MIDAS SHARE TIPS UPDATE: SDCL Energy Efficiency Income is a bargain

According to in-depth research, a whopping 60 percent of all energy is wasted. Some is lost at the point of production. Some is lost when it is converted into energy and some is lost in the journey from processing plants to users.

SDCL Energy Efficiency Income strives to reduce that waste, working with thousands of customers here in continental Europe and the Americas. At the same time, the company, known as SEEIT, aims to achieve consistent share price growth and an attractive, growing dividend.

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 forecast for the 12 months to next March.

However, share price performance has been disappointing. Midas recommended SEEIT on its IPO at £1 and by last summer the shares had risen to £1.23. The price has since fallen to just 75p, hit by rising interest rates, economic uncertainty and a general disaffection with renewable energy stocks.

The fall is unjustified. SEEIT’s assets are valued at £1.01 per share, so the shares are trading at a large discount to the group’s perceived value. This should reverse as economic conditions improve and investors recognize SEEIT’s potential. Until then, shareholders can enjoy annual earnings of nearly 8.5 percent and the prospect of steady dividend growth for years to come.

SEEIT aims to save energy in three ways: by investing in local generators, making lighting, heating and air conditioning more efficient in buildings, and supplying greener energy to homes, businesses and even cars.

The Birmingham NEC is an example of this. Chancellor Jeremy Hunt visited the exhibition center on Thursday to open Europe’s largest high-speed electric vehicle charging site, capable of charging 180 cars in 10 to 20 minutes. SEEIT helped fund the site, with power supplied by BP’s ‘BP Pulse’.

Other projects include supplying solar power to water group United Utilities, converting food waste and olive oil into energy in Spain, and supplying on-site electricity, heat and water to more than 100 businesses at the former Kodak plant in Rochester, New York. .

In total, boss Jonathan Maxwell estimates that SEEIT has saved 1.2 million tonnes of carbon emissions, the equivalent of taking more than a million cars off the road. Looking ahead, brokers expect asset values ​​to rise steadily over the next three years, with the dividend reaching 6.7p by 2025, driven by long-term contracts with SEEIT clients.

Midas Verdict: SEEIT has been dragged down by a ruthless stock market but, at 75p, the shares are a bargain and the dividend yield is an added attraction. Improving energy efficiency is a simple and cost-effective way to reduce emissions, with growing support from both governments and businesses. SEEIT shareholders should try to be patient. New investors might also find now a rewarding time to buy.

Traded in: Main market Heart: SEIT Contact: seeitplc.com or 020 7287 7700