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Mar 23 2020, 07:15 GMT
The acquisition of a portfolio of French wind farms (8% of pro- forma gross asset value (GAV)) represents Greencoat’s first venture beyond the Irish market. A different geography perhaps, but the approach is consistent with its low-risk strategy to date – as in Ireland, these assets will contribute long-term (12.3 years), fully-contracted revenues to the portfolio. Its ability to acquire highly secure cashflows suggests that Greencoat is one of a select group of companies whose growth model remains intact in the current environment. The recent stock performance, while understandable, is at odds with its unchanged near- and medium-term prospects. With 97% of revenues contracted until the end of 2027 (economic concerns have no impact in this regard), the robustness of its cashflow and dividend is unaffected by global developments. The de-rating in its 2020F dividend yield to 6.2% (from 5% just a matter of weeks ago) therefore represents an attractive buying opportunity in our opinion. With the stock now trading at a discount to last-announced net asset value (NAV), we reiterate our ‘Outperform’ recommendation.