I hold SQN in my Sipp and ISA accounts, for income.
Following a recent announcement regarding delays and extra funding for a number of anaerobic ingester plants, the share price has been plummeting. Looking at the figures involved, the fall seems excessive especially as the company seems well funded with cash. Does anyone have a view on the stability of the company, and also its ability to maintain dividends, and has the share been oversold?
JS Gray
The most recent NPV was 93.68p, before the most recent 0.6042p div. If we assume the worst, a write down of 13.2p on the AD will take NPV to about 80p. There is also the fact that they are claiming £25m from the Suniva bankruptcy which may never materialise.
In November there will be a vote to continue or wind up the company. Given how accident prone they are a windup seems a strong possibility. However, given that the loans are long term, a wind up could take a considerable time (or be at a discount to NPV), and as the current div is not covered I suspect that it may well be cut.
Given the extent of the shambles I completely understand shareholders exiting in the mid~high 60p's. However the current 52p price does seem an excessive discount to me.
I have a small holding and will not be selling as things stand.
They should cut the dividend to 6-8% and start buying back the shares at this massive discount to NAV.
Remember in many enviromental funds AD plants trade at a premiun to NAV (#JLEN for example)
I also have a holding. I calculated the 80p worst case NAV and at 53p share price, the discount feels just too large to sell, particularly when re-reading the RNS there seem to be many variables feeding into the AD valuation, meaning this is not an exact valuation science, and the expert valuers could probably argue something better than the worst case.
The AD plants true worth obviously is only known when realised and with there being demand generally for environmentally themed assets, should these AD plants be sold during a winding up, it is hard to imagine they would only realise 53/80 of true worth, which the share price offers now.
I missed selling at a more reasonable price, and unless there is further bad news, I cannot see this going much lower. There is still the dividend to be received whilst awaiting news.
Well, as a fairly long-term holder, I am frustrated at the quick collapse in the deemed value of the AD portfolio. I see that they have to do it technically, but I did not see these problems arising two years ago and thought, how nice to lend to something useful.
The Chairman's statement on 27th September, against an 8% discount to NAV, seemed measured, so I held.
However, the unaudited NAV at 30th Dec was 93.68p. According to the Jan 20th RNS, the max writedown to these assets would be 13.2p. Assuming income has continued (no advice to the contrary), NAV would reduce to around 80p.
Schroders ditched about 1.6% of the shares with no II reporting having picked them up. Read the report to form an opinion on the uncovered dividend, but they would n't have to reduce it hugely to get in line. But with a 'strategic review' happening, no II is going to buy in and perk the price up for now.
I continue to hold as, even if it were wound up, I would imagine the worst would be 70p of realisations.
