Renewable Energy Generation' s (WIND) long-term strategic partnership with BlackRock is proving to be a masterstroke for the onshore wind farm developer. A £9.4m profit from the sale of its 12-megawatt (MW) Goonhilly wind farm to the global investment manager in September explains the healthier bottom line. And with £9.1m banked from the sale of two other projects a year ago, the partnership is beginning to resemble a renewable income stream for REG.
Indeed, the alliance will see REG sell off the largest completed wind farms to BlackRock and recycle the cash back into project development. REG builds assets for around £1.3m per MW of capacity and typically realises around £2m per MW upon a sale. It also has an emerging bio-power division with 8.6MW of plant capacity and a further 18MW coming on-stream next year.
Broker Cenkos expects REG to make roughly £30m of net profit from BlackRock wind farm sales over the next two years, generating adjusted EPS of 4.7p this year and 12.7p in 2015. Building 23.5MW of smaller sites for it to keep will also generate recurring revenue and underpin a progressive dividend policy. The forward yield is an estimated 3 per cent.
RENEWABLE ENERGY GENERATION (WIND) | ||||
|---|---|---|---|---|
| ORD PRICE: | 75p | MARKET VALUE: | £78m | |
| TOUCH: | 74-75p | 12-MONTH HIGH: | 80p | LOW: 60p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 5 | |
| NET ASSET VALUE: | 74p | NET CASH: | £4.8m* | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 6.5 | -1.7 | -1.5 | 0.50 |
| 2013 | 5.7 | 6.5 | 6.2 | 0.55 |
| % change | -13 | - | - | +10 |
Ex-div: 19 Mar Payment: 11 Apr *Includes restricted cash of £3.6m | ||||
