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.

TRIG - Renewables Infrastructure Group

TRIG’s attractions remain undiminished, yet trade on a discount of 4.5%…

Wind blowing in all directions

The Renewables Infrastructure Group (TRIG) is London''s 2nd largest listed investment trust dedicated to renewable energies. TRIG owns a GBP3.3bn portfolio of wind and solar generators across the UK and Europe with the bulk of it having secured government-backed PPAs that fix the price of electricity. Over 60% of TRIG''s forecast revenues until 2032 are fixed in nature. Defensive portfolio with some upside from power prices TRIG has high visibility on future cash flows, enabling the stock to off

TRIG - The Renewables Infrastructure Group

We look at TRIG’s key sensitivities to macro factors…

Inflation & Investment Trusts - Sep 2022

Inflation has now persisted beyond most people's 2021 expectations for a “short term blip” following the COVID crisis, and investors are increasingly under pressure to generate positive real returns in the first highly inflationary (i.e., >5%) environment since 1991. We expect a degree of asset price volatility to continue across all asset classes for quite some time. In this note we look at the factors behind the current inflationary environment, evaluate which ones are likely to persist and

Assessing the impact of EU / UK actions

Governments taking actions We argued in the past that as the energy crisis lengthens and intensifies, governments would feel increasing pressure to prioritise protecting households over favouring private investments into the energy transition. The EU is now looking to cap revenues for non-gas power generators at EUR200 per MWh. The UK government chose to negotiate with renewable energy producers to swap the short-term market upside for long term fixed price CfDs. Assessing the impact In this not

Blue sky scenario in H1

Lifted by high power prices and inflation TRIG reported a ~15p increase to the NAV p.s. in H1-22, a 17.4% y/y increase and a figure 8.5% above our estimates. TRIG''s trading environment seems to be as good as it can be. Power prices has been increasing in Europe and the forward markets suggest that this situation will persist in the years to come. Inflation is also running at a much higher pace than expecting, lifting the value of TRIG''s assets given the indexation of some feed in tariffs and

LIBERUM: Alternatives Daily: TRIG | GSEO | HGEN | APAX | HOME

LIBERUM: Alternatives Daily

Pulling the TRIGger

Delivering on acquisitions TRIG announced the acquisition of a ~8% stake in Hornsea One, a UK offshore wind field. This is a sizeable acquisition (the world''s largest operating offshore field) that will make 8% of the portfolio value. Still TRIG remains the most diversified trust in the peer group. In addition, this asset is backed by an inflation linked CfD with a remaining life of 13 years, thus significantly increasing the visibility of the portfolio cash flows well into the 2030s. This is

Private markets: A closer look at infrastructure and renewables

We examine the £27bn listed Infrastructure and Renewable Energy Infrastructure sectors

TRIG - Renewables Infrastructure Group

TRIG’s managers continue to diversify the portfolio

A matter of (tail)winds

Short term tailwinds here to stay, long term appeal unchanged TRIG delivered a good performance in FY21 despite the worst wind conditions since 2010 and the reflection of negative hits from FX, higher UK tax rate and impairments. This demonstrates the benefits of portfolio diversification and the strength of short-term tailwinds with i) record high forward power prices and ii) accelerating inflation. Both are here to stay in 2022 and asset valuations remain supported by the strong investor dema

LIBERUM: Alternatives Daily

Holding back the tears

Was COP26 a success or failure? In many ways it is irrelevant. Alok Sharma may have been upset at the last-minute watering down of the final text of COP26. However, its success cannot be attributed to the choice of words settled on at the end. The COP26 conference final agreement is clearly important, but its legacy is likely to be so much more.

Uncertain outlook comes as no surprise

We take a positive view of Legal & General’s FY 22 results. Despite the tough environment, the Group managed to outperform expectations – something which was hardly a given for such a large asset manager. With L&G being widely exposed to the UK economy, it might be a call one does not want to make but the firm’s business remains one of spreads – as long as a default does not occur. We remain positive but concede that L&G embeds more risk than we had assumed.

Very strong CY22 - CY23 upgraded 10%

LIBERUM: Alpha Group International* - Highly attractive global growth opportunity

Ambitious winds of change

M&G’s FY 22 results were strong. It was also the opportunity for new CEO Andrea Rossi to depict clearly his strategy for the upcoming months. While the impetus is clear and the objectives are ambitious, we rather believe in a structural improvement of the business (driven by the higher rates environment) than a commercial one.

Hybridan Small Cap Feast - 06 Mar 23

6 March 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objective

Belvoir Group - Debt free, entrepreneurial and diverse

2022 followed on from the strongest year for property in recent history, but Belvoir has, nevertheless, reported a robust set of full-year results further evidencing the power of its franchised model and strategy. FY 2022 revenue was up +14% (+2% like-for-like), gross profit up +6% and adj. PBT down -1% as the resilient Lettings income and expanding Financial Services business continued to grow (both +4% LFL), while housing Sales fell (-15% LFL) as market conditions weakened and administrative c

Morning Note – 27 March 2023

LIBERUM: Real Estate Investors* - Profitable sales drive valuation increase and NTA outperformance

Hybridan Small Cap Feast - 14 Mar 23

14 March 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objectiv

Critical Metals Plc - Initiating Coverage - 20th March 2023

Critical Metals is a British company that has acquired a 70% interest in a producing Molulu copper mine in the Katanga region of the DRC. The focus of the company is in the natural resources sector in Africa focused on the strategic or critical metals as defined by the United States Government Survey list in Open-File Report 2018-1021 and the Critical Raw Minerals as defined by the European Commission. The main catalysts for 2023 will be the announcement of the first sales of copper ore. This i

LIBERUM: Pollen Street * - Clear fundraising momentum

NAHL Group - Finals

NAHL generated growth in both its Personal Injury (PI) and Critical Care divisions, the former despite a continuation of subdued market conditions – hence market share gains. Results were in line with our forecasts but with a significant reduction in net debt which is especially welcome in the current high interest rate environment. Group strategy remains intact and in PI that means building the embedded value of future cash flows in NAL while flexing enquiry placements to maximise cash generati

Positive update - EPS upgraded by 5% p.a.

H&T (initiation of coverage): Pawnbroking royalty, with strong, profitable growth

Founded in 1897, H&T is the UK’s leading pawnbroker, with 269 stores, and it has gained a strong pawnbroking market share in recent years. While it is growing ancillary gold buying and forex products, its core is pawnbroking and related retail services. As other small-sum, short-term lenders have withdrawn, H&T’s well-capitalised, low-risk proposition has unique growth opportunities, with the pledge book up over 50% in 2022. The lessening of legitimate competition at a time of heightened demand

Interims in line, undervalued high quality income stream

Income quality stands out here: lfl rental growth continues, occupancy is full and rental collection is strong. The asset class is demonstrating the ability to perform in challenging conditions, reflecting the structural undersupply of high quality PRS homes in the UK. Pre-announced, EPRA NAV was largely unchanged at 117p in H1 with no yield compression and all rental earnings distributed. We make no changes to forecasts at this stage. We see an attractive total return with the shares trading at