DAVY VIEW

Greencoat Renewables’ results presentation (document just published; call at 10:00 UK/Ire time) highlights how the strong medium-term cash generation potential of its portfolio is resulting in a wide range of capital allocation options. Specifically, it presents a clear pathway to a stronger balance sheet position, with organic cashflow sufficient to drive leverage to 42% by 2028. At a >20% discount to NAV, its 9% portfolio discount rate implies available equity returns of 11.5% – a net equity risk premium over the European 10-year bond yield of 8%. We view this as compelling for a portfolio of real renewable assets generating predictable, high-margin and dividend-supporting cashflows.