sounds good. Especially in these troubled times. Reminds me a little of $KEP from South Korea, which I recently introduced. They are expanding throughout Asia and are professionals in the construction of nuclear power plants. But here there was direct criticism or fears from the community. That the state could regulate CEP and have a finger in the pie because it is also a monopoly. I think there will be similar fears with SNAM now. @Get_Rich_or_Die_Tryin @Dividendenopi . Thanks for the introduction and hope for a great discussion. Perhaps my friend Prompt might also like to take a look at $KEP
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@Tenbagger2024
Mr. Prompt is at the start and has had his coffee.
When someone with the name "tenbagger" asks about a state-owned Korean utility, we naturally have to play hardball. Let's give Korea Electric Power Corp (KEPCO, ticker: KEP) a quick and painless run through our established formulas.
1. core quality formula (quality growth)
Sales growth: Currently in the low single-digit range (approx. 0 to 5 % year-on-year). Electricity in South Korea simply does not grow like software.
Operating margin: Currently around 13 to 14% (after years of deep red due to the explosion in global gas and coal prices).
Score: 5 + 14 = 19 points.
Verdict: Right in no man's land (15-25 = solid to weak). Absolutely misses your target of > 25 points for quality growth.
2. cash flow quality formula (the cash machine?)
At first glance, the free cash flow does not look so bad after the recent recovery in energy prices, but: KEPCO is pushing a gigantic mountain of debt of over USD 80 billion in front of it.
The problem with CapEx is that if commodity prices rise again, operating cash flow immediately collapses again because they are not allowed to pass prices on to customers quickly enough. Not a real, reliable cash machine, but a cyclical plaything construct.
3. dividend filter (income core)
Yield: Currently between a meagre 0.3 % and a good 3.1 %, depending on the estimate, but definitely below your hard 3.5 % minimum requirement.
Sustainability: Disaster. When energy prices went through the roof in 2022/2023, the dividend was completely canceled. If a company has to kill the payout immediately in the event of headwinds and you don't think much of "pseudo dividends" through debt, the stock falls mercilessly through the filter.
4. the exclusion rule (the knock-out criterion)
The biggest problem here is not in the balance sheet, but in the parliament in Seoul. KEPCO is over 50 % state-owned. In practice, this means that if inflation rises in South Korea, the state forces KEPCO to sell electricity below the cost of production in order to relieve the burden on citizens. You are not buying a free company here, but the socio-political buffer cushion of the South Korean government. Margins are permanently at risk.
My flippant conclusion for Mr. tenbagger
KEPCO is not a "tenbagger", but rather a "depository excavator", which, in case of doubt, will eat into your returns. You are buying into a highly indebted state-owned company whose profits depend on the goodwill of Korean politicians. No reliable dividend, no strong quality growth and far too much political risk.
We'd rather stick to our Scandinavian or southern European infrastructure bets - at least we know that the regulatory system won't drive us straight into insolvency. We'll leave KEPCO on the Korean peninsula.
Mr. Prompt is at the start and has had his coffee.
When someone with the name "tenbagger" asks about a state-owned Korean utility, we naturally have to play hardball. Let's give Korea Electric Power Corp (KEPCO, ticker: KEP) a quick and painless run through our established formulas.
1. core quality formula (quality growth)
Sales growth: Currently in the low single-digit range (approx. 0 to 5 % year-on-year). Electricity in South Korea simply does not grow like software.
Operating margin: Currently around 13 to 14% (after years of deep red due to the explosion in global gas and coal prices).
Score: 5 + 14 = 19 points.
Verdict: Right in no man's land (15-25 = solid to weak). Absolutely misses your target of > 25 points for quality growth.
2. cash flow quality formula (the cash machine?)
At first glance, the free cash flow does not look so bad after the recent recovery in energy prices, but: KEPCO is pushing a gigantic mountain of debt of over USD 80 billion in front of it.
The problem with CapEx is that if commodity prices rise again, operating cash flow immediately collapses again because they are not allowed to pass prices on to customers quickly enough. Not a real, reliable cash machine, but a cyclical plaything construct.
3. dividend filter (income core)
Yield: Currently between a meagre 0.3 % and a good 3.1 %, depending on the estimate, but definitely below your hard 3.5 % minimum requirement.
Sustainability: Disaster. When energy prices went through the roof in 2022/2023, the dividend was completely canceled. If a company has to kill the payout immediately in the event of headwinds and you don't think much of "pseudo dividends" through debt, the stock falls mercilessly through the filter.
4. the exclusion rule (the knock-out criterion)
The biggest problem here is not in the balance sheet, but in the parliament in Seoul. KEPCO is over 50 % state-owned. In practice, this means that if inflation rises in South Korea, the state forces KEPCO to sell electricity below the cost of production in order to relieve the burden on citizens. You are not buying a free company here, but the socio-political buffer cushion of the South Korean government. Margins are permanently at risk.
My flippant conclusion for Mr. tenbagger
KEPCO is not a "tenbagger", but rather a "depository excavator", which, in case of doubt, will eat into your returns. You are buying into a highly indebted state-owned company whose profits depend on the goodwill of Korean politicians. No reliable dividend, no strong quality growth and far too much political risk.
We'd rather stick to our Scandinavian or southern European infrastructure bets - at least we know that the regulatory system won't drive us straight into insolvency. We'll leave KEPCO on the Korean peninsula.
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•@Raketentoni I say yes Mr. Prompt is the avatar of @Get_Rich_or_Die_Tryin. Interesting how he parrots his arguments. 🙈🤣
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@Tenbagger2024 He's just ruthlessly honest and has a good eye for the general conditions surrounding glossy, brochure-like figures.😌
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•@Get_Rich_or_Die_Tryin Then you can retire soon 🙈🤣
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•@Get_Rich_or_Die_Tryin What do you think about the new points in my analysis?
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•@Raketentoni I think it's great! I've actually added current newsflow to my prompt.🤷🏼♂️ and a short, medium and long-term outlook.😅
It's amazing that you and I are surfing the same wave.😁 At least on one side of your barbell.😉
It's amazing that you and I are surfing the same wave.😁 At least on one side of your barbell.😉
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•@Get_Rich_or_Die_Tryin yup .😁as long as it's against @Tenbagger2024 anyway .😁.😁.😁.😁.😁
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•@Raketentoni That has nothing to do with being against him.🫶🏻 We just have a different view of it, because the focus is different.🤷🏼♂️
Legitimate and perfectly fine.😌
Legitimate and perfectly fine.😌
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•@Raketentoni Let's see who is better off at the end of the year
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•@Raketentoni and there are also more than enough great things among the companies that @Tenbagger2024 presents here.
I am still grateful for $EXENS.🫶🏻
I am still grateful for $EXENS.🫶🏻
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