Telecom Plus
Shares: 184p +28p
Questor says Buy

Tory party backer Charles Wigoder must have felt truly blue earlier this year when shares in his residential telecoms and energy supplier fell below 100p for the first time in almost four years. In early 2004, Telecom Plus - in which Wigoder has a 20pc stake - had peaked at 400p. But a failure to hedge its gas supply contracts caused the stock to tumble as the gas price soared.

Then came the explosion of competition in the broadband sector led by that "free" offer from Carphone Warehouse. It is easy to see why investors got spooked. Since this summer, however, Telecom Plus has staged a modest recovery. Yesterday it got a fresh fillip as Wigoder promised record profits in the current year.

NPower has taken over Telecom Plus' energy-buying operations, along with an option to buy management's 29pc stake in 2009 at a price based on a set formula.

Based on analysts' earnings expectations NPower's strike price would be somewhere near 300p, which would represent an impressive return over three years.

The arrangement makes Telecom Plus pretty much bid proof for now but shows that NPower has confidence in the low-cost business model pioneered by Wigoder, who built Peoples Phone into a sizeable mobile phone service before cashing in millions by selling it to Vodafone in 1996.

Telecom Plus owns no network but buys in bulk and seeks to undercut larger rivals. Not only does it not have to build or repair switches and pipes, but it sells through agents and sub-agents so it has minute marketing costs - customers are given incentives to win new business from friends and family.

On 15 times forecast earnings, falling below 12 for 2008 and yielding 2.6pc, there is room for upside.

Whitbread

I look forward to hear an answer!

I am happy to read one, but Beremberg dropped TP from 1400-1000.

But projected earnings and yield would suggest different!

Consensus recommendation

As of Apr 06, 2016, the consensus forecast amongst 5 polled investment analysts covering Telecom plus PLC advises that the company will outperform the market. This has been the consensus forecast since the sentiment of investment analysts deteriorated on Feb 10, 2016. The previous consensus forecast advised investors to purchase equity in Telecom plus PLC.

The recent S P drop might also be linked to going ex dividend on 31 March.

Generally, the drop is the day the share goes X-div.

But, end of the year was 31/3/2016.

Where did you get x-div date from?

Also, it has reclaimed a little of the loss.

Have a feeling there were some large sells yesterday.

Divi dates for TEP appear to be mid July & mid Dec each year.

Quite right, I misread the date.

Anybody know the reason for initial 10% and now 7.5% drop in share price?

19/04/2018


StockMarketWire.com
Telecom Plus, trading as the Utility Warehouse, grew its full year adjusted pre-tax profits from continuing operations to around £54m in the year ending 31 March 2018, up from £53.3m the previous year.

Cash flow has remained strong, with the company returning £25m to shareholders through a tender offer in July 2017.

Throughout the year a significant gap remained between the low introductory fixed price energy deals available from some suppliers, and the standard variable prices charged by the 'Big 6'. In addition, the energy market saw record levels of switching, with approaching 20% of domestic customers changing to a new supplier over the last 12 months.

Customer and service numbers advanced over the course of the year to 610,739 (2017: 607,802) and 2,340,719 (2017: 2,288,918) respectively.

The company recently acquired a 75% shareholding in Glow Green, a fast growing supplier/installer of domestic gas boilers and warranty/care plans (which installed around 3,000 boilers last year), for a total initial cash investment of £2m.

The company intends to pay a total dividend per share for the year just ended of 50p (2017: 48p), representing an increase of 4.2% compared with the prior year. The final dividend of 26p is expected to be paid on 3 August 2018, subject to shareholder approval at the AGM which will be held on 26 July 2018.

Adjusted profits before tax for FY2019 are expected to be in the range of £55m-£60m.

At 8:15am: (LON:TEP) Telecom plus PLC share price was +14p at 1102p


Story provided by StockMarketWire.com