Q: Your comments on how you see Secure Energy as an investment over the next year or two.
5i Research Answer:
SES is still closely tied to the energy sector, which of course is highly cyclical. It has some debt, but less than 2X cash flow, which should be manageable. Valuation is 15X earnings, which is not cheap for the sector, but free cash flow is high and it has grown nicely since 2021. Earnings can be volatile, with losses in some years. Payout ratio is very reasonable at less than 25% right now (12 months). We would consider it a decent investment as long as one understands the cyclical risks here.