Trading at Alkane Energy (ALK) matched market expectations in 2014, but this didn't stop a slump in the share price. Sentiment towards the power generation sector remains depressed.
Despite the fall in power prices - in line with commodity prices more generally - Alkane has managed to secure contracts for this year and next at a steep premium to the average prices currently being paid. Some 82 per cent of the output expected this year has been contracted at £52 per MWh, in line with average 2014 prices and 13 per cent higher than the average 2015 price at the end of February.
The sale of shale assets to Egdon Resources (EDR) last June in return for 18 per cent of the exploration company's shares helped inflate Alkane's net assets by a third to £44.1m, meaning it is now trading at a steep discount to book value. The value of the stake has since plummeted to £3.6m, but Alkane chief executive Neil O'Brien views it as a long-term investment.
Analysts at Liberum left their 2015 forecasts virtually unchanged, but downgraded their 2016 numbers by almost a quarter. They expect pre-tax profits of £5.4m and EPS of 3.6p this year, followed by £5.5m and 3.5p in 2016.
| ALKANE ENERGY (ALK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 22p | MARKET VALUE: | £32m | |
| TOUCH: | 21-22p | 12-MONTH HIGH / LOW: | 44p | 21p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 30p | NET DEBT: | 42% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 6.6 | 1.3 | 1.9 | nil |
| 2011 | 9.5 | 1.7 | 1.9 | nil |
| 2012 | 14.7 | 2.3 | 2.4 | 0.1 |
| 2013 | 20.6 | 2.7 | 2.4 | 0.2 |
| 2014 | 16.0 | 3.2 | 2.6 | 0.3 |
| % change | -22 | +19 | +7 | - |
Ex-div: 28 May Payment: 30 Jun | ||||
