Member Info for Guitarsolo

Lionheart, you've highlighted what the market clocked when Simoes made the announcement about a year ago. The proposed 2% divi increase for 2025-27 is largely funded by the £500m buyback, so it is not actually using much of the net profit to pay shareholders. Perhaps that was why there was a lukewarm reception to the plan at the time (share price fell from c.240 to c.220p). But, what it does do is give LGEN more funds to grow the wealth and PRT businesses (in particular).

What I hope, as a LTH, is that accepting a reduced dividend increase for a few years puts the company in a better position long term to be more generous further down the road.

Guitarsolo

Hello Actuary, thanks for the confirmation. Indeed it is a polarised debate! Some people react just because it is and article in The New Yorker (left of centre). Equally, others squeal at the mention of the Telegraph or Daily Mail. I give up sometimes!

But whatever lens solar is viewed through, it's growth is outstanding. That can be independently tracked through gridwatch(es) for various countries to show solar power production. Through FSFL, NESF, BSIF etc we know that the cost of solar panels has plummented as production has become more efficient (unfortunately dominated by China). Solar has the potential to be the majority energy producer worldwide in just another decade. The question is, will the pro-solar governments be there for long enough? You highlight one risk!

Fingers crossed.

Https://www.newyorker.com/news/annals-of-a-warming-planet/46-billion-years-on-the-sun-is-having-a-moment

Fantastic article by The New Yorker regarding solar power, but also BESS systems - with a special mention for Texas and California! It neatly debunks all the usual anti-net zero arguments.

I'm not going to post it across all my solar/BESS ITs, just here and FSFL (because it had a good day!).

Good luck all.

Guitarsolo

Https://www.newyorker.com/news/annals-of-a-warming-planet/46-billion-years-on-the-sun-is-having-a-moment

A fantastic (but long) article in The New Yorker (courtesy of Blue Sky) that explains how far and how fast solar power has moved, along with BESS systems. I hope the link works.

The article neatly debunks all the rubbish around anti-net zero arguments and gives hope to all of us that we can harness the unrelenting power of the sun to power the entire planet. The only thing that can stop us is ourselves.

If they are mostly using the new interest-only credit facility to fund this, that's at SONIA +1.5% = 5.72% presently.

Net initial yield = 7%

Mildly accretive (albeit this is an over-simplified measurement).

Still, it sounds like a good asset which will give a boost when these assets are more in favour. All good I hope.

JR just beat me to it, but I was going to say that your own perspective is very important here. As someone who only bought in during January, I already knew of the 1+1+1+4 plan and therefore knew the last 3p depended on selling the ITCs over which GSF had limited control (esp. after Trump). So its delay neither shocked nor disappointed me.

Of course for longer term holders, who may have seen capital erosion as well, I can understand how a dividend plan has not been fulfilled. But that happens and the stock market (and my portfolio) is littered with examples of "broken promises".

I generally invest for the long term and therefore see plenty of "newcomers" to my holdings who have a different perspective to me. This is vice-versa.

What we all want, one way of another, is GSF to prosper. It just might suit some of us more than others how they do that.

Guitarsolo

Bingo, about a year ago National Grid launched a rights issue at around about a 40% discount (from memory). Shares were trading at about 1120p and were offered at 645p. Following the rights issue the shares have increased to 1050p. Funnily enough, I sold my rights issue-obtained shares for £4 a share profit to partly fund the Chesnara rights issue.

But to answer your question, I think it depends on the market's view of what the company is doing with the funds. It liked what NG. was planning to do. And I think it will like what CSN is doing with the £140m.

No advice offered, but I'll be holding for a while (if not forever) even it has unbalanced my figures.

Guitarsolo

Thank you TT/ Actuary.

Thanks Troajan,

Has anyone made a stab at what the absolute dividend will be going forward? There's the proposed one-off 6% uplift (which I presume will be instead of the usual 3% annual increase). But we're increasing from c.230m shares to c.310m but the increased income from the HSBC deal won't be felt until months after the expected deal completion in early 2026. Is the current 24.7pps going to be uplifted by 6% and then spread over the increased share count?

Guitarsolo

Trek,

Where are you getting that it needs to be funded by 7th July? They say the rights will be admitted to trading on 8th (so you can sell your rights after 8am on the 8th) but I haven't received anything to say when is the last date to take up the rights, other than it is obviously before it becomes payable in full at 11am on 22nd July.

I think with the National Grid rights issue my platforms were a couple or a few days before the issue closed.

Many thanks

Guitarsolo

Well that is quite a development! It sounds a good deal and following the successful CSN approach, which I like. As others have mentioned, it also elevates CSN into a slightly different league for the future.

However, it does leave me 18 days to find the money to take up the rights and I am limited what I can sell because of tax issues! Hmmmmm.

Guitarsolo

Morning Damien, the only thing I would say is that German 10 year bonds are at 2.65% so the premium to a German risk-free yield is about +3.75%. It kind of depends who are the buyers and against what are they measuring the risk premium. But nevertheless, if 6.4% suggests these properties are at the lower end of the Net Initial Yield scale then selling them for "only" 10% below NAV suggests that the market's discount for the whole of CLI's portfolio is significantly out of kilter. I hope so anyway.

Guitarsolo

Morning OBNW, you're right that it won't rise much..... 2% to be precise for the next three years. But I don't think there is much danger of it being held or cut unless there is a really major worldwide problem. The increase is reduced from what it has been and is covered with earnings likely to increase faster than the divi. In addition, the buyback pays for about half of the forecast dividend increases (that's from memory) so the strain on the company is really quite minimal. Probably why it was given a muted response at the time. That said, anyone who bought nearer 200p might understandably want to book a profit and hope the share price only holds or drops. But I'm just sitting tight.

Good luck.

Guitarsolo

Correct Actuary, I don't think any of them are cash rich enough to buy each other out with a large cash element, so it will mostly be shares. Hence why it's about the relative value of each company.

Mergers make sense to gain scale and reduce costs. Most renewable ITs already have a high yield, but NESF's is the highest (or the lowest share price) so we might have to expect a yield reduction if there was a merger. However, that dividend should then be stronger and more likely to grow with the fortunes of the larger merged company.

Sparhawk/ Sprantrout,

I suspect we'll be told that they are trying to do various things to close the discount, such as:

- Share buybacks

- Selling/ rotating assets, using proceeds to pay down debt or acquire other assets at beneficial returns

- Pursuing other "options" (e.g. merger)

The whole sector is likely to consolidate in my opinion, hence I hold NESF, FSFL, BSIF and GSF. But whether mergers are equal or not depends on the fortunes of each company. All have a large dividend payout relative to earnings, meaning there isn't much left over to buy/ build new assets, pay down debt etc. I suppose the only way that they could attract the initial capital was to offer a high rate of return (as the cost of renewable infrastructure is almost all up front). But it does limit their options.

Spantrout, yes effectively it is a "sell everything" and return funds to shareholders/ close down. The problem is the company is then selling assets that the buyer knows the seller has to sell, so you don't get full value. For an IT that is earning money it would be a bad call in my opinion, so I would vote against discontinuation. Sit back, enjoy the dividends, average down if you want to and let the share price close the discount in its own time.

Famous last words perhaps, but the infra/renewable ITs do seem to have reached the bottom, unless interest rates shoot up which is against the consensus.

Sparhawk, I think it is just a standard statement in such an RNS. The >10% discount requires a discontinuation vote and they want to say that they are doing something to address the discount.

So many ITs (renewables, infrastructure, PE, even aircraft leasers) are all trading at large discounts. I don't see it as a problem because I am generally on the buy / accumulation side of things at the moment.

Just a quick note to thank Rivaldo for his updates on this forum. It may not be the busiest discussion board but Rivaldo's regular posting of information (from wherever he/she gets it!) is helpful. Thank you.

I would just echo part of the briefing note; "How did it do it? Mainly by sticking religiously to what it does best and doing it extremely well."

That sums up why I hold shares here and ignore any short-term volatility surrounding control programmes which revert to the norm at some point.

Summary: Renew is good at what it does. Very good.

Slightly concerning to see Tom Griffith sell 72% of his holdings (400,000 shares for £1.34m). There are, of course, legitimate reasons why a PDMR would do so that aren't company related, but I couldn't see anything in the RNS or other research. Is anyone aware of a reason?

Hi JCB, it's always nice to have benefitted from some capital gain. However, personally I wouldn't sell because I see it has the share price hass risen to where it should have been in the first place. Great if you were able to buy sub 200p. Hopefully it will hold these gains and you can still collect the same divi as you were getting when the share price was low.

Guitarsolo