Octopus Renewables Infrastructure (ORIT)
18/09/2024
Results analysis from Kepler Trust
Intelligence
Octopus Renewables
Infrastructure (ORIT) produced a NAV total return of 2% for the six
months to 30/06/2024. The trust's NAV fell marginally from 106.0p
to 105.2p (-0.7%). The main negative movements related to the costs
of paying dividends and financing costs, and these were largely
offset by operational performance, valuation adjustments related to
power prices, the sale at a premium of a Swedish wind asset, and
the positive impact of a new PPA on the Crossdykes asset. Since IPO
in December 2019 ORIT has generated a NAV total return of
31.2%.
Shareholder total return was
-16.9%, with ORIT's share price tracking a wider move down across
the renewable energy infrastructure peer group in the first quarter
of 2024. Since IPO, shareholder total return is
-11.3%.
The interim dividend of 3.01p
is in line with the dividend target for the whole financial year to
31/12/2024 of 6.02p. The interim dividend was covered 1.33x
(30/06/2023: 1.09x) If achieved, the target for the whole year
would be a 4% increase, in-line with 2023 CPI
inflation.
Taking Octopus Renewables
Infrastructure's (ORIT) current discount to NAV of c. 24% and
deducting ongoing charges, we estimate the share price is saying
that the valuation discount rate is c. 10%, rather than the 7.0% it
currently is. That valuation discount rate is validated by over
£160m of disposals since December 2024 at figures above carrying
value. This is, of course, an indicative number, but serves to
highlight the very wide gap between the market's expectations and
the possible outcome.
Overall then, while sentiment
among investors remains weak largely on macro concerns that are
starting to recede, the operational direction of the portfolio is
positive and the capital recycling programme is providing the
evidence that the discount to NAV is real, and thus returns from a
narrowing discount could be very attractive. In the meantime,
ORIT's yield is c. 7.6% and the discount c. 24%
CLICK HERE TO READ THE FULL REPORT
Visit
Kepler Trust Intelligence for more high quality
independent investment trust research.
Important information
This report has been issued by Kepler
Partners LLP. The analyst
who has prepared this report is aware that Kepler Partners LLP has
a relationship with the company covered in this report and/or a
conflict of interest which may impair the objectivity of the
research.
Past
performance is not a reliable indicator of future results. The
value of investments can fall as well as rise and you may get back
less than you invested when you decide to sell your investments. It
is strongly recommended that if you are a private investor
independent financial advice should be taken before making any
investment or financial decision.
Kepler Partners is not authorised to
make recommendations to retail clients. This report has been issued
by Kepler Partners LLP, is based on factual information only, is
solely for information purposes only and any views contained in it
must not be construed as investment or tax advice or a
recommendation to buy, sell or take any action in relation to any
investment.
The information provided on this
website is not intended for distribution to, or use by, any person
or entity in any jurisdiction or country where such distribution or
use would be contrary to law or regulation or which would subject
Kepler Partners LLP to any registration requirement within such
jurisdiction or country. In particular, this website is exclusively
for non-US Persons. Persons who access this information are
required to inform themselves and to comply with any such
restrictions.
The information contained in this
website is not intended to constitute, and should not be construed
as, investment advice. No representation or warranty, express or
implied, is given by any person as to the accuracy or completeness
of the information and no responsibility or liability is accepted
for the accuracy or sufficiency of any of the information, for any
errors, omissions or misstatements, negligent or otherwise. Any
views and opinions, whilst given in good faith, are subject to
change without notice.
This is not an official confirmation
of terms and is not a recommendation, offer or solicitation to buy
or sell or take any action in relation to any investment mentioned
herein. Any prices or quotations contained herein are indicative
only.
Kepler Partners LLP (including its
partners, employees and representatives) or a connected person may
have positions in or options on the securities detailed in this
report, and may buy, sell or offer to purchase or sell such
securities from time to time, but will at all times be subject to
restrictions imposed by the firm's internal rules. A copy of the
firm's Conflict of Interest policy is available on
request.
PLEASE SEE ALSO OUR TERMS AND CONDITIONS
Kepler Partners LLP is authorised and
regulated by the Financial Conduct Authority (FRN 480590),
registered in England and Wales at 70 Conduit Street, London W1S
2GF with registered number OC334771.