9M23: hydro still good, wind still poor, guidance raised

Iberdrola released earnings that were globally in line with the consensus. Hydro generation still drove earnings, whilst onshore wind conditions remained poor, also seen among peers since the beginning of the year. However, offshore wind partially offset the lower load factor in onshore wind. Renewables generation, investments in networks and new rate cases in Brazil contributed to increase the group’s FY23 net income guidance from ‘high single-digit’ to ‘double-digit’.

US activities: NY Public Service Commission release

Iberdrola’s US subsidiary Avangrid, which is focused on grid services in New England, Pennsylvania, New York and on renewables development, received a very positive outcome yesterday from the NY Public Service Commission.

1H23: 2023 net profit to grow by high single digits

Iberdrola reported EBITDA up by 17.3% to 7.5bn (Cons BB 7.5bn) supported by a 6.5% increase in renewables capacity over the last 12 months. The group increased the guidance on net profit growth from a ‘mid to high single digit’ to by a ‘high single digit’ as hydro condition have almost fully recovered while continuing to deploy additional renewables capacity.

Q1 23: strong recovery in hydro offers Iberdrola good start in clean waters

Excellent set of results for Iberdrola that got the ball rolling in the sector, with figures beating estimates, mainly supported by the strong generation from renewables assets and particularly thanks to the solar activity but also a strong recovery in hydro in Q3 23 compared with last year. A strong dynamic in the main business units led the Spanish group to confirm a total remuneration amounting to €0.49/share proposed as part of the FY2022 results and being confident in the completion of the

FY2022: increasing regulated asset base confirming a resilient business model

After soaring gas and power prices in 2022, the Spanish company reported a strong operating performance and a net profit record to €4.33bn, supported by growth in all geographies except for Spain where the group reported a 19% drop. The group benefited from both higher energy prices and higher renewables capacities as well as an increased regulated asset base. However, the windfall tax imposed by Spanish public authorities seems to be weighing on the group’s forecasts and investments.

A strong international performance confirming a resilient business model

Iberdrola’s Q3-2022 results beat estimates, with an 9M2022 EBITDA up 17% at €9.53bn, with growth in all geographies except Spain, driven mainly by the USA and Brazil in the Networks and Renewables segments. The group also benefited from its currency positions in the US Dollar and Brazilian Real that appreciated strongly over the year, supporting EBITDA and Net profit. However, net profit continued to decrease in Spain, amid lower renewables production and a negative impact from volatile gas ma

H1 22: networks to drive the growth, overall robustness confirmed

Iberdrola’s H1 22 results were strong overall. EBITDA beat expectations by c.7% driven by Networks, in particular in the US, although some extraordinary impacts must be mentioned. Interestingly, networks were at the forefront of the growth and outperformance, pushed by FX, inflation and capex. Reassuring comments on the current environment are worth mentioning, namely no dependence on Russian gas or oil, providing confidence and visibility which are of great value in these troubled times. T

Q1 22: growth was internationally-driven

There were no major surprises from Iberdrola’s Q1 22 results as the figures closely matched the consensus. The main point to note is weak generation in Iberia due to low hydro and nuclear outputs, more than offset by higher network RAB in particular in the US and Brazil. EBITDA grew by 4.9% yoy, more than net income (+3.2%) which was affected by financial costs. The guidance has been reaffirmed.

FY21: higher-than-expected results to support capex and dividend growth

Iberdrola released a solid set of FY21 results, standing above the consensus (+7.0%) and our estimates (+9.3%) at the EBITDA level. Note the positive news as well coming from the reiteration of guidance for FY22. The group confirmed its asset base development with record capex, and will proposed a total dividend of €0.44 per share, +4.8% yoy. After a year marked by price volatility, regulatory headwinds and governance risks, this release comes as a sigh of relief.

9M 21: encouraging results but a blot remains

As in H1, Iberdrola reassured with its networks and renewable businesses, while Generation & Supply segment keeps on disappointing. A positive tax reversal in Spain (€+382m) also offset an impact from the gas clawback (€-85m). However, a blot remains on the regulatory side even if CEO Galan has promoted a ‘return to normal’. Positive view confirmed but let’s be careful.

Nuke optionality

What if the best solution for the energy transition were … nuclear power? Nuke is back at the heart of political debates in the context of the current energy crisis and massive but insufficient investments in renewables. This short review provides an overview of nuclear power in Europe and speculates on options. This ‘nuke optionality’, hinging on a favourable green taxonomy, is a game-changer for EDF, Centrica, Fortum but also Engie, Iberdrola, Enel and EDP.

H1 21: one-offs overshadowed by Renewables to confirm guidance

The first half year is a mixed bag for Iberdrola, as the strong performance of Renewables offset a weaker-than-expected Generation & Supply and the one-off impact of the increase in UK corporate tax rate to 25% by 2023. At the end of the day, figures matched the consensus and allow the guidance on earnings and dividend to be confirmed. Positive view reiterated as Iberdrola may have reached an inflection point.

Q1 clouded by one-offs, but the future is getting brighter

The Spanish utility’s EBITDA remained unchanged and, as always, hurt by non-recurring items such as the pandemic and above all FX impacts. This overshadowed a solid quarter for the group, as EBITDA would have increased by 12% excluding these effects. Significant investments and a substantial pipeline are, however, brightening outlooks. Positive view confirmed.

FY20 hit by non-recurring items

EBITDA is quite stable (-1%) to €10.0bn, slightly below the consensus and well below our bullish expectations of €11.1bn. It was severely affected by FX fluctuations (€487m) and the COVID-19 impact (€218m) which were difficult to forecast and explain the deviations from the consensus. The FY20 proposed dividend is up by 5% to €0.42. Gross investments (+13.3%) reached a record to €9.2bn. Non-recurring items globally weighed on the results, overshadowing the resilient operating figures.

Good Q3 and M&A operation

Iberdrola realised an overall good Q3. The figures are in line with expectations and the group expects an acceleration in Q4. In addition, the negative elements are, for the most part, non-recurring. Iberdrola also announced the start of negotiations to acquire fully PNM Resources, an integrated utility operating in New Mexico and Texas, for $4.3bn. We confirm our positive view, even with a limited upside.

ITM Power (ITM LN) - Trading update

ITM has released a trading update, providing guidance on its upcoming H1 FY 2024 results, and reiterating full year FY 2024 guidance.

PROGRESSIVE: Oxford Metrics: Drivers to growth and catalysts for rerating

Oxford Metrics’ results for the year to 30 September show a business that is growing strongly, driven by long-term technology, economic and demographic trends across the life sciences, entertainment and engineering markets. The results are in line with the trading update given on 25 October (see our note) that showed revenue and adjusted PBT ahead of our, and market, expectations. With a confident management commentary on the outlook, we raise our estimates for FY24E and introduce forecasts for

Norcros - UK margins up materially, South Africa stabilising

Norcros’s compelling investment case was underpinned at the half year where underlying operating profit was down less than 3% despite material revenue pressure. Group operating margins rose 60bp, the UK business reported record underlying profits and Norcros continued to take market share in both the UK and South Africa. We believe that Norcros’s key strengths are underappreciated and that legacy issues, notably the pension deficit, have been resolved. We retain our estimates and value the share

Titon Holdings+ (TON, House Stock at 80p) - Trading update

SP Angel Morning View: Gold powers through $2,100/oz on outlook for Fed rate cuts

Water Intelligence 10m Trading Update

Water Intelligence has reported a strong 10m Trading Update that indicates it is on track to meet expectations and we increase our FY23 estimates by +2%.

PROGRESSIVE: Oxford Metrics: Technology, strategy and EPS enhancing

Oxford Metrics (OM) today announced the acquisition of Industrial Vision Systems Ltd (IVS) for £8.1m, funded from cash and 1m new shares. IVS operates in industrial applications of smart sensing, with machine learning technology for quality control in the manufacturing environment. The deal is immediately earnings enhancing and we are raising our forecasts for FY24. This is an exciting first M&A application of the funds from the Yotta disposal. The deal appears technologically and strategically

UK-Listed Energy Sector: Review of the UK oil and gas landscape – why the country needs it, current policy and tax

The front of this note takes a look at the UK oil and gas sector, why domestic production is advantageous, what the main political parties think, and what could happen going forward. The latter part contains a review of the companies in our coverage – some that are UK centric, which give exposure to the note’s wider theme, and others that are focused elsewhere.

PROGRESSIVE: SDI Group: Acquisition of Peak Sensors

SDI Group has announced the acquisition of Peak Sensors, a UK manufacturer of temperature sensors, for an estimated £2.4m (£2.3m less cash). The initial cash consideration is £1.58m, with a further c.£0.82m payment due shortly after completion. The deal will be funded from SDI’s revolving credit facility. As at 30 September, SDI had c.£1.78m cash, £15.1m bank debt and £9.9m undrawn bank facility excluding the accordion, providing considerable financial flexibility for the group. The acquisition

discoverIE - Efficiencies driving margin, good forward visibility

discoverIE has reported an encouraging H1 2024 showing a resilient sales performance (flat in total, +4% CER) against strong comparators (+23% CER last year) in a difficult macro environment and an impressive increase in operating margins from 11.5% to 12.9%. Underlying EPS increased +8% and gearing of 1.6x is at the lower end of the target range. There remains significant opportunity for acquisitions, which – alongside targeting continued margin increases – provides upside potential to our fore

TClarke - £1.1bn order book and delivery protection measures

TClarke has confirmed it is on track to deliver its three-year growth-plan target of £500m of revenues in 2023E (up from £426m in 2022). It detailed a 99% increase in the order book to £1.1bn alongside a further £1bn in opportunities. Reflecting the current challenges in the construction sector, management has made a number of strategic decisions to preserve the business’s strong market and financial position. These include changing some supply-chain partners mid-contract to protect project comp

Van Elle Holdings plc (VANL LN) - Trading in line with FY24 expectations, completion of Rock & Alluvium acquisition

Van Elle has released a pre close trading update for HY24 confirming it is trading in line with expectations. Revenue is down 16% yoy to £68.0m which is broadly in line with Zeus expectations for FY24 of 12.1% decline in revenue, pre the addition of Rock & Alluvium. Estimates are updated on the back of the completion of the deal increasing revenue by 6% in the current year to £138m and 11% to £155m in FY25. Zeus leave profit before tax estimates unchanged at £5.0m in FY24 due to integration cost

Morning Note – 28 November 2023

SP Angel Spec Sits: (YUG) H1 2023: Revised EBITDA Target of £33m+

YUG announced its finacial results for H1 2023 with revised Adj. EBITDA expectations for the year of over £33m, from ~£19m currently.

Supreme (SUP LN) - Initiation of coverage

FY24 Interim results: A record H1 performance delivered revenue growth of 62.5% to £105.1m (H1 FY23: £64.6m), with growth across all divisions: Batteries +1.4%, Lighting +21.8%, Sports Nutrition & Wellness +17.5%, Vaping +32.5% (ex- ElfBar) and Branded Distribution +798.9%, which includes revenue of £26.4m from the ElfBar distribution opportunity, commenced in June. Adj. EBITDA of £15.2m is +88.0% (H1 FY23: £8.1m) benefitting from higher sales, and operational efficiencies. Adj. PBT of £12.6m is