Greencoat UK Wind Plc

Greencoat UK Wind Plc (LON: UKW) is a renewable infrastructure fund with the primary objective to invest in operating the UK wind farms and preserve capital on a real basis.

Recent News
On 27^th February 2020, the board of Greencoat UK appointed Ms Caoimhe Giblin, as Chairman of the Audit Committee.

Financial Highlights – Financial Year 2019 (31^st December 2019, GBP, thousand)

(Source: Annual Report, Company Website)
 
For the financial year ending 31^st December 2019, due to lower investment returns for the period, the total income and gains declined to GBP 89,236 thousand from GBP 232,236 thousand in FY2018. The operating profit declined from GBP 215,164 thousand in FY2018 to GBP 66,323 thousand in the financial year 2019. The PBT (profit before tax) stood at GBP 43,294 thousand in the fiscal year 2019 versus PBT (profit before tax) of GBP 200,678 thousand in the financial year 2018. The PAT (profit after tax) stood at GBP 43,294 thousand in the financial year 2019 versus PAT (profit after tax) of GBP 202,381 thousand in the financial year 2018. The basic and diluted earnings per share (continuing operations) stood at 3.14 pence in the financial year 2019 versus basic and diluted earnings per share of 18.54 pence in the financial year 2018.
 
Share Price Performance
 

Daily Chart as of March 19^th, 2020, before the market close (Source: Thomson Reuters)

Greencoat UK Wind Plc shares were trading at GBX 100.793 at the time of writing before the market close (at 11:16 AM GMT) on 19^th March 2020 and down by 1.18% versus the previous day closing price. Stock's 52 weeks High is GBX 155.00 and Low is GBX 100.20.

From the technical standpoint, 3 days, 9 days and 14 days relative strength index of the stock was favourable (oversold) and the price could rise further from the current trading level.

Valuation Metrics

(Source: LSE)

As on 28^th February 2020, the Price/Earnings multiples and EV/EBITDA of the Greencoat UK were 10.5x and 12.6x, which were lower as compared with the Equity Investment industry multiple of 23.5x and 24.0x, respectively, reflecting that the company is trading at a lower multiple as compared to its peers.
 
Conclusion
The company’s financial performance for the financial year 2019 declined significantly. Both the top-line and bottom-line performance has fallen for the period. The company had made three significant investments, which includes wind farms in Dunmaglass, Stronelairg and in Tom nan Clach. The company has raised funds of more than £500 million from its shareholders (existing and new). The company invests heavily towards different projects to increase its capacity to generate more power; however, sometimes these investments might not bring as expected returns or become unattractive. The company has a healthy pipeline of investment opportunities in the future. The ongoing Brexit uncertainty does not much impact the company's operations.

Over 4 years (FY15 - FY19), the company’s net income surged from $30.65 million in FY15 to $43.29 million in FY19. Compounded annual growth rate (CAGR) stood at 9.02% per cent.

Based on the above rationale, we have given a "BUY" recommendation at the current price of GBX 100.20 (as on 19^th March 2020, before the market close at 9:57 AM GMT).

Custodian REIT Plc

Custodian REIT Plc (LON: CREI) is a Leicestershire, the United Kingdom-based real estate investment trust (REIT). Its property portfolio includes retail, industrial, office, retail warehouse and office properties.

Financial Highlights – H1 Financial Year 2020 (30^th September 2019, GBP, thousand)

(Source: Interim Report, Company Website)
 
In the first half of the financial year 2020, the company’s revenue stood at GBP 20,495 thousand as against GBP 19,634 thousand in H1 FY2019. The operating profit (before investment property financing and revaluation) stood at GBP 16,365 thousand in H1 FY2020 as against GBP 15,758 thousand in H1 FY2019. The operating profit (before financing) declined from GBP 18,619 thousand in H1 FY2019 to GBP 3,145 thousand in the first half of the financial year 2020. The PBT and PAT (profit before tax & profit after tax) stood at GBP 727 thousand in the first half of the financial year 2020 versus PBT & PAT (profit before tax & profit after tax) of GBP 16,606 thousand in the first half of the financial year 2019. The basic and diluted earnings per share stood at 0.2 pence in the first half of the financial year 2020 versus basic and diluted earnings per share of 4.3 pence in the first half of the financial year 2019.
 
Share Price Performance
 

Daily Chart as of March 19^th, 2020, before the market close (Source: Thomson Reuters)

Custodian REIT Plc shares were trading at GBX 83.60 at the time of writing before the market close (at 11:24 AM GMT) on 19^th March 2020 and down by 0.59% versus the previous day closing price. Stock's 52 weeks High is GBX 120.60 and Low is GBX 83.00.

Valuation Methodology

*Peers: Londonmetric Property Plc, Town Centre Securities Plc and Land Securities Group Plc.

From the technical standpoint, 3 days, 9 days and 14 days relative strength index of the stock was favourable (oversold) and price could rise further from the current trading level.

Conclusion
The company has shown a decline in financial performance in the first half of the financial year 2020. Although the revenue has increased, while the bottom-line performance declined for the period. Custodian REIT PLC has a robust business model and a strong balance sheet. The strength of the company is blue-chip tenants for the prime retail warehouse assets, and this also represents the opportunities with strong rental growth in rent review and lease renewal. 

Based on the decent prospects and supported by valuation done using the above method, we have given a "Speculative Buy" recommendation at the current price of GBX 83.00 (as on 19^th March 2020, before the market close at 12.02 PM GMT) with high single digit, based on 13.07x NTM Price/Earnings multiple (approx.) on FY20E earnings per share (approx.).
 
*All forecasted figures and peer information have been taken from Thomson Reuters. 

Disclaimer

PLEASE BE ADVISED THAT YOUR CONTINUED USE OF THIS SITE OR THE INFORMATION PROVIDED HEREIN SHALL INDICATE YOUR CONSENT AND AGREEMENT TO THESE TERMS.
References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.
This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332.
The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine is not responsible for material posted on this website and does not guarantee the content, accuracy, or use of the content in this site. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated.
Kalkine do not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional licensed financial planner and adviser.