RCS - Octopus Renewables - Results analysis from Kepler Trust Intelligence

Octopus Renewables Infrastructure TrustAnnouncement

02/04/2024 10:30

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RNS Number : 9532I  Octopus Renewables Infra Trust PLC  02 April 2024

Octopus Renewables Infrastructure (ORIT)

02/04/2024

Results analysis from Kepler Trust Intelligence

Octopus Renewables Infrastructure (ORIT) produced a NAV total return of 2.1%
for the year ending 31/12/2023 (2022: 12.4%). The trust's NAV fell from 109.4p
to 106.0p (-3.1%) largely as a result of  falling power price and inflation
forecasts, and an increase in discount rates. Since IPO in December 2019 ORIT
has generated a NAV total return of 28.6%.

Share price total return was -4.4%, as ORIT and its peer group continued to
experience share price weakness against a backdrop of higher inflation and
interest rates. Since IPO, share price total return is 6.7%.

Dividends totaling 5.79p were paid in the year ending 31/12/2023, covered
1.18x   (2022: 1.77x), a 10.5% increase on the previous year and in line
with CPI inflation. The 1.18x coverage does not include the positive impact of
the gains from asset sales above their holding value (see later), and
including this figure the dividend cover would have been 1.52x.

Dividend guidance for the year to 31/12/2024 is for an increased dividend of
6.02p, an increase of 4.0%, again in line with CPI inflation. The dividend is
expected to be fully covered.

ORIT sold two assets, both Polish onshore wind farms, for a total of £92m, a
21% premium over the pre-disposal holding value. This generated a c. 3% uplift
to NAV and an IRR of c. 30% over the holding period for the investments.

Kepler View

Since the year end, ORIT and its peer group have seen a significant further
widening of discounts, as illustrated in the chart below. ORIT now trades at a
c. 32% discount to its last published NAV, an 8.4% dividend yield, which is a
spread over well over 400bp to UK 10-year gilts. Considering that ORIT has
provided considerable evidence about the validity of its NAV in the last
financial year, has increased the percentage of fixed contracts to over 80%
and has a good pipeline of potentially value-enhancing projects to come
through its development investments, this could prove to be a fundamental
mispricing of the shares for long-term investors.

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