FY22/23: High visibility on inflation-protected results

National Grid published strong FY22/23 earnings (year ended March 31) reaffirming the strength of its business mix during inflationary periods. The group completed its strategic pivot with the disposal of 60% of the UK Gas assets to focus mainly on electricity transmission/distribution over an intensive 2026 £40bn capex plan. The outlook over the five-year period 2020/21 to 2025/26 remains unchanged.

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

Robust FY23 performance contrasts with low valuation

Today’s trading update highlights a strong performance in FY23, with revenue and operating profit ahead of market expectations. Volex looks to have exited FY23 in a robust position supported by its diverse growth markets focus and strong customer relationships, built on recognised levels of service and reliability. In common with the broader sector, the Group is seeing signs of supply chain normalisation, but still healthy underlying order positions, and reduced inflationary cost pressures. Pre-

Invinity Energy Systems - New Sale Could Build Familiarity

A sale of four VS3 Invinity flow batteries shows continued positive momentum for the company. This deal goes further as we see it building familiarity for the company’s storage technology with key members of the workforce in the North American electricity industry.

Initial Equity Trading Comments - 15 May 2023

LIBERUM: Eneraqua Technologies* - Initiation - Saving money... and the planet

RSL budget pressures impact margin expectations

FY23 results confirm strong growth, delivering adj. PBT of £10.1m (SCMe: £9.8m, FY22: £5.6m). Investors are likely to focus on the outlook however, where we materially reduce our earnings forecasts. Registered social landlord clients are reacting to significant budget pressures, with high levels of cost inflation exceeding government rent caps. In response, clients have rephased project schedules, prioritising lower cost per unit, typically lower margin, projects as they right-size capital budge

Mpac Group+ (MPAC, House Stock, 230p) - AGM update; FY23F unchanged

Morning Note – 11 May 2023

LIBERUM: Wincanton - FY results in line, exit from closed book transport

ATOME Energy - Strategic Stake And Fertiliser Move

US energy technology company Baker Hughes has made a US$3m (£2.4m) investment in ATOME representing a 6.6% holding. As with all such strategic stakes the information content of the investment is key, signalling a positive appraisal of the company from an industry insider. Specifically, we see the interest of this major player as pointing to the long-term development opportunities ATOME has in multiple geographies. ATOME has also announced that it will add a back end process in the Villeta design

Hybridan Research: Sector Review: Critical minerals for UK - mining and battery recycling: 09-05-2023

Virgin mining: Energy security and decarbonisation are driving the race in the sourcing of critical minerals from the natural world. This has contributed to the revival of exploration activities in the US, Europe and to a lesser degree the UK. For example, the global identified lithium resources increased from 40m tonnes in 2015 (the Paris Agreement year) to 97m tonnes in 2023, at a CAGR of 12%, according to the U.S. Geological Survey data. For example, there was no identified lithium resources

Hybridan Small Cap Feast - 23 Feb 23

23rd May 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 objectiv

LIBERUM: ATOME Energy * - Significant expansion of Villeta, BH joins the register

Powerhouse Energy - Northern Ireland Site Identified

Powerhouse has today announced an agreement with Noage Energy to establish a project in Northern Ireland using Powerhouse technology to convert waste to energy. Noage have identified a potential site and work is due to commence to negotiate access and to obtain the necessary permits for construction and operations. This follows the joint venture with Hydrogen Utopia International to develop a waste to hydrogen project in the Republic of Ireland announced earlier this year and displays a growing

Epwin Group+ (EPWN, House Stock, 67p) - Trading update: forecasts intact; 7x PER compelling

Webinar: “The Impact of US IRA on Clean Energy Companies”

The US Inflation Reduction Act will have sweeping impacts on the energy industry and its participants. We’ve invited four companies from the Active Net Zero Universe to share how they see the industry evolving, helping investors identify the major risks and opportunities. Companies presenting are EQTEC (EQT LN), Foresight Group (FSG LN), Invinity Energy Systems (IES LN) and Velocys (VLS LN). The Active Net Zero Universe uses the same selection methodology as the Solactive Active Net Zero Global