SSE - SELL - Demerger To trigger Dividend Cut?
SSE's shares have somewhat surprisingly outperformed many in the utility sector since Labour's strong showing in the general election. The announcement of the retail demerger looks to be a reaction to the looming standard variable tariff price cap but will not protect shareholders from the potential fall in profits. The management has made no commitment to maintaing the overall level of dividend once the demenrger is completed. The shares are being supported by a misplaced belief in the sustainability of the dividend making them a SELL.
SSE is engaged in producing, generating, distributing and supplying electricity and gas, as well as other energy-related services, across the U.K. and Ireland. Co. has three principal business areas: Wholesale, which uses turbines to convert energy from gas, oil, coal, water and wind to generate electricity, trading in wholesale energy markets, and managing energy contracts; Networks, which transmits and distributes electricity and gas to homes and workplaces; and Retail, which supplies electricity and gas and related services to households and organizations.
Baden Hill has a team of 9 institutional salesmen and analysts operating under the Northland Capital Partners regulatory umbrella. The sales team cover the UK and European stock markets whilst the analysts cover support services, clean tech and equity income. The equity income product has a particular focus on cash flow and accounting quality. The team is also offers capital rasing services and have been involved in a number of succesful flotations and secondary capital raises.
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