Greencoat UK Wind PLC (LSE:UKW) (UKW) is set to become increasingly attractive for investors as many of its positive traits begin to separate it from rivals in the sector, analysts said.
Kepler Cheuvreux, the French financial group, argued the renewable energy infrastructure fund “is ahead of the pack in the current market” due to being “well-placed to continue growing without tapping equity markets”.
Analysts believe much of its outperformance is due to it being cash-strong and resilient against weaker wind generation.
During the first quarter of the group’s financial year, UKW revealed its net asset value was 160p per share, slipping back slightly from the 164.1p valuation at the start of the year.
Much of this slip backwards was caused by lower winds reducing power generation, limited site availability and an outage at the Hornsea 1 facility.
Despite these headwinds, the trust produced 5.5p per share in net cash and continued with its £100 million buyback scheme, snapping up 13.8 million shares during the quarter.
Cash holdings sit at £250 million as of the end of March, while an additional £200 million is available through a credit facility.
Kepler experts said: “The trust continues to look capable of increasing its dividend above the rate of inflation and delivering NAV growth on a real basis.
“Along with the extensive buyback programme, we think the trust may start to look increasingly attractive to investors as those traits shine through and we see a separating of the 'wheat from the chaff' in the sector.”
Analysts at the French group added that discounts have continued to widen between the market and sector rivals, meaning trusts are unlikely to use equity investors to generate additional funding.
“UKW's scale, strong balance sheet, and robust cash generation means it can continue to meet commitments and invest in new projects at attractive rates without having to do this anyway,” Kepler concluded.