HY22/23: resilient business model supported by an ambitious Capex plan FY202

An encouraging set of half year results from National Grid, reflecting the resilience of the model in a challenging and turbulent macroeconomic environment, mainly driven by the regulatory frameworks and electricity transmission and distribution. National Grid upgraded its Capex guidance to £40bn between 2022 and 2026 to accelerate its transition to low carbon generation and enhancing its UK and US electricity distribution as well as the underlying EPS growing in the middle of the 6-8% CAGR rang

FY21/22: rock-solid

National Grid confirmed its safe-haven status by unveiling a strong set of FY21/22 figures, c. 3.3% above the consensus. The group is moving forward serenely, benefiting from its natural inflation indexation both at operational and dividend levels. The mid-term FY25/26 plan is backed even if the FY22/23 outlook expected at ‘broadly flat’ is admittedly a miss. But who cares? NG is the perfect benchmark for a flight-to-quality for investors awaiting better times.

H1 21/22 and CMD: the quiet strength

National Grid beat expectations at the EPS level (+8.6% vs consensus) for its H1 21/22 results, mainly driven by the WPD acquisition, higher regulated tariffs and the post-pandemic recovery. As a result, the full-year outlook was improved. The group also unveiled its 2026 roadmap: £35bn capex in networks, both in the US and in the UK, to increase the asset base and support the expansion of renewables. The plan is in line with our expectations, even if the funding issues were relatively unaddre

Not yet running at full power

National Grid saw its adjusted operating profit down by 12% for the FY20/21 (fiscal year ending in March), especially driven by the adverse timing of recovery movements and COVID-19. These results are well below our (bullish) expectations. However, the network giant provided a promising 5-year guidance in terms of capex (£30-35bn to 2026) and EPS CAGR (5-7%). WPD / NECO / NGG deals are on track. Note also a surprising but pleasant JV with RWE to develop US offshore wind.

From US expansion to UK consolidation

National Grid has engaged in a significant asset swap with PPL Corporation to buy UK-based grid activities for £14.2bn (EV) and to sell US-based gas and electricity activities for £3.7bn. The group also plans the sale of its UK-based gas division and is thus shifting from a US growth-driven strategy to UK asset consolidation, and therefore moving towards greater exposure to the growing electricity market. A strategically promising move.

FY19/20 - impacted by US activities

Below market expectations, but in line with our estimates. Operating profit was flat compared to last year and came in at £3,454m (consensus was £3,590m, our estimate was £3,442m). EPS decreased by 1.5% to 58.2p (consensus was 59p, our estimate was 58.1p). Dividend increased by 2.6% to 48.57p (consensus was 48.7p, our estimate was 48.8p). The group estimates the impact on operating income to be in the region of £400m, but recoverable over future years.

H1: the US ensures growth

Solid H1 19/20, backed by the good progression in the UK and a slight increase in the UK Electricity Transmission division. After the promising investments, the group is well on track to meet its asset growth guidance of 5-7%. Positive view confirmed.

STATE OF CHARGE - INVESTMENT OPPORTUNITIES IN EV CHARGING

Government bans on new fossil fueled vehicles in many major economies are likely to drive significant growth in electric vehicles (“EVs”) over the next twenty years. This will create growth in electricity demand from EV charging. The volume of energy to be supplied creates opportunities for both supply companies and generators and the provision of charge points is already creating a new industry. However, the timing of this demand puts pressure on local distribution infrastructure. While smart c

Good FY18/19 results spoiled by nationalisation risk

National Grid released a good set of FY18/19 results. Activities in the US continue to lead the RAV growth and the group continues to invest in the UK to increase the quality of its network. But this good publication was spoiled by Labour’s suggestion to nationalise the energy networks. Although this seems unlikely, it will be a driver of the stock price in the short term.

Lower taxes and headcount offset higher storm costs

National Grid released a set of H1 results which were broadly in line with our expectations. The underlying operating profit fell 6% but NG was able to post 6% growth in underlying EPS – broadly in line with our estimates – as the tax rate declined to 19.3% from 22.9% (US-driven) while the Electricity Transmission business in the UK performed well. The group confirmed its dividend policy. We stick to our Buy recommendation.

US-driven FY17

National Grid reported a good set of FY17-18 results, driven by the US activities, which posted a +20% increase in underlying operating profit fuelled by the 7% rate base growth and favourable rates renewals during the period. The board proposed a FY dividend of 45.93p, up c.3.7%, in line with RPI. The company provided a reassuring outlook and expects growth at the top end of the guided 5-7% range for the medium term, driven notably by the US market.

Nationalisation debate continues, while higher inflation weighs

The company has reported weak H1 results with reported profit down 12.7% to £1.27bn, but up 4% to £1.4bn on an adjusted basis for one-offs and timing effects. The group has reported EPS down 11.75% to 19.5p/share and -13.2% on an adjusted basis. Despite this, and in line with its dividend policy to pay a dividend growth linked to inflation, the group will pay an interim dividend of 15.5p/share which represents 2.1% growth. The group maintains, nonetheless, its full-year outlook as it expects t

Positive FY16/17 results supported by strong US performance; 2017/18 EPS below expectations

The group has published positive full-year results with adjusted operating profit increasing by 14% to £4,667m, profit before tax increasing 13% to £3,555m and EPS growing 16% to 73p. These are all better than expected. The strong yearly performance was mainly driven by the US (+45%), UK electricity transmission (+17%) and gas transmission (+5%). Gas distribution was up 2%. Net debt reached £19.6bn (-19.7%). On a reported basis, the group published operating profit increasing by 0.5% to £4,102m

Growth, stability, returns

National Grid’s high visibility revenues, underwritten by regulatory returns across the UK and US, offer equity holders an attractive combination of asset growth and a 4.3% dividend yield. Both the UK and US businesses are well run. The UK business has predictability of revenues until the end of the current regulatory period in 2021 and is delivering returns ahead of OFGEM’s expected ‘base returns’. In the US, a rate filing programme is underway, which will result in enhanced returns in the year

FY22 Financials

Capital Limited (LSE: CAPD) released its full year results (YE Dec 2022) this morning. The company had already released the operational figures for the year including revenue so focus is on EBITDA and below as well guidance. Having said that it is impressive that this is the third consecutive year Capital has delivered material growth in revenue, with full year sales increasing 28%, following 68% YoY growth in 2021 and 18% YoY growth in 2020. Moreover the company is guiding to $320-340m for FY23

Hybridan Small Cap Feast - 21 Feb 23

21 February 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objec

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Judges Scientific FY Results – Outstanding results, Steady organic, M&A delivers in spades

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Supreme plc: disposal of T-Juice intellectual property

Supreme reports that it has entered into an agreement with an associated company of La Vape Professionelle Distribution (LVP), a leading French wholesaler of e-cigarettes and e-liquids, for the disposal of the intellectual property (IP) of T-Juice, inclusive of the Red Astaire brand. Supreme will receive an upfront payment of €4.5m (£3.97m) in respect of T-Juice brand IP, with the addition of income from consultancy services. The agreement ushers in a new strategic partnership in which Supreme

Hardide Update

The AGM statement reiterated the ‘cautious optimism’ that underpinned the group’s recent annual report (covered in our 9 February update). HDD is experiencing growth across all of its key markets; aerospace, energy and industrial products. First half revenues to end March 2023 are expected to come in around 7% ahead y-o-y. That will be sufficient to deliver forecast EBITDA breakeven in FY23 despite deferral of a c. £0.3m order into H1 FY24. That outcome underlines the success of initiatives to

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SP Angel Spec Sits: (YUG) Stellar 2022 Results + New Dividend Policy

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