Octopus Energy Regulatory News (ORIT)

Octopus Renewables Infrastructure (ORIT)

01/04/2025

Results analysis from Kepler Trust Intelligence

Octopus Renewables Infrastructure's (ORIT) annual results to 31/12/2024 show a NAV total return of +2.5% (2023: +2.1%). At an operational level, ORIT's power generation grew by 7%, revenues by 12% and EBITDA by 16%. ORIT met its dividend target of 6.02p, 1.24x covered by operating portfolio cash flows. The dividend saw an increase of 4% over 2023, in line with UK CPI for a third consecutive year. The target dividend for the year ending 31/12/2025 is, similarly, an increase in line with UK CPI of 2.5% to 6.17p and is expected to be fully covered. At the current share price (as at 31/03/2025 ) the yield is c. 9.4%.

At an operational level this was a solid set of results, with positive earnings growth from the operational portfolio. Further, Octopus Renewables Infrastructure (ORIT) has made good progress on reducing the size and cost of debt which ultimately could feed through to further dividend growth. Clearly ORIT faces the same macro headwinds as the rest of its peer group, with investors still reassessing the damaging investment trust cost disclosure debacle and trying to navigate the ups and downs of the bond market, which competes for their attention. But while clearly the US is taking a different approach to renewables, the jurisdictions ORIT operates within all remain firmly committed to renewable energy. Further, ORIT's sale of its Swedish wind asset, for an IRR of over 11% from construction to sale shows that it is much more than a bond proxy, with equity upside potential. On top of this, 2025 is set to be the fourth consecutive year of dividend growth in line with inflation.

Overall, with a stable NAV that has been validated by several disposals in the last 18 months, positive operational progress resulting in a progressive and covered dividend and a balanced capital allocation policy, we think ORIT's 36% discount looks notably unjustified.

CLICK HERE TO READ THE FULL REPORT  Visit Kepler Trust Intelligence for more high quality independent investment trust research.

Important information

This report has been issued by Kepler Partners LLP. The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

Kepler Partners is not authorised to make recommendations to retail clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.

The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. In particular, this website is exclusively for non-US Persons. Persons who access this information are required to inform themselves and to comply with any such restrictions.

The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.

This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.

Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm's internal rules. A copy of the firm's Conflict of Interest policy is available on request.

PLEASE SEE ALSO OUR TERMS AND CONDITIONS

Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 480590), registered in England and Wales at 70 Conduit Street, London W1S 2GF with registered number OC334771.