DAVY VIEW

The benefit to Greencoat from accelerating inflation and the current spike in wholesale electricity prices is often underappreciated, with the continued strength of both macro inputs now creating a meaningful earnings tailwind for the group. We increase our NAV forecasts by c.1% across the 2021-2023 period (reflecting increased inflation assumptions only) and set out how elevated electricity prices look likely to result in significant NAV forecast upgrades over the coming period. Greencoat is now operating and investing in a fast-improving end-market environment. Its superior position is at odds with its current valuation, confirming the stock has reached a compelling level. We reiterate our ‘Outperform’ recommendation.