Greencoat Renewables - Encouraging H1 performance

Davy Research
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Greencoat Renewables (GRP) first half performance demonstrates the maturing nature of its business model. Alongside NAV growth (Q2 +1c to 101.1c/share), its dividend cover performance in a low wind speed environment is a reminder of the robust and structurally growing nature of its cash generation potential. Importantly, the inflation-hedged and contracted nature of its portfolio provide a supportive backdrop for future cashflow and dividends. This, coupled with balance sheet strength and an active pipeline, provides a strong basis for future shareholder returns. Since its 2017 IPO, GRP has delivered total shareholder returns of over 35%. While that is similar to the broader market (+33%), correlation between GRP and the market remains low and GRP’s performance includes almost 24c of dividends (c.20% of the current share price). In our view, the attractive (i) financial characteristics, (ii) shareholder returns profile and (iii) dividend yield (>5%) combine to create a compelling investment opportunity. We reiterate our ‘Outperform’ recommendation.