Thread by @BigBiteNow

1/6
Starting with #YU, one of my more speculative investments and I am delighted by the positive messages running through today's report.

A 31% reduction in EBITDA losses (£1.846m) on 19% less revenues but ;

https://twitter.com/BigBiteNow/status/1306181711521361920?s=20

2/6
"The estimated adverse impact on H1 2020 Adjusted EBITDA as a consequence of all of the above (Covid) is £1.6m."

So at £45m revenues, YU is almost at EBITDA breakeven. Big improvement.

"cash at 31 Dec 2020 forecast to be significantly above the 31 Dec 2019 balance of £2.4m"

3/6
When the business starts to accelerate its earnings growth, of which there is clear evidence for 2021, then we could well see profitability, especially when more value accretive acquisitions are added to the YU stable.

4/6
I talked previously about the positive impact of the Bristol Energy acquisition and that it is clear that more acquisitions are coming.

Well the CEO couldn't be more clear.

40% increase in meters, no noticeable additional cost burden, immediately cash generative. . .

5/6
and most importantly he says "I look forward to repeating this exercise shortly."

So at least one more acquisition on the way and with it further impact on the already very positive future finance figs.

Lots more to say but that's for later. My main concerns on energy...

6/6
...hedging and Covid affected revenues have been more than alleviated.

Yes we still have the Winter to get through but YU looks on really solid ground now and is a big recovery play for 2021/22.

6A
In 2019 #YU achieved £112m in revenues.

18th Sept 2019 RNS ;
"At 31 August 2019, contracted revenue for FY 2020 in excess of £65m"

Today's RNS ;
"at 31 August 2020, estimates the revenue achievable from its forward contract book to impact FY 2021 to be £71.7m"

6B
This has been assisted by ;
"The Group's average monthly bookings (being the annualised revenue booked on new contracts) significantly increased in H1 2020 to £6.2m (a 94% increase on H1 2019 bookings of £3.2m)."

So effectively double.

23rd Jan FY 2019 trading update.

6C
There we see that H2 2019 bookings fig. was just £5.1m and the FY 2019 bookings fig £4.2m, with follow through to £112m.

Today's RNS goes further ;

"the Board anticipates H2 2020 average monthly bookings to be significantly above the £6.2m achieved in H1 2020."

6D
Whilst respecting the possibility of the impact from further Covid risk, when free of Covid, YU can break even at EBITDA level on just c. £45m in H1 revenues.

Right now (limited further Covid impact) it looks like the business is heading for a FY2021 revenue fig,

6E
considerable above that generated in 2019 (£112m), which intensifies my belief that they can turn a profit in 2021.

None of which allows for a further acquisition, which is clearly on the cards.

6F
Prior to its accounting indiscretions in Oct 2018, YU was trading at a minimum of 600p, based on circa the same shares in issue.

Back in July 2018, when YU was still loss making and reporting c. £82m in expected revenues, it was trading at 960p

6G
The rebuilding process is exactly that, a process, that takes time.

However, I truly think they are on their way now, even with Covid in toe and there's no reason why they can't reach those dizzy heights and beyond, once again.

6H
More from my #YU review.

When YU completed their Bristol Energy acquisition on 10th Aug, they reported it "will add c. 4,000 meter points to Yü Group's current meter portfolio of c. 9,800."

So 13,800 in total.

Jump forward to today's announcement and ;

6I
"we now expect run rate meter point growth to accelerate to circa 17,000 by FY 2020 and for that positive momentum to continue in to FY 2021 and beyond."

That's a further 23% increase post acquisition and if indeed true, achieved in just 4.5 months.

6J
Take out the acquisition and we are talking a 32% increase on YU installed meters, which again signals their renewed drive (post deliberate new business slow down in 2018/19) and demonstrates where this is now heading.