...following on nicely from the engineers on Friday. Firstly in brief we have had half year results from Renewable Energy Generation (WIND). This is one I have written up in the past see here for more details. Basically the results are more of the same from them with more planning approvals and some profits from disposals to the JV partner Black Rock Asset Management. The headlines from the results statement were:
● Wind farm planning permission awarded for Hallburn, Cumbria (12MW) and resolution to grant permission at Mynydd Portref, Rhondda Cynon Taf (12MW)
● Sale of the St. Breock and Ramsey II wind farms to BlackRock for net proceeds of £13.8m with a profit of £4.6m recognised to date
● 53MW of consented onshore wind assets now moving to procurement and construction, with a further 124MW of applications awaiting determination in the UK planning system and over 100MW in pre-planning
● Whitemoor bio-power plant (18MW) commissioned and operating under National Grid's short term operating reserve
● Group revenues of £5.1m (H1 2013: £5.7m) in line with management expectations following the decommissioning of the original St.Breock windfarm during 2014 to allow for repowering
● Adjusted EBITDA of £4.2m including disposal profits of £4.6m (H1 2013: £9.6m including disposal profits of £9.4m)
● Increase of £3.2m in unrestricted cash resources for the six months to £14.6m as at 31 December 2014
The only other point of note was that the interim dividend was unchanged 0.55 pence, although the full year dividend is forecast to be up by 9% to 2.4 pence in total so hopefully they will see fit to increase the final for the year to June 2015 for a 3.8% yield. Otherwise nothing much else to add on this one, other than the fact that it still looks good value versus the price of deals, but the shares continue to be becalmed like a wind turbine on a summer day. Which...
Click to visit Rolls Royce investor relations site.
...leads nicely onto the other turbine related stock today, Rolls Royce (RR), which has been the opposite of becalmed as it has suffered some turbulence in its share price in the last 12 months with falls from around 1200 pence to under 800 pence in October 2014. This was on the back of a couple of profits warnings and disappointing trading updates that they put out during the year.
The reason I mention it is because I wrote it up toward the end of October at 780 pence as a good quality stock which had been over sold in the market volatility at that time. So as it has recently hit the first of my target prices and close a gap on the chart around 920 pence (see below) it seems like a good time to revisit it as they are due to report results on Friday 13th this week (see Mail write up here). Now given the poor updates in the last year these are not expected to be good, but presumably the market knows that – I guess the key will be what they have to say now about the outlook and how investors take that.
Thus if you did buy into them back in October and are more of a trader than an investor I would be tempted to lock in a profit of around 15% ahead of the results just in case they disappoint again. Alternatively if you are a longer term investor you could hold on in the expectation of them recovering all the way back to 1200 pence again given their longer term quality and visibility of their earnings from the spares business. However I would say they look fairish value on around 14 to 15x earnings with a lowish dividend yield of just over 2.5% and an earnings yield of just under 8%. So in summary as I always say you pay your money and take your choice but for me this one looks like a trading sell / longer term hold.
Sorry couldn't resist adding another tune today which seems appropriate. Oh no I hear you say so look away now or see the end of this post to listen if you want.