Edison issues flash on Foresight Solar Fund (FSFL)

Foresight Solar Fund Limited

11 August 2023

 

London, UK, 11 August 2023

Edison issues flash on Foresight Solar Fund (FSFL)

Foresight Solar Fund (FSFL) released a strong operational trading update, with production 2.8% ahead of budget, cash receipts of £52.3m, 42% higher year on year, and forward power sales supporting a 1.5x dividend cover forecast by the company for the next three years. FSFL's Q2 NAV/share was down 4.3p (-3.4%) from Q1 at 119.9p, with 74% of this move due to 50bp rise in discount rate assumptions for UK assets to 7.5%. FSFL trades at an attractive 19% discount to NAV and 8% dividend yield, in our view.

FSFL's June 30 NAV/share was 119.9p, down 4.3p (3.4%) from March 30. 3.2p of this move (74%) was due to 50bp rise in discount rate assumptions (levered rate assumption for UK assets was raised from 7% to 7.5%, other regions remained unchanged) reflecting rises in interest rates. Lower forward power price forecasts reduced NAV/share by 1.4p, offset by 0.9/share positive impact of lower tax payments under the UK generators levy. FSFL is trading at a 19% discount to NAV, and we believe that a higher interest rate environment is already more than reflected in its share price. FSFL represents an 8% yield and management has confidence in 1.5x dividend cover in the next three years, underpinned by forward power sales.

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