP) | Cello (CLL): Strengthening the offer in Health (BUY) | dotDigital* (DOTD): Yet again – positive trading update (CORP) | Allergy Therapeutics* (AGY): FY trading update drives 7% upgrade (BUY)
Companies: CYAN IDEA K3C LGT SOM CTP CLL DOTD AGY
We update this table which we first published in early January and highlight the continued progress of the biggest AIM companies so far this year and activity in general. The latest AIM Statistics show that there are 963 companies currently, with 28 new issues year to date raising £441m. What’s more, this momentum has been maintained since June. This demonstrates that despite, the uncertainty surrounding the UK economy, generally investors continue to be active in the AIM market. In Share News & Views we comment on Cohort, ECSC*, Porvair, Quarto*, SQS* and Xafinity.
Companies: BMS CRPR ECSC EUSP FDM PCF PPIX QRT SNX SPRP SQS TCN W7L
The AIM market turned twenty-two in June and it is fair to say it has had its fair share of difficultiesH1 2017 saw a further net loss of constituents and we ask what will the rest of 2017 hold in store. Arguably the stability of the UK government, Brexit and the shift in global monetary policy will be the biggest themes for the remainder of the year.
Companies: IDP PEG AMYT SOU EVRH TST VANL W7L G4M
Carador Income Fund (CIFU LN) CLO new issuance and reset activity continues | eg solutions (EGS LN) Strong H1 drives full year upgrade | Howden Joinery Group (HWDN LN) Successful NPD/pricing see pick up in recent LFLs, but risks growing | IQE (IQE LN) Photonics ramp up begins in earnest | Nichols (NICL LN) Strong interims and an accretive deal
Companies: IQE CIFU HWDN NICL EGS
Since its inception in 2010, the Panmure Gordon Conviction List has outperformed the market, returning 284% against a Small Companies index that would have returned 221% over the same period.
Companies: ALD AVON CTH GKN HVN HCM INF NOG OTB POLY SNR SQS STJ
Solid State continues to make progress towards management’s goal of doubling revenues over the next five years. It delivered pre-exceptional profit growth from continuing businesses of 6% during FY17. The record order book combined with investment during FY17 in both the Manufacturing and Distribution divisions shows management is driving organic growth to complement its successful acquisition programme.
Companies: Solid State
accesso Technology (ACSO LN) TE2 accelerates growth, but does not materially benefit EPS until FY19 | Alliance Pharma (APH LN) In line update; Diclectin UK approval expected Q3 | Cello Group (CLL LN) Trading update | City of London Investment Group (CLIG LN) FuM +7% in Q4, modest positive earnings surprise, better final dividend | Clinigen Group (CLIN LN) Clinigen Group (CLIN LN) | Horizon Discovery Group (HZD LN) Synergistic acquisition and proposed placing | Renold (RNO LN) AGM trading update reiterating expectations for FY18
Companies: CLL CLIG RNO CLIN HZD APH
We note the RNS this morning, and advise we are suspending our forecasts (previously updated on 31 March 2017) from the market given the changes to the outlook for the business during a period when the shares remain suspended following the announcement of the transaction.
Companies: Dx Group
The QCA, which campaigns for smaller quoted companies, says that the latest MIFID II policy statement by the Financial Conduct Authority (FCA) will enable smaller companies to continue to commission research that can be distributed to fund managers for free. This will include when a smaller company is raising additional cash in order to finance growth. There were worries that the EU’s MIFID II directive could have made it more difficult to make small company research available to investors.
Companies: MLIN RHL ANCR EVG AUTG RLD
Forbidden Technologies plc (FBT.L, 5.75p/£10.4m) North American pilot opens multiple potential opportunities (12.07.17) | CloudCall plc (CALL.L, 120p/£24m) H1 trading update: accelerating growth and positive KPIs (12.07.17) | Amino Technologies plc (AMO.L, 193p/£138m) Interims: Enable provides interim upgrade and new sales route (11.07.17) | Falanx plc (FLX.L, 7p/£8.8m) Prelims: Increased push into cyber security (10.07.17) |
Companies: FBT CALL CCT AMO FLX
ProPhotonix (PPIX) has said that it is trading in line with market expectations for the full-year in its trading udpate. We make no changes to any of our forecasts but note that there are some increased non-cash charges which will impact reported net income but not EBITDA. In addition, PPIX has extended the company's Rights Plan to August 2020. This prevents the company being taken over "on the cheap". We maintain our 16p TP and Buy rating.
As we approach 3rd January 2018 and the coming into force of the MiFID II legislation which changes the landscape for research, we are beginning to see some of the practical implications and complications. Brokers are in the early stages of working out how to structure charging for research, asset managers have already begun cutting their brokers’ lists and a model code of conduct for Research Payment Accounts for institutions has been published.
Companies: ABZA AGY APH ARBB AVCT BUR CMH CLIG COS DNL EVG MCL MUR NSF ODX OXB PPH NIPT PHP PURP RE/ SCLP SPH VAL
Quiz—Sch 1 from the omni-channel and international own brand in the women's value fast fashion sector. Offer TBA. Expected late July. Last year Quiz posted sales of £87.4m while pre-tax profits grew by 17pc to £5.7m | Arena Events Group -provider of temporary physical structures, seating, ice rinks, furniture and interiors. Raising £60m. Mkt cap £63m. Expected on the Chef’s birthday. 25th July. | Altus Strategies—African focused natural resource Company. Offer TBC. Expected Mid July. | Harvey Nash Group— Provider of professional recruitment and offshore solutions moving to AIM from Main. No capital to be raised. Mkt Cap c. £57.8m. | Greencoat Renewables - Schedule 1. Targeting a portfolio of operating renewable electricity generation assets, initially investing in wind generation assets in Ireland. Offer TBC. Due Mid July. | I3 Energy –Schedule 1 Update. Independent oil and gas company with assets and operations in the UK. Offer TBC, Mid July admission. | Verditek— Sch 1 update. The Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission late June | Hipgnosis Songs Fund investment company offering pure-play exposure to Songs and associated musical intellectual property rights. Prospectus yet to be published. | Impact Trust—Exposure to a diversified portfolio of funds providing SMEs across developing economies with the growth capital they need to have a positive impact on the lives of the world's poorer populations. Raising up to $150m at $1.00 | Residential Secure Income - social housing REIT raising up to £300m Admission due c.12 July. | Curzon Energy—Report on Proactive Investors of intended LSE float this year with acquisition of coal bed methane assets in Oregon. Looking to raise £3m plus. | NLB Group—financial and banking institution based in Slovenia, with a network of 356 branches. Seeking Ljubliana Stock Exchange listing with GDRs on the LSE. Expected mid June. | Kuwait Energy— has not been able to complete its initial public offering as announced in its Intention To Float of 3 May 2017. However, in light of positive feedback from potential investors, the Company remains committed to obtaining a London listing and continues to explore its options. | Supermarket Income REIT– Up to £200m raise to acquire a diversified portfolio of supermarket real estate assets in the UK, providing long-term RPI-linked income. Due 21 July.
Companies: CCT IOF BOD CNMI PPIX CRV DX/ IVO OSI
Renold’s AGM update has confirmed that trading is on track to deliver FY18 results in line with expectations. The group has delivered strong underlying sales growth for Q1, ahead of our assumptions. However this outperformance has been offset by a decline in margin due to rising raw material costs, and while prices have been raised in response, there will be a time lag before this benefits margin. Growth prospects remain positive, with order intake 11.4% ahead of sales, or 4.7% ahead excluding revenues to be delivered post year end. STEP 2020 self-help initiatives remain on schedule. We do not anticipate making changes to our headline profit forecasts at this stage. The shares are trading on a significant discount to sector EV/EBITDA and P/E multiples and offer material upside to our target price.
We recently hosted our annual Industrial Technology dinner with 14 companies, many of which are active in the materials science arena; having focused previously on composite materials in the aerospace sector, in this edition of Machinations we focus on graphene, with its unique and potentially game-changing qualities and potential applications. Investments in this area remain fairly early stage, but could potentially reap huge rewards. Graphene is well represented in the UK small-cap market by several players.
Companies: SIXH ACL AXS AMPH ALU AEP AVG CAPD CAR FENR FLO RAD GHH HDD HAYT IOF MPE RE/ RED RNO RBN SOM SCE TRT TRI VANL ZAM