We would love to hear your thoughts about our site and services, please take our survey here.
To invest mostly in operating UK wind farms with the aim to provide investors with an annual dividend that increases in line with RPI inflation while preserving the capital value of its investment portfolio.
Find out MoreLondon South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
You can pay me to write a bullish report on a company too!
Do Kepler have a vested interest in UKW as they are always ramping it up? Have held for a few years now am happy to hold for the time being...Tend to sell around the 160p mark then rebuy on the drop...
Very promising report issued by Kepler Trust Intelligence today.
HA! Could pretty much say the same thing about all other energy forms.
I wonder what they say about "defence" subsidies"
Https://www.investorschronicle.co.uk/news/2023/08/10/investing-in-wind-isn-t-the-safe-bet-it-seems/
Https://www.investorschronicle.co.uk/news/2023/08/10/investing-in-wind-isn-t-the-safe-bet-it-seems/
Their argument is that as they generate 2x divi cover the excess after the divi allows the company to grow even without any placing.
However, I am sure that if the price went above nav then they would do a placing to reduce debt and then be in a position using the rcf to finance a further, more rapid, expansion of the portfolio. They prefer to do a placing above nav as they can then argue it is non -dilutive to existing share holders. I think that they still have an eye on moving up to the FTSE 100 which would also be facilitated by a £500M placing.
Plus, Vattenfall have stopped work on Norfolk Boreas wind farm due to spiralling costs. In that case surely it makes Greencoats existing farms more valuable or more expensive to replace. Yet the share price has tanked by over 20p from its highs.
Hi Jim can't answer the question about the NAV and borrowing more money but what i can say is I've held UKW for a few years now have traded a bit and done quite well on the back of that...During that time they have had 3 share issues so if they are struggling to borrow I can see another issue in the offing......This is only my view so don't take this as gospel....
In the latest results the CEO stated that because UKW is trading below NAV it makes it more difficult to borrow for further investment. Could anyone explain to me why that is the case? Also the CEO felt that the share price was trading below NAV currently because the market doesn't quite understand the investment case and he was looking forward to the results and the presentation as an opportunity to clarify that investment case.
What is it that the market is failing to appreciate? If the market continues to fail to give credit to the investment case and the share price remains significantly below the NAV, what, if anything, can the board due to close the gap?
I am long here and remain positive long -term, though holding is currently underwater, and may buy more before the ex-dividend date. Appreciate any answers.
7 mill,very big trade,just there.
RogueRiver - thanks for the link
Many thanks
Merchant is the non forward, fixed price sales - so the auction price - (obviously been quite profitable over the past year).
For your second question this may help-
https://www.sciencedirect.com/science/article/abs/pii/S0140988320300402#:~:text=The%20penalty%20from%20each%20supplier,ROC%20presented%20by%20a%20supplier.
A very positive and well informed 'buy' recommendation from The Times:
https://archive.ph/IgyxO
In the UKW Half Year Report for the six months ended 30 June 2023 there is a sentence on page 10 that I don't understand "The Group’s strategy remains to maintain an appropriate balance between fixed and merchant revenue". What is merchant revenue ? I assume fixed revenue refers to fixed price PPA's.
As an aside, I don't understand what a buyout price or a recycle price for a ROC is either, and Mr Google is reluctant to explain.
Many thanks in advance
It does seem f a bit like that. We have had three el Nina years so lets see what happens in a el Niño one.
For a definitive reference point -
Energy Trends: UK weather - GOV.UK (www.gov.uk)
Hi Monkswood. The fact that the dividend would have been covered 3x with "normal" wind is very encouraging. That said, they seem to suffer from bad wind nearly every year, which makes me wonder whether "normal" really means normal. ;-)
A very bullish stance by the managers in the conference call. As usual they provided a good explanation to the details of the business.
They clearly feel that the inflation/discount rate/interest rate has been misunderstood in relation to their business model.
They wanted to get across that they are looking to total forward returns of 10%, around 5% on the divi and the other half from an increase in nav - funded from the £200m income in excess of the divi.
A few points -
The divi cover last half would have been 3x (rather than 2x) if there had been 'normal wind'.
The forward price curve now (£78mwh this year) means the energy windfall tax will now cost £50m over 2 years rather than £200m over three.
The rcf is currently zero but will be drawn down to fund the investment in the London Array (completion is after H1). Their discount rate is already ahead of their peers who they believe will need to increase theirs. Interest rates- even if all floating (which they are not) it would cost £20m per 1% increase in rate, this is equivalent to only 0.1% of divi cover .
Longer term they are looking to around 35% gearing with an all in cost of debt of 5%.
Even with a 18% reduction in output they still managed 2.1 x Divi cover.
What is interesting, and reassuring, is the table with hypothetical divi cover under different energy pricing looking forward over the next 5 years.
'The fixed revenue base means that dividend cover is robust in the face of extreme downside power price sensitivities. A dividend that continues to increase with RPI is covered down to £10/MWh over the next 5 years.'
Https://www.lse.co.uk/rns/UKW/half-year-results-nav-and-dividend-announcement-3pnm9cyqk4ld3g1.html
Monkshood,
See below report on likely / believed cash balance
https://www.google.com/amp/s/www.sharecast.com/amp/news/news-and-announcements/greencoat-uk-wind-leads-25pc-investment-in-london-array-wind-farm--14097748.html
Whilst NI and the North were becalmed earlier in the year there was a fairly strong and constant Eastly blowing across the Southeast, having more assets in this region will help to diversify their geographic spread.
Has anyone crunched the debt/cash flow numbers for an insight into how the first half has been?