2025-06-16-Jefferies-NextEnergy太阳能基金（NESF）_NextEnergy太阳能基金_期末-阴云笼罩_7页_107kb

Summary of NextEnergy Solar Fund Equity Research Report (NESF LN)

Flash Note: The FY26 dividend target is flat at 8.43p, reflecting the run-off of high-priced PPA fixes and operational underperformance. The fund's NAV is estimated at 95.2p per share, trading at a 25.5% discount. Results showed a 5.3% generation shortfall due to adverse weather conditions, and asset sales are slower than anticipated due to M&A market volatility.

Key Highlights:

• NAV and Discount: NAV per share at 95.2p (discounted 25.5% based on Q4 assumptions showing a weighted average discount rate of 8% and lower medium-term power price expectations).
• Operational Performance: Generation was 5.3% below budget due to flooding and grid issues; this is the third consecutive year underperformance compared to irradiation levels.
• PPA and Hedging: Hedging reduced from 80% capacity in FY25 to 24% in FY26, with average PPA prices dropping from £80/MWh to £56/MWh, influenced by PPA runoff.
• Asset Sales: Two assets (The Grange and South Lowfield) remain in competitive sales with third-party buyers; board explores strategic options beyond sales.
• Dividend and Share Buybacks: Pre-scrip dividend cover of 1.1x, maintained across FY26 with unchanged target; £11.5m repurchased under a £20m commitment.
• Financials: Total gearing at 30% of GAV, with £60.1m RCF available; balance sheet leveraged, with increase in RCF drawings post-acquisitions.
• Valuation and Rating: Jefferies Equity Research assigns Hold rating with price target of 86p-60p; discount rates wider than 10% may trigger discontinuation vote at AGM.
• Risks: Dependence on power prices, potential M&A delays, operational challenges in irradiation-matched environments.

Recommendation: Hold, reflecting stable NAV discount and moderate PPA runoff expectations. Further details on strategic options are advised for shareholder consideration.