Triple Point Energy Transition PLC

Triple Point Energy Transition PLC (LSE: TENT) takes a comprehensive approach to investments in the energy sector, with a primary focus on three key themes- Energy Generation, Energy Storage and Distribution and Energy Demand Reduction. By strategically investing in these three areas, TENT is fast-tracking the transition toward a more eco-friendly, resilient, and efficient energy system. Their diversified asset portfolio aims to deliver a positive environmental impact while creating a sustainable and diversified income source for their investors.

Investment Rationale – Watch at GBX 53.75

• Quarterly Portfolio Update: Net asset value decreased from GBP 99.4 million as on 31 March 2023 to GBP 97.1 million as on 30 June 2023. The investment portfolio valuation increased from GBP 87.7 million as on 31 March 2023 to GBP 94.6 million as on 30 June 2023. The change in the valuation for the quarter is primarily a result of two factors:
  • A 40 basis points increase in the unlevered discount rate for the Hydroelectric Portfolio, going from 5.6% to 6.0%. This increase can be attributed to the ongoing trend of rising interest rates and higher UK long-term gilt yields.
  • Downward revisions in power price forecasts made by external power market consultants. However, it's important to note that this was partially offset by a more optimistic outlook on inflation compared to previous forecasts.

As a result of these changes, the weighted average unlevered discount rate for investments deployed as of June 30, 2023, has now risen to 7.0%.

The company announced a debt investment of GBP 5 million made in Innova Renewables to support its ongoing projects involving solar, battery, and energy storage systems throughout the UK. This investment has a 12-month term and is expected to provide returns that significantly exceed the Group's target return range of 7-8%.

GBP 3.9 million has been allocated to the Group's Battery Energy Storage System (BESS) Portfolio. This brings the total investment in this sector to 22% of the overall commitment.

• FY23 Income Statement Update: The total Net Asset Value return for the year ending on March 31, 2023, was 9.2%, compared to 4.9% on March 31, 2022. Throughout the year, TENT generated a total profit and comprehensive income of GBP 8.8 million, a notable increase from GBP 4.8 million in the previous year. This growth is a direct result of the expanding investment portfolio, which has appreciated by 14% during the financial year.
• Dividend Update: Dividends declared for the year ending on March 31, 2023, amounted to 5.50 pence per Ordinary Share. These dividends were fully covered by operating cash flow at 1.1 times the amount (after accounting for expenses and finance costs for both TENT and its wholly owned subsidiary, TENT Holdings).
• Revolving Credit Facility Update: On March 14, 2023, TENT made an announcement regarding the successful completion of a 12-month extension of its fixed-rate GBP 40 million Revolving Credit Facility (RCF) through its wholly owned subsidiary, TENT Holdings Limited. This extension has prolonged the RCF's validity until March 28, 2025.

Share Price Chart

Conclusion

Due to the current macroeconomic condition, higher interest rates, poor sentiments, and considering the outflows and technical chart pattern, a "WATCH" recommendation on Triple Point Energy Transition PLC has been given at the closing price of GBX 53.75 (on 08 November 2023).

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 08 November 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 4: Dividend Yield may vary as per the stock price movement.