Greencoat Renewables - Q2 NAV falls modestly; H1 cash generation strong

Davy Research
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Against the unprecedented backdrop of recent months, the resilience (and attractiveness) of Greencoat’s business model is apparent in its H1 performance. Net asset value (NAV) has fallen modestly by 1c (to 102.2c/share); however, strong cash generation is the most noteworthy feature of its performance in our view. Gross dividend cover of 2.1x suggests effective free cashflow generated of >6c/share in the first half alone. While external factors may impact NAV performance in any given quarter, the company continues to demonstrate its ability to generate highly secure cashflow and to pay attractive dividends (a further 1.515c pay-out announced for Q2). With the stock trading at a c.5% dividend yield (and likely a >10% free cashflow yield), we reiterate our ‘Outperform’ rating.