MIDAS SHARE TIPS UPDATE: SDCL Energy Efficiency Income is a bargain
According to in-depth research, a whopping 60 per cent of all energy is wasted. Some is lost at the point of production. Some is lost as it is turned into power and some is lost on the journey from processing plants to users.
SDCL Energy Efficiency Income strives to reduce that wastage, working with thousands of customers here, in Continental Europe and America.
At the same time, the firm, known as SEEIT, aims to produce steady share price growth and an attractive, rising dividend.
The future: Improving energy efficiency is a simple and cost-effective way to drive down emissions
Since listing in 2018, SEEIT has delivered on the dividend front – the payout has increased from 1p in 2019 to 6p in the year to March 2023, with 6.24p pencilled in for the 12 months to next March.
Share price performance has been disappointing, however. Midas recommended SEEIT on flotation at £1 and, by last summer, the stock had risen to £1.23. The price has fallen to just 75p since then, hit by rising interest rates, economic uncertainty and a general disaffection for renewable energy stocks.
The decline is unwarranted. SEEIT’s assets are valued at £1.01 a share so the stock is trading at a big discount to the group’s perceived worth.
This should reverse as economic conditions improve and investors recognise SEEIT’s potential. Until then, shareholders can enjoy annual income of nearly 8.5 per cent and the prospect of consistent dividend growth for years to come.
SEEIT aims to save energy in three ways – by investing in on-site generators, by making lighting, heating and air conditioning more efficient in buildings and by supplying greener power to homes, businesses even cars.
The NEC in Birmingham is a case in point. Chancellor Jeremy Hunt on Thursday visited the exhibition centre to open Europe’s largest high-speed electric vehicle charging site, capable of charging 180 cars in 10 to 20 minutes. SEEIT helped to fund the site, with energy supplied by BP’s ‘BP Pulse’.
Other projects include delivering solar energy to water group United Utilities, converting food and olive oil waste into energy in Spain and supplying on-site electricity, heating and water to more than 100 businesses on the old Kodak plant in Rochester, New York.
Overall, boss Jonathan Maxwell calculates that SEEIT has saved 1.2 million tons of carbon emissions, equivalent to taking more than a million cars off the road. Looking ahead, brokers expect asset values to increase consistently over the next three years, with the dividend hitting 6.7p by 2025, powered by long-term contracts with SEEIT customers.
Midas verdict: SEEIT has been dragged down by an unforgiving stock market but, at 75p, the shares are a bargain – and the dividend yield is a further attraction. Improving energy efficiency is a simple and cost-effective way to drive down emissions, with growing support from both governments and businesses. SEEIT shareholders should try to be patient. New investors could also find now is a rewarding time to buy.
Traded on: Main market Ticker: SEIT Contact: seeitplc.com or 020 7287 7700