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To provide shareholders with regular, sustainable, long-term dividend income and to preserve the capital value of its investments over the long term by generating exposure to infrastructure debt and/or similar assets.
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I suspect they "kitchen-sinked" this report and the NAV is reflecting the worst case scenario of declining long-term power prices and rising corporation tax. I'm still puzzled as to why a debt-company is exposed to declining power prices -don't the operators of renewable infrastructure have to repay their debts regardless of the price at which they sell their power?
Well, I had a top up yesterday to try and reduce my average, as this is now my portfolio's biggest loser. To sum up the half year report - quote -
Ian Reeves CBE, Chairman of GCP Infra, commented: "It has been a challenging six months for the Company..... - unquote.
Shall we just leave it at that and put the rest of the report out for recycling ?
But not to worry, the lower price makes the yield look even better. Perhaps those demanding the world goes green should start investing in companies like this ?
Thats's all rant over
This is an extract from a recent Rns regarding BSIF. Maybe gives some help for the future o f power prices. Not set in stone though as far as I’m concerned.......
The Company's NAV as at 31 March 2021 reflects the adoption of power curves published by the Company's three independent power forecasters (which the Company blends equally) during this period. Compared to December 2020, the blended curves used by the Company have increased on average by 7% over the next four years (reflecting a faster than expected recovery in short-term power prices) but have decreased by 6% from 2025 until 2050.
I agree, also not helped by dividend cut. However in the long run this may prove to have been the prudent thing to do. Every reason to expect in the mid term energy prices will get back to where they were, which should see a reversal in the fortunes here. Indeed other energy related companies have already started pegging back pandemic related losses. Will this quickly get back to where it was at the end of 2019, maybe not.. but I don't think £1.15-£1.20 is unrealistic. Worth hanging around for the recovery I reckon.
Yep, it's been pretty dismal, but energy prices are only going one way from here which should reverse the NAV, whilst the running yield is still pretty good whilst we await better news. Hold fast people, better times are coming!
Performance of this has been poor.. No point in dividends if the sp just falls to wipe it out....
There's been a fair number of quarters showing a drop in NAV here now. Which has more than once been attributed to the energy price outlook/forecasts and that predicted impact on future revenue. Am hopeful this trend might come to an end in a few weeks when we are updated on NAV again, yes we've had another lockdown which is not great.. but with any luck from here on in things might improve generally, wrt covid at least. Also price cap increase based on wholesale costs might be a good sign(though I am absolutely no expert on the energy market).
"The energy regulator Ofgem has announced that the energy price cap will increase to pre-pandemic levels due to rising wholesale energy prices"
Yes! There is a recording available here: https://www.sharesoc.org/seminar/sharesoc-webinar-with-gcp-infrastructure-investments-gcp-18-march-2021/
You will need to be a full member of ShareSoc to access it! :)
If you're not already a member you can join here: https://www.sharesoc.org/membership/
IS there a recording to become available for this? I did register but unfortunately was unable to attend. Anyone that attended managed to get a picture of where things are?
We are hosting a webinar with GCP Infrastructure Investments on the 18th March which may be of interest to shareholders or potential investors. Philip Kent – Fund Manager will be presenting: https://www.sharesoc.org/events/sharesoc-webinar-with-gcp-infrastructure-investments-gcp-18-march-2021/
Seller out for now by the looks it. Just in time to reinvest dividend. .
Agree the increase in corporation tax will have some negative impact, though arguably most of the performance issues relative to current investments last year may well become less of an issue this year(energy prices). But yes going forward the question is what can they do to find sensibly yielding new investments that don't lead to higher overall risk. On balance I reckon this might have fallen a bit too far now, but we'll see!
https://quoteddata.com/research/gcp-infrastructure-fund-compelling-yield-qd/
Well looks like GCP are done for at least the next 5 years due to the increase in corporation tax and the new infrastructure bank setup by govt. Only hope is whether they can somehow co-operate with the new bank setup by the govt for infra projects. Future for me looks grim. I think next year will see a further curtailment of dividend. It has been cut by 8% from 7.6 to 7 I think it will be further cut to 6p. I also do not see how they can invest money they have without taking on some risk. Am I missing anything?
I see your point, but I can also see GCPI as very. similar to a government inflation linked bond or TIPS. That's to say, if inflation rises, the yield should rise and the capital value therefore increase as well. If market interest rates go up, fixed returns become worth less, but with this I think its returns are index linked and default risks are very low.
Maybe so but I think what you are suggesting is probably a macro view. I have been in GCP nearly 3 years now and if it weren't for the dividends I would not be breaking even. The question for me is where is growth coming from? For the life of me I cannot see where they can lend money to increase returns or at least maintain existing. This is why I called it a dividend trap. Happy to be proven wrong. At the moment I am a very reluctant holder.
There have always been overdone periods of fear in infrastructure funds and they have always recovered. Remember when Corbyn threatened to nationalise them all without compensation? And GCP was at that time the safest of the bunch due to being a debt fund. It still is the safest, has the best management team and best company structure backing it. The market is totally irrational in valuing this at the moment.
Where else can you get an inflation linked yield of 7%? And most of the borrowers are governments or government backed that can just print money to pay you back.
Every day that goes by and GCP is becoming a dividend trap. I thought there was a Bottom at 102.8 but it has breached that too. Could this have to do with the new green bond that the government is planning to launch?
Is there any future to GCP - Thinking of cutting losses and selling up.
I take my dividend as a scrip. The price fall usually follows the ex dividend so I get more.. This for me is just a alternative to going backwards in a bank account..
Yep - forget the share price in short term, and focus on the yield. TBF we still trade at a small premium to NAV, but this is the smallest it's been for many years, and the stock price has underperformed the NAV by c10% over 1 and 3 years. Portfolio is extremely high quality - 60% renewables, and 15% in social housing, 25% in PFI. The dividend is not going to be cut, so enjoy the yield now, and the capital gains later when the market wakes up.
As a long term holder purchased for an income stream the day to day price doesn’t worry me too much. I have topped up today as I believe a fair price for this share is in the £1.10 to £1.12 region given the current annual dividend of 7p per share, that’s a yield of 6.25% at £1.12 per share. DYOR.
How low will GCP go ? Seems that NAV was declared at 102.7 yet this one today went as low as 102.2. Surely it must be the recovery play of the sector. Anyone any views? Is this potential post dividend blues?
Disappointing how the share price had performed here, though seems to have been blamed on electricity prices which weren't great through 2020, but possibly look to be recovering now.
This seems to have been harder hit that for example dedicated wind or solar funds which seems a bit concerning as on the face of things you'd expect it to be more diversified. I bought after most of the fall, but has fallen a bit further since I bought. Have watched this for years and held before and it's always been fairly stable/resilient.
Rule 1 in investing. Take everything you read and see with a pinch of salt. Not a bad investment for divi's but growth in the sp is proving a problem... Very long term investment but there are a lot worse ..GL
The trades shown here as 'buys' and 'sells' are not reliable as a basis for trading. I bought this morning at 9.17 but the website shows this trade as a 'sell'.