DAVY VIEW

Greencoat UK Wind’s (UKW) Q1 performance is along expected lines. Net asset value (NAV) fell 2.5% in the period, reflecting the ‘marking-to-market’ of Q1 forward power curve weakness. Its balance sheet is little changed since the end of last year (gearing 39%) and the 2.5p/share proposed quarterly dividend is consistent with its 2024 10p/share target. Its performance remains robust – NAV remains within 5% of December 2022 peak levels despite the material reset in key macro-economic assumptions in the subsequent period (including forward looking power price and inflation assumptions, and a higher portfolio discount rate). With NAV on an increasingly stronger footing, the stock’s valuation looks attractive – trading at an 11% discount to March 2024 NAV, its 11% levered portfolio discount rate equates to a c.7% equity risk premium over the UK ten-year gilt.