Greencoat Uk Wind Share Discussion Threads

[nickrl] 15/4/2024 13:38

@rongetsrich im no so sure they wouldn't as they benefit hugely currently (which im not compalining about) from wholesale cost being linked to gas in most settlement periods thus the mantra of renewables are cheap isn't being realised. There still looking into changing the way the leccy market works under the REMA (Review of Electricity Market Arrangements ) and one option is zonal pricing which could be quite detrimental to UKW with high concentration of wind in Scotland. It won't impact the existing subsidy arrangements so UKW reasonable well insulated if the average price falls across the portfolio but its a cloud hanging over it. Labour will want to push into the area of lowering costs but also their desire to for faster green energy will act as a restraint so all round probably will be neutral in the long run but markets care fickle when it comes to Labour and what they might do.

[rongetsrich] 15/4/2024 13:09

A stock that Labour won't touch.

[marktime1231] 14/4/2024 12:52

So instead of or as well as buying back shares which cost you over 7% in dividends they can pay down debt (from surplus cash or by issuing new shares?) much of which is long term non-recourse and very cheap eg 3%, even the credit facility only costs around 6% I think. Whereas investing in additional assets ought to return even better if prices hold up. Let's not start worrying about some of the oldest subsidies on a tiny fraction of assets coming to an end in three years time.

As the board said they are continuously looking at all the options and reviewing which is the best use of cash or capital, a fine balance depending on power prices, interest rate outlook etc etc. But in the short term they have been impelled to run a small buyback to support the share price when it fell to 130p and try and close the discount gap, sort of obliged to respond according to the terms of the trust when it widens over 10% for a sustained period. All good trusts seek to manage the discount or premium by cancelling or issuing shares in this way. Every share they buy is 20p or more off its resale value and saves 10p a year in dividends ... win win.

As things stand with the share price subdued they may feel obliged to continue a small buyback. Deleveraging can wait, and would be best achieved by asset disposal rather than deploying cash. But I would rather they continue boldly to acquire and grow while accretive assets are still available.

[nickrl] 14/4/2024 08:31

@marktime eroding some of the debt pile would be a sensible course as well. Reality is ZIRP was an aberration so rates are going to be higher over the medium term. You also have to consider the clock is ticking down on the subsidies on some assets from as early as 2027 so cashflow starts to be crimped the further into the future we go.

[marktime1231] 13/4/2024 22:28

How else do they close the discount? I think they will keep going with buybacks if they survive the winding up resolution at the AGM, as a way of deploying a little surplus cash flow, ramping the dividend might risk making it unsustainable. I think we are due a 2.5p quarterly though.

A good trading update would help too, showing the benefits of recent acquisitions and I think good wind conditions even though wholesale prices are subdued.

[nickrl] 13/4/2024 15:05

UKW very rangebound despite them being in the market everyday to hoover up 300k shares. Barely one quarter into the buyback but you have to wonder what will happen to share price once it comes to an end.

[cerrito] 12/4/2024 21:07

Tempus in The Times had a buy today.

[marktime1231] 28/3/2024 13:47

Ian Cowie backing his own personal investment in UKW, using the excuse that Labour's pledge in Wales (until they backtrack?) to invest in tethered offshore wind is supportive of the sector followed by a rosy review of past performance.

There should be better argument in favour of UKW ... its performance and outlook, the sustainability of its progressive excellent yield, a wide and hopefully temporary discount, large scale, strong backing, mostly long term cheap debt, the wind picking up, the prospective decline of other forms of generation, in built price indexing, a pending investor influx when interest rates fall and other sectors decline, etc etc etc

Still if this draws attention going in to the new ISA season all well and good.

[catch007] 28/3/2024 10:07

Ian Cowie article on Interactive Investor today commenting on UKW.

[fwatson] 27/3/2024 16:55

A good day today... any reason?

[marktime1231] 26/3/2024 15:07

I wonder if some of the dampener here is due to OFGEM saying it is investigating the level of compensation claimed by wind farms when generation is curtailed. Since OFGEM is judge and jury it probably means they think wind farms have been overcharging, perhaps some of the super surplus cash flow which UKW enjoyed during the price spike needs to be handed back.

From memory OFGEM have demanded money back from the likes of SSE and NG of the order of £5-10M. You would think the scale of any such issue for UKW would be lower and in any case the consequence can be absorbed, but the threat and the uncertainty still does damage.

[uncle_sam] 25/3/2024 20:40

Article in The Times today, p31, (and other newspapers, I'm sure) is worth a read: "Energy prices may riseas Treasury stifles cheaper offshore wind".

[marktime1231] 21/3/2024 12:48

A positive research note from Kepler (paid for?). I didn't spot a target price, but there is an implied share price uprating of 10-20% due from closing the discount and the ongoing opportunity to strengthen NAV using free cash flow which continues to comfortably cover the dividend eg by acquisition, debt reduction and buybacks.

And a good observation that the progressive dividend will continue to be covered even in a weaker power price environment and even if some parcels of debt have to be refinanced at higher rates.

I am happily reassured UKW remains a standout pick in the renewables sector, but frustrated that the share price does not reflect performance or outlook. Sufficiently overinvested here not to want to add further so its a case of waiting for common sense to prevail and happily banking the excellent dividend income.

[gbh2] 20/3/2024 12:20

Reducing debt doesn't affect the EPS and bonuses are often linked to the EPS.

[nickrl] 20/3/2024 11:26

HEIT are buying up 300k/day but it aint moving the dial would ahve rather they used the money on reducing debt

[marktime1231] 19/3/2024 12:30

What a bggrs muddle to the online vote, the proposed fix just making things even more clumsy ...

IF IN DOUBT DO NOTHING

"If you would like to split your votes, to be able to vote for, and/or against, and/or to abstain from voting across different resolutions, you will need to send a secure message, before the deadline, as below:
- in the ‘Subject’; field, please state: CORPORATE ACTION - Greencoat UK Wind PLC - 9839443
- specify the details of the meeting and how you would like to vote for each resolution."

[gbh2] 14/3/2024 11:04

SP moves are uninspiring.

[yump] 08/3/2024 10:11

Perhaps I’m missing something but share buybacks seem to have no effect on the discount. Anywhere, anytime, any business.

If the discount is caused by external circumstances, then how can an internal process make any difference ?

Similarly as our inflation rise was caused by external circumstances, not an overheating economy, how does raising UK interest rates help ? Especially as it pours fuel on the pay rise fire.

[marktime1231] 07/3/2024 23:25

Oh dear how clumsy. The online AGM voting form has arrived but it only offers the chance to vote for or against all items en bloc. Unfortunately they are worded "for" except the crucial continuation resolution which, unless you vote "against", could mean inadvertently causing UKW to wind up!

So if in doubt do nothing not even abstain.

[mwj1959] 01/3/2024 16:18

Having read through the presentation and the report all seems ok to me, particularly the sustainability of the dividend. The level of gearing appears reasonable in the current environment, albeit they shouldn't be complacent about it and make efforts to reduce where feasible / appropriate. The size of the discount is frustrating and there will be a continuation vote if the share price trades at a an average discount of 10% or more over a 12m period. So there is work to do there, even if I suspect the risk of a no vote is low. At the end of the day UKW has been a flagship trust in the Renewables space, delivering both NAV and dividend growth.

[marktime1231] 01/3/2024 13:41

The hold co and spv structure is pretty complex, my attempt to read through the detail of the report yesterday evening didn't get very far, will try again.

I did note that the buyback is running at a pretty slow rate, only £20M of a possible £100M spent after 4 months. There is a chance that, if the share price recovers strongly, they might reallocate the money, the report does stress they are continuously looking closely at how best to allocate capital. The pressure to run the buyback remains high until the discount closes to 10% which is now around 148p.

They do however seem to have a good handle on all the group debt, a lot of which is non-recourse and on long term low rates. It is the flexible finance facility which needs paying down. Given there is already a Capital Markets event scheduled for early May, could they be thinking of a further raise to take advantage of the good offers they say keep coming their way and perhaps reduce the gearing? All depends on the share price and discount to NAV no doubt, not much point reissuing shares at 138p if you have just bought them back at 142p. Meanwhile even a token £50M or so allocation of free cash to group debt reduction would sit well with those bothered by that. Personally in this particular case of UKW I am not so worried and bold accretive expansion is fine with me.

Also, while the headline debt is in your face and reduction would be welcome, the spv debt is amortised eg older onshore projects are being paid down slowly over their lifetime I think at about £50M per year across the portfolio. The opportunities, apart from the obvious market price for energy, include life extension and better wind conditions having had three poor years in a row. We don't get a trading update to tell us how things are going year-to-date unfortunately, but we are due some upside on generation.

[nickrl] 29/2/2024 15:12

@marktime reducing debt is what they should have done as interest charges are the only certainty here not that i don't expect the wind to stop blowing just there is element of uncertainty that could crimp revenue.