2549: Good Energy #GOOD - Overview

The SharePickers Podcast with Justin Waite

Some notes on Good Energy #GOOD
VALUATION SUMMARY
Market Capitalisation = £29m
Net Cash = £19m
Enterprise Value = £10m
Net Asset Value = £38m
WHAT DO THEY DO?
Good Energy is a supplier of 100% renewable power and an innovator in energy services.
It has long term power purchase agreements with a community of 1,700 independent UK generators who are independent businesses, non profits and local communities, spread all over Britain.
Since it was founded 20 years ago, the Company has been at the forefront of the charge towards a cleaner, distributed energy system.
Its mission is to power a cleaner, greener world and make it simple to generate, share, store, use and travel by clean power. Its ambition is to support one million homes and businesses to cut carbon from their energy and transport used by 2025.
Good Energy is recognised as a leader in this market, through green kite accreditation with the London Stock Exchange, Which? Eco Provider status and Gold Standard Uswitch Green Tariff Accreditation for all tariffs.
THE CEO
In April 2021 Nigel Pocklington was announced as the successor to Juliet Davenport the Founder and Chief Executive Officer of Good Energy.
This transition is part of the continuing evolution of Good Energy from its roots as a simple green energy provider to a newer world green energy services and 'mobility as a service' provider.
Nigel most recently served as Chief Commercial Officer of Moneysupermarket.com Group plc. Prior to this, he held a variety of senior roles within Expedia Inc., including President of eBookers and Chief Marketing Officer of Hotels.com. He spent a decade of his early career at Pearson plc, including a period leading the digital operations of the Financial Times.
A DEEPER DIVE INTO THE COMPANY
Good Energy have 2 different parts to the business.
They supply Renewable energy to domestics & business customers:
On 20 January 2022 they announced the disposal of its 47.5MW generation portfolio to Bluefield Solar Income Fund for a total consideration of up to £24.5m.
This generation portfolio of two wind farms & six solar farms supplied 15% of their customers. They now have long term power purchase agreements with a community of 1,700 independent UK generators that supply their 277,000 customers.
This sale of their generation portfolio was part of their strategy to transition to a higher margin energy services provider.
Energy Services, this includes Solar Installation & generation, Heat Pumps & Transport
Through acquisitions they now have a business that can install solar panels, heat pumps and manage customers generation. They are the second-largest feed-in-tariff operator in the UK, and has one of the highest profitability/customer in the industry.
Transport:
They also own 49.9% of Zap-Map, the UK’s No.1 EV charging map iOS/Android app.
It allows users to search for EV charging points, plan journeys and pay for charging. It has 600,000 customers and recently raised £9m, £5.3m was from from Fleetcor, (NYSE: FLT) is a leading global business payments company that helps businesses spend less by providing innovative solutions that enable and control expense-related purchasing and payment processes.
FORECASTS
Year Revenue Net profit
2023E £267m £1.75m
2024E £258m £4.55m
The net margin is therefore expected to increase from 0.6% in 2023 to 1.7% in 2024, which is more than doubling.
They had £38m gross cash at the end of May, which is considerably larger than its market cap.
Good Energy rejected a 400p hostile bid in 2021. Canaccord, their brokers, have a target of 475p, current sp 174p.
Canaccord:
“At our unchanged 475p target, which continues to be based on a sum of-parts, the stock would trade at 13x/8x 2024/25E P/E, and still with a substantial net cash position. We remain Buyers”
MY OPINION
Good Energy are the original renewable energy company have loyal customers who are of the same ethos, which is to champion green energy decentralisation.
As a company they are profitable, pay a dividend and have a big chunk of cash, around £20m. Some of this will be used to acquire complimentary businesses to enable them to expand further into the green energy, higher margin, services sector. This is a sector that is growing and will continue to grow for decades backed by global regulation to cut carbon emissions.
Their revenue generation of £240m+ pa means even a slight improvement in margins, which will happen as they transition from energy supplier to energy service provider, could see a major positive re-rating on their valuation.
DYOR
https://youtu.be/ws7lO4RJcfA