DAVY VIEW

Strong cash generation is the stand-out feature of Greencoat Renewables’ 2022 performance (3.2x gross dividend cover). While boosted by recently elevated power prices, its underlying performance (estimated to be 2.3x) demonstrates the enhanced cash generation and value creation potential of the business. This translated into 7.3c/share NAV growth in 2022, while also effectively offsetting a reset in its discount rate assumption (announced in Q3). Looking forward, the investment case for the evermore established platform is promising – a 9% levered portfolio IRR should provide comfort around the appropriateness of its current discount rate assumption and its positive NAV growth trajectory in 2023 and beyond. Combined, these two outcomes can also help the share price trend back towards higher levels.