SSE PLC           

SSE PLC (LON: SSE) is listed on FTSE 100 index. It is an integrated energy utility company with investments and operations across Ireland and UK.

 Investment Rationale – Watch at GBX 1,525.00

• Macro-Economic Risks: The record-high inflation, soaring energy costs, the resurgence in Covid 19, and regulatory delays can keep the equity market volatility in the short term.
• Underperformance Against Index: SSE has fallen over 6.19% from year to date reflecting underperformance against FTSE 100 Index.
• Overvalued Multiples: EV/EBITDA, Price to Earnings, Price to Book value and Price to Cash Flow valuation multiples are overvalued against the median of the utility sector.
• Bearish Technical Indicators: From a technical standpoint, the stock appears to be bearish, as it has shown a death crossover and is trading below the 50- and 20-day exponential moving averages of GBX 1,587.67 and GBX 1,567.83, respectively.

Trading Statement for Q3 FY22 (Released on 08 February 2022)

• Operational Performance: SSE is on track to record a capex of more than £2 billion for FY22. In addition, the net debt is estimated to be roughly £9 billion as of 31 March 2022.
• Dividend Structure: For FY22, SSE aims to suggest an annual dividend of 81p per share with an RPI-linked dividend in FY23, a rebase to 60p in FY24, and at least 5% increments in FY25 and FY26.

One Year Share Price Chart

(Data Source: Refinitiv, Analysis by Kalkine Group) 

Conclusion

Based on the macroeconomic risks, overvalued multiples, and downward price momentum, we have given a “WATCH” recommendation on SSE PLC at the closing market price of GBX 1,525.00 (as of 14 February 2022).  

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer

References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.

This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332. Kalkine Limited is authorised and regulated by the Financial Conduct Authority under reference number 579414.

The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation.

Kalkine does not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. Kalkine’s non-personalised advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested.

Kalkine Media Limited, an affiliate of Kalkine Limited, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.