FY23 Result and Outlook

We view DORE’s results (3.5% NAV TR) as a solid outcome in a difficult year; power price forecasts declined sharply, and UK solar discount rates ticked out. As part of the results, we have seen a welcome increase in disclosure. The key item in the results, in our opinion, is the fund’s FY24 dividend target of 5.8p (up 7.85%) combined with an increase in expected average dividend cover of >1.35x (1.21x) for the next three years. Discussions with management highlights that growth is being driven b

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

Downing Renewables and Infrastructure Trust – Powering ahead

Downing Renewables and Infrastructure (DORE) set out to build an attractive portfolio of renewable energy assets diversified by geography and asset type, and has succeeded in that. In doing so, it alighted upon an opportunity to build a portfolio of hydropower assets in Sweden. As we describe in this note, the management team has identified a number of ways in which it can significantly enhance the returns of these assets. These initiatives have the potential to add meaningfully to both DORE’s N

Downing Renewables and Infrastructure Trust – Powering ahead

Downing Renewables and Infrastructure (DORE) set out to build a portfolio of renewable energy assets diversified by geography and asset type, and has succeeded in that. In doing so, it alighted upon an opportunity to build a portfolio of hydropower assets in Sweden. As is described in this note, the management team has identified a number of ways in which it believes that it can significantly enhance the returns of these assets. These initiatives may have the potential to add meaningfully to bot

Interim Results – Continuing to add diversity

DORE delivered a positive H1’23 (NAV TR +1.6%, 6 months 30 June) return driven by limited asset repricing (the fund’s discount rates were already fairly conservative) and attractively priced incremental acquisitions in Sweden (Hydro plants) and in the UK. During the half, the fund progressed plans to exploit the optionality in its Hydro portfolio and has highlighted the potential to add an estimated 290bps (range 135-445bps) onto the core 8% Hydro return. In addition, the fund agreed two Grid Se

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

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

Acquisition of a Shunt Reactor

DORE’s £11m acquisition of Mersey Reactive Power (Mersey RP, a UK based 200MVAr shunt reactor) further diversifies the fund’s revenue base whilst supporting the energy transition. The asset has an initial fixed life, index-linked, availability-based contract with National Grid ESO until March 2031 (c8 years remaining) and an expected asset life of 40 years. The ESO’s demand for this service is highly location specific and lasts well beyond the life of the initial contract. The investment will be

Solid Q4 NAV, Hydro demonstrates its power

The Q4 NAV rose 1p (net of a 1.25p dividend) to 118.7p, taking the NAV TR for the year to 19.6%. DORE’s solid Q4 performance was the product of multiple countervailing forces (detailed below). DORE’s decision to store (in early Q4) hydro-generation capacity (water) in its dams facilitated higher value generation later in the period and above expected hydropower revenues. In light of recently published discount rates for UK Solar (7.0%-7.5%), DORE’s valuation of its UK Solar assets at 8% feels co

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.

Structurally positive

The detail in the recently published Q3 NAV statement (+2.6% TR) bodes well for future returns. Specific items include a conservative assumption for UK inflation in 2023 (2.75%), the avoidance of UK Windfall taxation (due to scale), higher discount rates (wgt. av. 7.7%, +0.5%) and the disclosure that the post period investments in UK solar and Swedish Hydro power have base case returns in excess of the revised portfolio discount rate. In our opinion, DORE is well placed to act as a diversifying

Timely disclosure sets a positive tone

Trading at a 13% discount to NAV (versus a 1.1% 12m average discount) and yielding 5%, DORE has de-rated with the wider sector. We attribute the generalised de-rating to a combination of higher risk free rates combined with specific concerns regarding the UK Government’s windfall revenue proposals. DORE’s timely disclosure regarding its revenue profile highlights a minimal impact from the windfall revenue proposal & the potential for upside from the CFD. In the light of this new information, we

Strong interim result, NAV TR +14.1%

Following a strong H1 results, the fund is well positioned to continue performing strongly and deploy further capital. The fund’s UK inflation assumptions 7.8% for 2022 declining to 2.75% in 2023 (versus 12.3% currently) feels conservative as do the most recently published power price assumptions. Trading on a 1.3% premium to NAV (June 22), yielding 4.2%, with a progressive dividend policy, cash to deploy, we view DORE as an attractive, diversifying, renewable exposure

Hybridan Small Cap Feast 23/06/22

Dish of the day Joiners: No Joiners Today. Leavers: No Leavers Today. What’s cooking in the IPO kitchen? Immediate acquisitions (IME.L) is to re-join AIM via a Reverse Takeover of Fiinu Holdings Limited. Once complete the Company is proposing to change its name to Fiinu Group plc. Fiinu intends to be a provider of a consumer banking product, the Plugin Overdraft ®, which is designed to provide customers with an overdraft facility without having to change their current account or request an overd

Downing Renewables and Infrastructure Trust - Proving its mettle

With a solid first set of results published, revenue and dividends running ahead of IPO forecasts, a diverse and differentiated portfolio of attractive renewable energy assets, and a growing NAV supported by investments that are helping to build NAV and profits, Downing Renewables and Infrastructure (DORE) is attracting the support of new investors. On 11 May 2022, the trust announced an NAV as at end March 2022 of 110.1p – up from 103.5p per share as at 31 December 2021; we discuss what drove

Elixirr - Outperforming competitors and the global Consulting market

Elixirr offers investors exposure to the long-term growth trends in the global Consulting market (including digitisation and the ongoing technology revolution, demand for innovation, efficiency and specialised expertise) all turbo charged by the group’s ‘challenger’ strategy driving market share gain from a low base. FY 2023 results showed the power of Elixirr’s differentiated model with revenue up +20% and adj. EPS up +22% in a market subdued by global uncertainty. With net cash of £18m, a posi

City of London Investment Group (CLIG LN) - 3Q IMS: return to growth

CLIG’s 3Q IMS reveals 5.5% rise in FuM in the first three months to March 2024 to US$10.1 billion. In the quarter performance added US$302m and group net inflows were US$224m.

Morning Note – 22 April 2024

LIBERUM: MindGym: Delivering on the controllables

Malvern International - Positive results confirm turnaround on track; cash-generative and a strong bid pipeline

A positive trading trajectory for MLVN has continued to emerge strongly in this morning's results, with FY23A revenues standing at £12.2m (FY22A: £6.3m / +79%) and £0.2m PBT profit as against a £1.1m PBT loss the year before (excluding a £94k fair value movement / loan write back). MLVN provides education services including (1) a range of university-related courses for overseas students, (2) adult ELT and (3) summer schools for juniors. MLVN's contract with the University of East London (UEL) st

hVIVO - FY 2023 results, revenue in-line, margin better, future is bright

hVIVO has delivered FY 2023A results in-line with the 30 January 2024 TU, with total customer revenues of £56m, growth of 16% versus 2022A. Other income related to tax credits added another £2.6m. 2024 revenue guidance of £62m has been reiterated, representing 11% growth over 2023A, and ahead of the £60m that we had previously forecast. The company has good visibility with the 2024 figure, with 90% already being covered by the existing orderbook (stands at £80m at the end of 2023), as well as in

SP Angel Morning View: Gold prices slide following profit taking as traders look to US data

Morning Note – 26 March 2024

The Hardman & Co Monthly: April 2024

Feature article: Steady as she goes, but could be better: A review of investment company liquidity since 2016 Liquidity is the lifeblood of equity markets. The measurement of liquid asset availability to a market or company is a way of gauging a market’s health. This article builds on our previous work, which analysed the liquidity data for non-financial trading companies, by applying the same analytical techniques to the investment companies (IC) space. We analyse liquidity for ICs as a whol

Hybridan Small Cap Feast - 14 Mar 2024

Banquet Buffet*** Abingdon Health 9.25p £11.3m (ABDX.L) The lateral flow contract development and manufacturing organisation announces its unaudited interim results for the six months ended 31 December 2023. Revenue increased 117% to £2.4m (H1 2023: £1.1m). The Adjusted EBITDA loss decreased 47% to £1.2m (H1 2023: £2.2m). Furthermore, reduction in operating loss of 50% to £1.2m (H1 2023: £2.4m). The Board therefore expects that H2 2024 revenue will be significantly improved compared with H1 2024

Allenby Capital: Franchise Brands - Capital Markets Day

A well-attended and successful Capital Markets Day (CMD) was held yesterday with the theme being “unlocking the Group’s maximum potential and financial targets” with presentations by all Group companies and divisions. Financial targets for the Group have been set for the period from FY25 to FY27 which emphasises the growth that the Board believes the Group capable of achieving. We include these targets in our financial model with the proviso that at this early stage they are more indications of

LIBERUM: The Liberum Leisure Digest: NLW increase - pricing power is key

Hardman & Co Insight - Asset managers had a poor 2022

Asset managers had a poor 2022: the S&P Composite 1500 Asset Management Index was down 22% and, according to the Investment Company Institute (ICI), worldwide mutual funds fell by 20%, from $76tr to $60tr. When bond and equity markets fall, the results are unlikely to be pretty: with revenues trending down and multiples contracting, there is a double whammy to contend with. So how do valuations shape up now, after a bullish start to the new year? The first chart is my favourite chart of asset m

Hybridan Small Cap Feast - 17 April 24

17th April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

Marlowe - New forecasts for Marlowe’s continuing operations

Following news that Marlowe had agreed to sell certain Governance, Risk & Compliance (GRC) software and services assets to Inflexion Private Equity for an EV of £430m, we release new forecasts for the group’s continuing operations, which comprise its Testing, Inspection and Certification (TIC) and Occupational Health (OH) businesses. This deal crystalises significant value for shareholders (disposed assets equated to c120% of the pre-announcement market capitalisation), simplifies the business a