Smart Metering Systems (SMS) 525.5p
Gain to date: 11.8%
One of Smart Metering Systems’ (SMS) larger rivals has joined the UK stock market and has a less appealing investment proposition. Calisen (CLSN), valued at £1.3bn versus £582m for SMS, has the same approach of owning and installing smart meters and collecting rent from utility providers.
Where the two companies differ is in the capacity of the installation team and customer base.
SMS has 500 in-house engineers and a training programme. In contrast, Calisen only recently acquired in-house installation capacity and it will have to invest heavily to expand its installation team.
Fund manager Oliver Brown of MFM UK Primary Opportunities (B905T77) says he didn’t take part in Calisen’s IPO offer because of concerns about it not being able to meet demand for installations and that its valuation was too high.
On the customer side, SMS has a bigger presence among independent utility providers, a part of the market rapidly picking up business from customers disgruntled with the service from the big energy companies.
‘The shares were weak in mid-2019 partly due to a large seller, but have since recovered,’ says Joe Brent at Liberum. ‘Negative real gilt yields (-2%) makes SMS’s index-linked recurring revenues an attractive proposition,’ adding that Calisen’s portfolio is a fixed annual rental per meter.

SHARES SAYS: Having a quoted peer is good for comparison purposes but it doesn’t alter our positive stance on SMS.
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