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NG has a "ludicrous" amount of debt
https://www.youtube.com/watch?v=ygE01sOhzz0
LTI clearly their debt is too high, or they wouldn't tap shareholder's with a rights issue and they wouldn't sell assets to fund their plans, clearly they have to watch their debt position to protect their credit rating; As far as I'm concerned, excuses like "they plan to sell businesses to streamline the business to concentrate on transmission networks", are just spin, even your Black and white thought processes must be capable of understanding that? Clearly they're getting close to their overdraft limit and are having to find other ways to raise cash, I'm just amazed that analysts aren't hitting with a Vodafone like narrative suggesting the dividend is unaffordable at the current level, maybe they'll hit them with that one further down the road.
Flec
''is disposing of assets because it's current debt position is too high''
wrong again - they plan to sell businesses to streamline the business to concentrate on transmission networks.
''There's no guarantee that NG's £60bn worth of capex will significantly grow revenue''
wrong again - the more electricity that passes through NG's network the higher the revenue. Electricity generation is expected to explode in the coming years.
''All I'm saying is that BT is no riskier an investment''
This is a National Grid board - I am sure that anyone on here is quite capable to make up their own mind about BT.
So you come on here de ramping NG where you have not invested a single penny, and at the same time giving BT as an alternative investment - a stock that you have invested a lot of money in and are underwater.
People quite rightly would question your motives for being here wouldn't they.
Comparing BT and NG is completely ludicrous - any sensible investor would know that
Just to add, Lending why are you answering for LTI? He was the one that said comparing the two companies is "ludicrous"
BT and NG share a lot of the same features, although in different sectors:
They're both heavily regulated
They're both wholesale providers, NG with its Energy supply customers and BT through Openreach providing infrastructure services to other Communication Providers
They both have Capex demands and debt
They both generate around the same revenue and EBITDA
They both pay dividends, BT reduced there's post covid but BT hasn't had a rights issue recently either.
Going off the recent results, BT has now reached peak capex whereas NG have just announced a further £60 Billion capex over the next 5 years. BT has competition, but they're in the midst of a big building closure program, PSTN switch off and convergence play that'll add hugely to the bottom line between now and 2030; NG has just diluted it's stock and is disposing of assets because it's current debt position is too high, clearly BT is a safer bet than NG from that point of view.
There's no guarantee that NG's £60bn worth of capex will significantly grow revenue, just like there's no guarantee that BT wont face stiff competition going forward, whichever stock you bet on it's speculative. What is clear is that the market players decided to trash sentiment in Telecom stocks, probably to allow private equity to swoop in and pick off infrastructure assets, like KKR buying Telecom Italia's fixed line network, or Vodafone selling Vantage towers. NG is also selling off various assets to fund it's Electricity Grid bet, which may lead to growth in revenue, but the regulators could easily crimp that dependent on the general economy and end customer's ability to pay their energy suppliers.
I could go on about the efficiency of Passive optical networks and how BT's energy bill will fall through the floor once FTTP is complete; I could also say that AI chip designs may become more power efficient, as chip manufacture moves from 3nm to 2nm and the designs get more ever power efficient over time. It isn't written in stone that businesses will require more power in years to come, that's just speculation based on current technology and unknowns.
All I'm saying is that BT is no riskier an investment than National Grid, but the market treats them very differently from a sentiment and valuation point of view.
Given that NG is heavily regulated in both the UK and USA, what are the risks of a labour government in the UK and ? regime in the USA adversely affecting the short/medium term prospects of NG?
I expect the dividend hunters to be active next week as the price recovery continues.
Fleccy “Comparing one with the other, NG is either massively overvalued or BT is massively undervalued. ‘
I’m not sure I understand the logic of your reasoning. I’m curious to know how you determine the intrinsic value of a business to be able to make a statement like the above. Surely CAPEX and debt levels alone are insufficient? And how do you differentiate between CAPEX needed to maintain the business and CAPEX used to grow the business and generate future returns?
Nil paid rights currently up 26% today -just to counteract someone mentioning the price on the way down.
" the expected big increase in electricity consumption because of things like increased use of EV's and artificial Intelligence etc."
etc ....being air conditioners and water pumps !! depending how the climate change affects you !!
Talk
''leading the way with a greater focus on renewables''
??
That would be the generators of electricity.
NG will greatly benefit from this renewable energy waiting to be plugged into the Grid to accommodate the expected big increase in electricity consumption because of things like increased use of EV's (I am not personally interested) and artificial Intelligence etc.
LTI, why is comparing BT and NG completely ludicrous?
Even though one is a Telecom company and the other a power grid owner, I can think of many qualities they share as companies, albeit in their respective industries.
It can still have dips, but I've gotta be honest, it's looking like I'm glad I loaded the boat at just under £8.35
Unlucky to the dreamers and bargain hunters who held on salivating at the thought of an under £8 SP, you missed a great opportunity in the £8.30/8.40 range. Looking forward to receiving my 39p upcoming divi and this returning to over £10 in the coming months and the company leading the way with a greater focus on renewables
Why?
Flec
comparing BT and NG is completely ludicrous - any sensible investor would know that
My post was all about NG, the fact I mentioned BT to make a point is irrelevant. If I'd been comparing Vodafone and BT, without mentioning NG, then you'd have a point. I mentioned NG 9 times in that post, so I'd suggest it was very relevant, the fact I'm not invested in NG is irrelevant. I'm sorry if me posting upsets you, you should get over it.
Suf
''I was only looking to buy in around the Rights issue prices ''
There was a reason why the rights issue had been fully underwritten at 645p.
''at todays price 866p I see no Capital gains for new investors''
others of course would have another opinion
Flec
this is a NG board and not one to go into details about BT.
I am not sure that you as a non shareholder have had any benefit for shareholders with your numerous de ramping posts
The technicalities that put downward pressure on the NG share price hopefully are now easing, but it has created a good buying opportunity.
ADR's represent a number of shares issued and held at a depository bank , in the case of NG, 5 voting right shares .
The number of voting right shares are currently 3,719,747,182. 7 in 24 of that number multiplied by the rights issue price of £6.45p comes to the £7 Billion being raised.
The after hours price of an ADR yesterday was equivalent to £9.25p per share as I had already mentioned. I have also mentioned what looked like an arbitrage situation.
The pre open ADR price is now currently equivalent to £8.93p per share with the UK share price now up to 880p, meaning that taking advantage of the arbitrage situation has now all but disappeared whereas at one point the difference was about £1.
This gap in price and guessing that 'tail swallowing' which would have the technicality of downward pressure on the share price may be largely over prompted me to purchase near the lows yesterday.
Well done (for the time being at least) to others who purchased at or near lows yesterday
The Fed’s preferred inflation measure rose 0.2% in April, as expected
LTI questioned why I've been posting on here, I think the main reason is that I'm confused as to why NG is somehow valued differently than BT. If BT had a Rights Issue of 7 for 24 shares, UBS and other analysts would hammer BT's share price into the ground, yet BT is in a far stronger position financially than NG. Comparing one with the other, NG is either massively overvalued or BT is massively undervalued. For some reason the market is currently valuing NG's assets differently than they value BT's assets, for example Openreach alone is worth way more than BT's financial debt, and should BT sell Openreach a big portion of the Lease liabilities will go with it. Then there's BT(EE)'s mobile portion of the business, that BT acquired for around £12 Billion, or around BT's current market cap. In terms of BT's debt, the figure the media likes to quote in isolation is the Net Debt figure of £19.5bn, consisting of £14.5bn Financial Debt and £4.882bn lease liabilities and lease liabilities may be accounted for as debt, but in reality they're operational costs.
In terms of CAPEX, BT are heavily punished by analysts for any cash they direct into infrastructure spend, with UBS probably being their most vocal critic. Another narrative used to bash BT is the amount of regulation meted out by OFCOM, due to their SMP status, yet NG's £60 Billion infrastructure spend doesn't guarantee returns and is heavily dependent on the regulators being kind going forward.
Just because the market's being kind to NG now, doesn't mean it always will, 5 years is a long time and £60 Billion is a lot of Capex, there's no reason to suppose that NG's dividend is safe going forward, or that NG wont look to raise more capital down the road, or that the market wont change its view on NG's prospects.
Many are buying in for the dividend no doubt. Let's see where we are this time next week.
I just scanned bits of the prospectus https://www.nationalgrid.com/document/152061/download, esp Section 2.5.
p87 Subject to certain limited exceptions, holders of American depositary shares
(“ADSs”) representing Shares will not be entitled to participate in the Rights Issue.
That tells me to pay SDRT and swap the ADRs for NG shares. Disappointment tempered by having top sliced just before the announcement and bought it all back yesterday.
"£91 million transaction last evening"
goinguphigh
That was the closing auction , which was a number of transactions ...but the auction price above the close price did give a very strong suggestion that today would open higher
yes many funds have shares in NG ...no doubt a game of selling the RI rights higher and then buying them back lower