TIDMUSF
US Solar Fund PLC
16 March 2021
US Solar Fund (USF)
16/03/2021
Results analysis from Kepler Trust Intelligence
-- Today US Solar Fund (USF) released its annual results for the
period ending 31 December 2020. As at 31 December 2020, USF's NAV
was $194.2 million, a 0.7% increase from the $192.9 million
reported at 30 June 2020 and a 0.1% decrease from 31 December
2019.
-- USF paid a dividend of 0.50 cents per share in February 2021
for the quarter ending 30 September 2020, totalling 1.00 cent per
share for the six-month period, representing an annualised dividend
of 2% when measured against the initial issue price of $1.00 per
share. With all projects now operating, USF expects to cover the
remaining 2020 dividend with operating cash flows and confirms its
2021 annual dividend target of 5.5 cents per share to be covered
with operating cash flows.
-- Looking forward, the chairman continues to believe that USF's
core business is resilient and that the trust is well-positioned
for future growth. The managers have now committed all the IPO
proceeds and have successfully achieved a fully operating
portfolio, with 41 projects acquired and generating revenue.
Kepler view
2021 should be an exciting time for US Solar Fund (USF) and its
investors. The managers have now fully invested the proceeds of the
IPO, comprising 443MWDC of capacity across 41 projects. This means
that USF now expects to meet its full dividend target of 5.5% of
the IPO price in 2021, and cover it by cash income, in line with
its intentions at launch.
Once achieved, this dividend is expected to grow by 1.5% to 2% a
year. USF fixes its future cash inflows via forward power purchase
agreements which means revenues do not depend on fluctuating power
prices. When the acquisition of MS2 is concluded in March, cash
flow income will be secured for a weighted average period of 15.4
years.
We believe investing in the US offers valuable diversification
for the UK renewables investor, and is likely to see structural
growth thanks to the political drive to 'net zero' and to raise
spending on infrastructure. The US market for solar is already many
times larger than the UK's, and forecasts predict rapid
expansion.
Currently USF is trading on a premium of 7.3%, in comparison to
a sector weighted average of 10.6%. Given the significant upside
potential the US solar market offers, and the dependable income the
board anticipates delivering, we see this premium as justified, and
wonder if it the potential to increase further.
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