DAVY VIEW

Greencoat’s recent performance highlights the quality and differentiated nature of its portfolio. Its higher contracted cashflow mix means net asset value (NAV) was broadly unchanged in Q1 at 111.6c/share (from 112.1c/share). NAV remains just 1.4c/share below peak Q3 2023 levels (113.0c/share) despite a likely c.35% reset in near-term power price forecasts over the same period. Furthermore, strong cash generation remains a steady source of value creation – underlying NAV growth was +1.1c/share in Q1, or +2.7c before dividend payments, impressive for a single quarter. Its performance and positioning are clearly at odds with its current valuation. For that reason, Greencoat will initiate an initial €25m share buyback programme – at the current share (the stock is trading on 0.77x Q1 24 NAV), its 9% portfolio discount rate represents a levered IRR opportunity of almost 12% – a net equity risk premium of 8.4%.