Overpriced?29 Nov 2019 00:07
I'm struggling to understand the recent strong trend upwards, especially when compared to Gresham House Energy Storage Fund (GRID).
Maybe I'm misunderstanding some important details but my thinking goes like this:
GRID's operational capacity is currently 75MW to GSF's 17MW.
At currently buy prices (GRID 105p to GSF 100p) that puts them both on 0.35W/£.
However come Q1 2020 GRID is expecting to have 229 MW operational while GSF is expecting 27 MW.
So that puts GRID at 1.07W/£ and GSF 0.55W/£.
These calculations are based on 204.27m shares in issue for GRID and 204.27(m) for GSF.
Current information from GSF shows we have to wait until 2021 before seeing any further increases in capacity.
Though based on the Lower Road project their expectations can be hard to trust given it was originally expected to be operational in Q4 2018 and is now only expected this quarter.
If make the big assumption that earnings will be proportional to battery capacity, GRID is looking much better value with almost half the forward P/E ratio compared with GSF for 2020.
There is also the management fees with GRID being 1% whiles GSF is at 2.38%. I find it hard to understand why GSF warrants more than double the fee. Though maybe that is due to the smaller scale of the fund.