GCP Infrastructure – Crystallising unrealised value

GCP Infrastructure Investments Ltd (GCP) had a difficult 2023, as the infrastructure sector dealt with rising interest rates and stubborn inflation. However, 2024 brought an improving economic outlook, the prospect of a reversal in interest rate policy, and – for GCP’s shareholders – a highly attractive dividend yield, solid portfolio execution, and the introduction of a capital recycling programme (where the adviser looks to realise existing assets to fund capital returns and new investment).

GCP Infrastructure Investments - Key takeaways from capital markets day

GCP Infrastructure Investments (GCP) has a mature, diverse and operational portfolio of 51 UK infrastructure assets with a total asset value of £1.1bn and a net asset value (NAV) of £953m, two-thirds of which is focused on renewables, and 41% of investments by value have some form of inflation protection. The portfolio is also well-positioned to benefit from the global trends of decarbonisation, energy security and population dynamics. The fund’s January capital markets day saw the board and man

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

GCP Infrastructure – Don’t look back in anger

There is no doubt that 2023 was a challenging year for GCP and the broader infrastructure sector as a confluence of factors weighed on performance, particularly the rapid increase in interest rates. Despite this, the company was still able to generate positive NAV returns thanks to inflation linkages and contracted earnings, which helped offset the impact of rising discount rates. Disappointingly, negative sentiment continued to weigh on the company’s shares, with the discount widening to a reco

GCP Infrastructure – Don’t look back in anger

2023 was a challenging year for GCP Infrastructure Investments Limited (GCP) as rising interest rates and several other factors appeared to weigh on returns. Despite this, the company was still able to generate positive NAV returns which the advisers note was thanks mostly to inflation linkages and contracted earnings that helped offset the impact of rising discount rates. Unfortunately, negative sentiment continued to weigh on the company’s shares, with the discount widening to a record low, de

GCP Infrastructure – Merger to unlock compelling value?

GCP Infrastructure Investments (GCP) has announced a potential three-way merger between it, GCP Asset Backed Income (GABI), and RM Infrastructure Income (RMII). As we explore in this note, this has the potential to address some of the issues that may have given rise to GCP’s exceptionally wide discount. Following a period of impressive NAV growth through 2022, GCP’s half-yearly report for the six months ending 31 March 2023 and the recently published end-June NAV showed a period of consolidatio

GCP Infrastructure – Merger to unlock compelling value?

GCP Infrastructure Investments (GCP) has announced a potential three-way merger between it, GCP Asset Backed Income (GABI), and RM Infrastructure Income (RMII). As we explore in this note, the adviser believes that this has the potential to address some of the issues that may have given rise to GCP’s discount. Following a period of NAV growth through 2022, GCP’s half-yearly report for the six months ending 31 March 2023 and the recently published end-June NAV showed what looks like a period of

Hardman & Co Insight: UK interest rates and “risk-free” gilts at their peak? Infrastructure stocks struggle

The share price performances of the nine Infrastructure Investment Companies (IICs) and of the 22 Renewable Energy Infrastructure Funds (REIFs) have been dire over the past year. Undoubtedly, the sharp rise in interest rates has presented the sector with serious challenges, especially since the yield on “risk-free” 10-year gilts has risen appreciably. Furthermore, the ongoing war in Ukraine and high inflation rates, from which many IICs and REIFs are partially ‒ if not wholly ‒ protected, contin

GCP Infrastructure Investments

GCP: recycling capital helps reset the clock...

The Hardman & Co Monthly: August 2023

Feature article: UK interest rates and “risk-free” gilts at their peak? Infrastructure stocks struggle Executive summary Infrastructure/Renewable Energy Funds ► The share price performances of the nine Infrastructure Investment Companies (IICs) and of the 22 Renewable Energy Infrastructure Funds (REIFs) have been dire over the past year. Undoubtedly, the sharp rise in interest rates has presented the sector with serious challenges, especially since the yield on “risk-free” 10-year gilts has r

Hardman & Co Insight: Higher interest rates overshadow IIC/REIF prospects

Hardman & Co Research’s focus is on the nine quoted infrastructure investment companies (IICs) and on the 22 renewable energy infrastructure funds (REIFs), most of which saw their share prices fall during 2022, while the FTSE 100 rose by just 0.9%. In our Quoted UK Infrastructure and Renewable Energy – Prospects for 2023 publication, we have addressed the three key issues of recent months: higher inflation, extremely volatile power prices and rising interest rates.

GCP Infrastructure – Green is good

GCP Infrastructure (GCP) has seen an improvement in the tailwinds supporting its investment thesis, whereby the rise in UK inflation and power prices has driven a substantial, positive uplift in GCP’s NAV. This uplift has more than made up for the negative impact of the UK government’s levy on energy producers. GCP has also improved the quality of its ESG disclosures. However, GCP has moved to trade on a historically wide discount, currently 14.7%. This may be a reflection of the wider pressure

GCP Infrastructure – Green is good

GCP Infrastructure (GCP) has seen a dramatic improvement in the tailwinds supporting its investment thesis, whereby the rise in UK inflation and power prices has driven a substantial, positive uplift in GCP’s NAV. This uplift has more than made up for the negative impact of the UK government’s levy on energy producers. GCP has also made major strides in the quality of its ESG disclosures. However, GCP has moved to trade on a historically wide discount, currently 14.7%. This may be a reflection

GCP Infrastructure – Green is good

GCP Infrastructure (GCP) has seen a dramatic improvement in the tailwinds supporting its investment thesis, whereby the rise in UK inflation and power prices has driven a substantial, positive uplift in GCP’s NAV. This uplift has more than made up for the negative impact of the UK government’s levy on energy producers. GCP has also made major strides in the quality of its ESG disclosures. However, GCP has moved to trade on a historically wide discount, currently 14.7%. This may be a reflection

Economic and Political Monthly Roundup January 2023

A collation of recent insights on markets and economies taken from the comments made by chairs and investment managers of investment companies – have a read and make your own minds up. Please remember that nothing in this note is designed to encourage you to buy or sell any of the companies mentioned.

Clip Money is a rapidly growing NCR-backed start-up based in Ottawa, Canada, and operating in Canada and the US.

Clip Money is a rapidly growing NCR-backed start-up based in Ottawa, Canada, and operating in Canada and the US. It is helping physical stores and businesses quickly, safely, and less expensively deposit cash into their bank accounts, as well as replenishing notes and coins for store operations. The company uses its proprietary software platform to facilitate cash management, and its network is made up of a network of DropBoxes and NCR ATMs located in retail outlets. Clip also partners with Bri

Hardman & Co Monthly: October 2024

Feature article: Labour’s first Budget - Investors in their sights? Summary ► Budgets are always important for investors. ► The imminent Budget, at the end of October, will be doubly so, because it is the first from the new Labour government, and it has already signalled the need to fill an alleged £22bn black hole, while ruling out changes to more than half the tax base. That implies a lot of the pain will be felt by investors. ► This paper considers the impact of increases in rates for th

Morning Note – 30 September 2024

Impressive progress in H1'24, forecasts maintained

Global Smaller Companies

GSCT offers comprehensive exposure to small-caps worldwide…

Gresham House Energy Storage Fund - Rising revenues and big plans for the future

Gresham House Energy Storage Fund (GRID) invests in utility-scale battery energy storage systems (BESS) in Great Britain. The sector had a tough start to the year, due to a deterioration in revenue conditions, but GRID’s efforts to stabilise revenues and increase capacity are paying off. The manager, Ben Guest, is looking forward to a significant improvement in revenue in 2025, underpinned by a large, contracted earnings base, and plans for new pipeline projects, further augmentations to GRID’s

Balancing act

Over the past three years, trusts with blended approaches rather than a strong tilt to growth or value have been at or near the top of the pack across the developed equities sectors, benefitting from their flexibility in a period of extreme style gyrations.

HICL Infrastructure

HICL’s increased dividend target comes amidst other positive signs…

Henderson Far East Income - Asian income fund with 5.9% dividend yield

Henderson Far East Income (HFEL) is a pan-Asian investment company with a focus on achieving a high and growing income as well as capital growth. While the emphasis on income will naturally lead the management team to focus on some older-economy sectors where there is a long history of rewarding investors with dividends, lead manager Mike Kerley reports that an increasing number of high-growth technology stocks in Asia are now generating healthy cash payouts. However, the manager retains a tilt

Templeton Emerging Markets Investment Trust - Under-owned, undervalued & under-appreciated

Templeton Emerging Markets Investment Trust’s (TEMIT’s) co-managers Chetan Sehgal (lead manager) and Andrew Ness consider that the case for emerging markets is not well understood. Hence, they believe that the regions remain under-owned, undervalued and under-appreciated, which provides an interesting opportunity for global investors. There are several powerful trends supporting the superior economic growth prospects of emerging markets versus those in developed regions, including demographics,

Trading in-line and delivering strategic progress

Today’s AGM update confirms that Vp continues to perform well, reiterating full year expectations despite challenges in certain markets (notably construction). Meanwhile, the new management team is progressing the refreshed strategic priorities set out in June. Broad market trends are consistent with those reported in recent periods. Infrastructure remains supportive, with good momentum and strong demand in transmission, water and civil engineering, although rail has seen a slower start to the

Allenby Capital TMT Update - 09.09.24 - ENSI.L, CPX.L, TERN.L, CHSS.L, ELEG.L, CNC.L

Please find below our weekly update covering themes that we feel that are of interest to investors and participants in the small and mid-cap TMT sector as well as commentary on recent newsflow.

Gore Street Energy Storage + (GSF, House Stock at 65p) - Transformational year ahead

PCI Pal - FY24 revenue growth of +20%, strong partner momentum

PCI Pal’s FY24 trading update shows FY24E revenue growth of +20% to £18.0m, strong traction with major partners, and FY24E net cash in line with our previous £4.3m. FY24E revenue of £18.0m includes a £0.7m impact from a specific project where the customer has paid in full and the company has delivered the services, but following discussions with the auditors the Board has decided to defer the revenue from FY24 into FY25. The remaining £0.4m revenue change vs our previous FY24E forecast reflects

Morning Note – 29 August 2024