The outlook for Renewable Energy Generation (WIND) is clouded by political opposition and delays to planning applications. The onshore wind farm operator has won permission to develop projects in Cumbria, South Wales and Scotland since the summer, but it is expecting decisions on as many as eight more ventures between the May general election and the end of its financial year in June.
Last year, David Cameron said a re-elected Conservative government would scrap subsidies for wind farms - a move REG chief executive Andrew Whalley described as "political posturing". Even if subsidies were reduced, the UK is legally bound to meet EU renewable energy targets by 2020, and onshore wind is the cheapest source of green energy except for hydro power. Mr Whalley does not expect a complete moratorium on planning applications. If all REG's outstanding applications are granted, it would treble the company's portfolio of onshore farms awaiting construction from 53MW to 177MW.
The company is nonetheless hedging its bets by diversifying its range of renewable projects. Management expects to add a further 36MW of bio-power sites in the 2015-16 financial year, and recently signed an exclusivity agreement with waste management group Veolia to develop 60MW of solar projects.
Broker Cenkos maintains its forecast for £2.3m of profits before tax for this year, giving a full-year EPS of 2.2p.
RENEWABLE ENERGY GENERATION (WIND) | ||||
|---|---|---|---|---|
| ORD PRICE: | 62p | MARKET VALUE: | £64m | |
| TOUCH: | 62-63p | 12-MONTH HIGH: | 80p | LOW: 62p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | na | |
| NET ASSET VALUE: | 70p | NET DEBT: | 11% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 5.7 | 6.5 | 6.2 | 0.55 |
| 2014 | 5.1 | 1.1 | 1.1 | 0.55 |
| % change | -11 | -84 | -83 | - |
Ex-div: 2 Apr Payment: 24 Apr | ||||
