I was wondering, shouldn't Ceres Power be included in this series about renewables? Maybe not a deep value play, but definitely one of the most promising companies in the field I believe. I know you've covered them once before, but curious why not included now ;)
Also fixed price debt is ....4.5% or 4.75% depends on where you read it. £1 preference shares (not listed). Can be bought back at par 2030-2036. Convert to ordinaries in 2036 if not bought back.
Question when or if will an RCF be available at 4.5%?
After reading a report by Hardman Research that compiled all the renewable funds together (I think it came out in Feb24) Itook positions in JLEN, Pantheon Infrastructure (PINT) and 3IN. My decision was primarily based upon the fact that the I think these 3 are using excessively conservative discount rates for their portfolios relative to the rest of the sector. I also excluded any renewable/infra trust with more than 30% debt/equity.
PINT uses a 14% Discount rate, 3IN -11.3% and JLEN- 9.4%. You would expect a slightly higher rate for PINT because some projects are still in development and they have less direct control over them, but I still thought 14% was too high.
3IN focuses on growth more than income. They are really good at selling on their assets at premiums and reinvesting. However, the growth focus may justify a higher discount rate, but the track record is so good that I think it's still too high a discount rate.
JLEN is quite similar to TRIG,UKW, NESF,FSFL and BSIF. But those were using discount rates of between 7% and 8% as far as I recall. So again, I thought JLEN's 9.4% was too conservative and left a lot of hidden value there. SDCL uses around 8% which is relatively low for their eclectic mix, and I'm not keen on their higher debt (I sold a small long held position today).
Very interesting .. I had not made the link about temperature, efficiency and luminescence (based on latitude) ... been one I have watched (with some other renewable stocks) as a bit of an experiment in lower value unattractive high yield stock. I started a fantasy track in Oct 2017 with £10K. Value now (with reinvestment of div) gives a CAG of around 2.5% .. not very dazzling ... but the dividend paid gives a CAG of 8.7% and is 75% higher and a yield on investment of nearly 10%
NESF, TRIG & UKW give value CAGS of -5.7%, 0.7% and 1.1%, but Dividend paid CAGS of 10%,6.5% and 19.9% with div yield on investment of 10.1%,8.8% and 10.9%
Re-investment in solid yielding stocks that don't necessarily have a massive SP growth (due to their asset/growth strategies mostly) and over time yield a very tidy income with a large headroom on investment
So once indexes have rebalanced and the sell off has petered out in the next couple of weeks this should be on something like a 12%+ yield and at a tastier discount than now. Until then yes I do hope readers sleep easy waiting to pounce, if this IT floats their boat.
....I do like JLEN....yes, the methane is great, and also, their management seems to take the NAV discount seriously - more so than other ITs! ....also something to factor in....
Be interesting to see if we get lower discount rate, share price rise with todays uk base rate cut to 5%
Interesting, thanks.
I was wondering, shouldn't Ceres Power be included in this series about renewables? Maybe not a deep value play, but definitely one of the most promising companies in the field I believe. I know you've covered them once before, but curious why not included now ;)
It definitely deserves consideration - thanks for highlighting it Nick.
OB
Always worth noting domicilled in Guernsey.
Also fixed price debt is ....4.5% or 4.75% depends on where you read it. £1 preference shares (not listed). Can be bought back at par 2030-2036. Convert to ordinaries in 2036 if not bought back.
Question when or if will an RCF be available at 4.5%?
After reading a report by Hardman Research that compiled all the renewable funds together (I think it came out in Feb24) Itook positions in JLEN, Pantheon Infrastructure (PINT) and 3IN. My decision was primarily based upon the fact that the I think these 3 are using excessively conservative discount rates for their portfolios relative to the rest of the sector. I also excluded any renewable/infra trust with more than 30% debt/equity.
PINT uses a 14% Discount rate, 3IN -11.3% and JLEN- 9.4%. You would expect a slightly higher rate for PINT because some projects are still in development and they have less direct control over them, but I still thought 14% was too high.
3IN focuses on growth more than income. They are really good at selling on their assets at premiums and reinvesting. However, the growth focus may justify a higher discount rate, but the track record is so good that I think it's still too high a discount rate.
JLEN is quite similar to TRIG,UKW, NESF,FSFL and BSIF. But those were using discount rates of between 7% and 8% as far as I recall. So again, I thought JLEN's 9.4% was too conservative and left a lot of hidden value there. SDCL uses around 8% which is relatively low for their eclectic mix, and I'm not keen on their higher debt (I sold a small long held position today).
Very interesting .. I had not made the link about temperature, efficiency and luminescence (based on latitude) ... been one I have watched (with some other renewable stocks) as a bit of an experiment in lower value unattractive high yield stock. I started a fantasy track in Oct 2017 with £10K. Value now (with reinvestment of div) gives a CAG of around 2.5% .. not very dazzling ... but the dividend paid gives a CAG of 8.7% and is 75% higher and a yield on investment of nearly 10%
NESF, TRIG & UKW give value CAGS of -5.7%, 0.7% and 1.1%, but Dividend paid CAGS of 10%,6.5% and 19.9% with div yield on investment of 10.1%,8.8% and 10.9%
Re-investment in solid yielding stocks that don't necessarily have a massive SP growth (due to their asset/growth strategies mostly) and over time yield a very tidy income with a large headroom on investment
Likely to drop out of FTSE250 today
Sleep easy brother
Ah that's a great insight, thanks Jon
So once indexes have rebalanced and the sell off has petered out in the next couple of weeks this should be on something like a 12%+ yield and at a tastier discount than now. Until then yes I do hope readers sleep easy waiting to pounce, if this IT floats their boat.
OB
It looks to have rallied and missed relegation this month
https://www.lseg.com/en/media-centre/press-releases/ftse-russell/2024/ftse-uk-index-series-june-review
It’s a great stock
Thanks for the write up!
irradiation levels vs temperature is intriguing!
....I do like JLEN....yes, the methane is great, and also, their management seems to take the NAV discount seriously - more so than other ITs! ....also something to factor in....
best regards