A fourth-quarter update from FTSE 250-listed Renewables Infrastructure Group (LSE:TRIG) was "pretty grim", said analysts at Stifel, downgrading their rating to 'negative' from 'neutral'.
Net asset value in the fourth quarter was down 4.7%, resulting in a 9.2% decline over the whole of 2024.
The second dividend target of 7.47p per share was met, TRIG said, but the analyst Iain Scouller noted that the second-half payout was "uncovered" with only 0.9 times cash cover. The 2025 dividend was increased 1.1% but cover is "only projected to be 1.1x".
Normally immaterial, the results saw a "previously unheard of" annual reassessment of transmission losses in the grid, which reduced NAV by 0.9p.
"The only potential positive that we can see is the share buyback is being increased to £150 million until May 2026, although £30 million of this is already used," Scouller said.
"While 2024 has been a poor year for the renewables sector, we think 2025 could see more stable NAVs, assuming power prices hold up at their recently more elevated levels of £80-£100/MWh.
"However, we think this 2024 outturn for TRIG will put a cloud over its shares, and whilst the circa 30% discount they are trading on appears to offer value, we can't really see any immediate catalyst (barring sector M&A) to re-rate the shares.
"There remains nervousness over the risk of higher discount rates, in a scenario where gilt yields were to hit the c.5% level."
This was the basis for the downgrade, the analyst said, expecting the share price to trade around the 70p to 75p level "until there is more stability in NAVs and improved dividend cover".