LPE - Locality Planning Energy

LPE - Locality Planning Energy

Seems great value to me - they are an energy retailer that sells to strata blocks putting in their own meters and then saving both the apartments and common areas money by amalgamating all the use and buying wholesale.

Here are a few details:
- Raised $6m at end of 2015 @ 2c and RTO'd (from SXT) + raised $5.78m @ 2c at start of 2017.
- Have now hit 100GWh under management with average contract length of 7.2 years (way better than normal retail energy providers who have massive churn). Margins steady at 18-20%.
- Achieving pretty consistent month on month growth in revenue which is forecast to continue - have only targeted SE Queensland so far so lots of room for growth.
- Forecasting $44.2m revenue, 680knpat this year so trading on FY18/19 PE multiple of 61 due to cost of expansion, FY19/20 forecast of $79.7m revenue, $4.65npat so forecast PE 9.5.
- Have a $10m debt facility to fund infrastructure for each strata which is paid back over time.
- Founders & management own 60% and voluntarily escrowed most of this.
- Currently at 52-week lows despite all of this progress - market cap of $42m.

Investor presentation here: https://hotcopper.com.au/threads/ann.../#.W0Aau9IzZPY

Anyone looked into LPE? Have any thoughts? Do you think it represents value or have I missed something?

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Originally Posted by duncan22

LPE - Locality Planning Energy

Seems great value to me - they are an energy retailer that sells to strata blocks putting in their own meters and then saving both the apartments and common areas money by amalgamating all the use and buying wholesale.

Here are a few details:
- Raised $6m at end of 2015 @ 2c and RTO'd (from SXT) + raised $5.78m @ 2c at start of 2017.
- Have now hit 100GWh under management with average contract length of 7.2 years (way better than normal retail energy providers who have massive churn). Margins steady at 18-20%.
- Achieving pretty consistent month on month growth in revenue which is forecast to continue - have only targeted SE Queensland so far so lots of room for growth.
- Forecasting $44.2m revenue, 680knpat this year so trading on FY18/19 PE multiple of 61 due to cost of expansion, FY19/20 forecast of $79.7m revenue, $4.65npat so forecast PE 9.5.
- Have a $10m debt facility to fund infrastructure for each strata which is paid back over time.
- Founders & management own 60% and voluntarily escrowed most of this.
- Currently at 52-week lows despite all of this progress - market cap of $42m.

Investor presentation here: https://hotcopper.com.au/threads/ann.../#.W0Aau9IzZPY

Anyone looked into LPE? Have any thoughts? Do you think it represents value or have I missed something?

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I was invested for almost a year and in that time they continued to release less and less information about the company progress, even though the progress was all positive.

A lot of the HC investors hated this and even called out management about it and management blew them off (basically) saying they are announcing everything they need too.

Over time I saw better opportunities pop up elsewhere so I ended up leaving.

People’s view on HC was that because management own so much of it and pay themselves well they not so concerned about shareprice appreciation - hence the years of non-movement.

Then it bought out all the pessimistic investors who said things such as “there are plenty of companies who do the same thing” and “their business model isn’t novel and could be copied at any time” and “check the review websites, people hate this company”. There are obvious rebuttals to all this pessimism of course.

The shareprice has been languishing though but I am always watching for a re-entry. Sound fundamentals but definitely a company to sit and wait on.

https://www.livewiremarkets.com/wire...h-a-big-future

I’ve topped up with more - like this one.

Thanks duncan. Ive been in an Aus share before with a very similar business model some years ago. It was very convincingly promoted on H/C by one believer,/director but just couldn't get enough traction/sales/contracts and went belly up.Still cant remember the name but it may still arrive.

Heres the presentation for LPE in 2015. Have they done what they said they would?. If they can get more strata contracts and traction could be a goer.

http://www.asx.com.au/asxpdf/2015101...d52zpywh29.pdf

Here's my crudely drawn graph of how they're doing compared to how they forecast back in 2015. Final two dots are forecasts based on most recent presentation that said they would grow by 100GW per year for the next 3 years.

Attachment 10218

Pretty good forecasting really - everything else apart from a poorly timed cap raising (in my opinion) and 2x debt facilities started and cancelled before Blackrock has been pretty well executed.

Another good write up here: https://egpcapital.com.au/wp-content...01/2018dec.pdf

duncan22 - question on 2019 competition for you please

Sorry for anyone who followed me in here - what a crap few months in LPE land!

Downgrade of revenue forecast due to what they said was wholesale pricing drops but its more due to lack of sales which they put down to a cashflow crunch and say will be resolved this half.

Half yearly out which is now very transparent and has projections - for a new investor these levels may be worth looking at the business fresh.

https://www.asx.com.au/asxpdf/201902...hz3cr1gswz.pdf

Business still ticking along and growing rapidly. Price still very cheap.

Forecasting $80m revenue (+160% growth) and 41,500 customers (+90% growth) for this financial year.

Not a great track record of forecasting (or reporting) but still like this business.

https://www.asx.com.au/asxpdf/201910...97llbqm3wd.pdf

Hey Duncan,

Keep an eye out on regulatory changes. There appears to be networks looking at the Embedded Network sphere with the aim to kill their network arbitrage (check Ausgrid AER submission) although I believe LPE are mostly QLD.
There's no reason why they should do this given they are regulated, so it may not eventuate. Citipower tried it a few years back.
I believe next steps will be EN operators will have to offer price at no greater than DMO or VDO rates (effectively cap prices) which could also impact these embedded network operators.

I dont have the specific information on hand, but can post if ts of interest