Nat. Grid was downgraded today by HSBC from outperform to neutral. A few days ago, the company issued a very positive interim business forecast. Why the down grade? Any comments.
Partial report. Find entire report on Nat Grid London web site.
29 January 2013
National Grid plc
Interim Management Statement
for the period 1 October 2012 to 28 January 2013
· Continued solid performance reflecting good financial delivery and sustained investment in attractive long-term growth assets
· Final RIIO-T1 and RIIO-GD1 proposals published by Ofgem in December 2012
· US regulatory filings proceeding well
o Rhode Island: Narragansett gas and electric rate cases approved
o New York: Niagara Mohawk joint proposals now submitted for final approval
o New York: KEDNY1joint settlement proposal agreed with Commission staff
Steve Holliday, Chief Executive, said:
"Our businesses made further progress toward delivering our priorities for the year, underpinned by good financial performance. Sustained investment in transmission and distribution infrastructure, combined with a strong focus on efficiency has resulted in another solid operational performance. This was achieved despite our US employees being affected by payroll issues associated with a new system implementation and the impact of 'Superstorm' Sandy on our operations.
In the UK and US a number of our regulated businesses reached significant milestones in the development of new regulatory frameworks. In December, Ofgem published their final proposals for RIIO which we are reviewing in detail before making any decision on next steps. At the same time, our US team has made good progress advancing regulatory discussions in both Rhode Island and New York, with new rate plans approved in Rhode Island in December.
We reconfirm our positive outlook for 2012/13 - overall, we are well positioned to deliver another year of good operating and financial performance."
I hold a lot of NGG and i shudder any time someone says good things about it cause the stock will drop the next two or three days. Can't for the life of me figure out why. it once sold at 79 so i have no idea why it is over sold now...
Yes, the NGG (ADR) trade price hovered around 80 US Dollarsback in 2008. However, during that period the British Pound was worth over 2.00 US Dollars. Now it's worth around 1.58 US Dollers. That alone accounts for 25% ADR price drop. (US dollar is stronger, so spend them in Britian! just jokring).
Also in 2010, the company held a Shareholder Rights Offering, adding more shares to the base which resulted in a 14% share value dilution.
In spite of these negative impacts, I'm still bullish on National Grid. I believe their reports that the company is in good shape and has a promising future. The price fluctuations are quirky sometimes, but I guess that's the nature of most investing that carries some risk.