Last checked at 
16 Mar 2021 11:12
US Solar Fund (USF)
16/03/2021
Results analysis from Kepler Trust Intelligence
· Today US Solar Fund (USF) released its annual results for the period ending 31 December 2020. As at 31 December 2020, USF's NAV was $194.2 million, a 0.7% increase from the $192.9 million reported at 30 June 2020 and a 0.1% decrease from 31 December 2019.
· USF paid a dividend of 0.50 cents per share in February 2021 for the quarter ending 30 September 2020, totalling 1.00 cent per share for the six-month period, representing an annualised dividend of 2% when measured against the initial issue price of $1.00 per share. With all projects now operating, USF expects to cover the remaining 2020 dividend with operating cash flows and confirms its 2021 annual dividend target of 5.5 cents per share to be covered with operating cash flows.
· Looking forward, the chairman continues to believe that USF's core business is resilient and that the trust is well-positioned for future growth. The managers have now committed all the IPO proceeds and have successfully achieved a fully operating portfolio, with 41 projects acquired and generating revenue.
Kepler view
2021 should be an exciting time for US Solar Fund (USF) and its investors. The managers have now fully invested the proceeds of the IPO, comprising 443MWDC of capacity across 41 projects. This means that USF now expects to meet its full dividend target of 5.5% of the IPO price in 2021, and cover it by cash income, in line with its intentions at launch.
Once achieved, this dividend is expected to grow by 1.5% to 2% a year. USF fixes its future cash inflows via forward power purchase agreements which means revenues do not depend on fluctuating power prices. When the acquisition of MS2 is concluded in March, cash flow income will be secured for a weighted average period of 15.4 years.
We believe investing in the US offers valuable diversification for the UK renewables investor, and is likely to see structural growth thanks to the political drive to 'net zero' and to raise spending on infrastructure. The US market for solar is already many times larger than the UK's, and forecasts predict rapid expansion.
Currently USF is trading on a premium of 7.3%, in comparison to a sector weighted average of 10.6%. Given the significant upside potential the US solar market offers, and the dependable income the board anticipates delivering, we see this premium as justified, and wonder if it the potential to increase further.
CLICK HERE TO READ THE FULL REPORT
Visit http://www.trustintelligence.co.uk/investor 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 9/10 Savile Row, London W1S 3PF with registered number OC334771.