DAVY VIEW

Greencoat UK Wind’s (UKW) net asset value (NAV) fell modestly in Q4 to 164.1p/share. Recent declines in UK forward power curves and a slightly lower-than-expected 2023 inflation outturn represented headwinds. However, each also signify the continued normalisation of key value drivers after the unprecedented nature of recent years. Against that backdrop, and growing evidence the sector investment cycle is turning, we note the stock is currently trading at 0.88x last reported NAV and approximately 6.9% dividend yield. Furthermore, the 6% equity risk premium implied by its 11% portfolio discount rate, net of management fees, is becoming interesting once again, especially when adjusted for the current share price discount to NAV.