Foresight Solar (FSFL), the £499m potential bid target that survived a continuation vote last month, has committed another £10m to share buybacks and reported a positive trading update.
The extra £10m will bring total share purchases to £60m, marking it out as one of the renewables sector’s largest efforts to align stock prices with net asset values, the company said.
Since it began share buybacks in May 2023, Foresight Solar has purchased over 50m shares, delivering what it says is a 2.6p per share increase in NAV that stood at 111p on 31 March.
This morning the shares added 2.1p to 91.9p
Using analysts estimates for the current NAV, FSFL’s wide share price discount has narrowed to 19% from a one-year average of 27% after the company disclosed in May that it had made a formal merger offer that it had been unable to advance for reasons it did not specify. The chair Alex Ohlsson also stated the board’s willingness to take part in consolidation that benefited shareholders.
At last month’s annual general meeting a resolution to wind up the company, which was made necessary by the double-digit discount, was rejected by 86.8% of voting shareholders.
Today the company reported that solar generation had come in 5% above budget in the second quarter, implying a further increase in NAV next month and giving the board more confidence in its 1.3 times dividend cover target. FSFL pays quarterly dividends and yields 9%.
Total contracted revenues stand at 88% for 2025, falling to 77% next year and 63% in 2027 with average hedged power prices in the UK of £85.48/MWh, £74.05/MWh and £74.51MWh respectively.
In Spain the company has been allocated more than 100MW of capacity for five battery storage projects and Muel, a 55MW project, is expected to reach ready-to-build status by the end of the year.
After delays to selling its Australian assets, the company said the process was moving ahead now that forecasting information was available for potential bidders to assess.
The company also welcomed the government’s recent update of its energy market review, saying the decisions, such as scrapping zonal pricing, supported the necessary buildout of renewable energy to meet the UK’s net zero goals.
Stifel analyst Iain Scouller said: “Following a couple of negative trading updates earlier in the year, including delays to divestments, it is good to see a more positive update. Electricity production at least 5% above budget is no surprise to anyone looking out of their office window at the abundant sunshine, although we suspect that the UK numbers will be better than in Spain and Australia, which were lagging earlier in the year.”
[QD comment, James Carthew: Foresight Solar’s shares have been climbing since the turn of the year and are now about 20% off their lows. The buyback is useful but I suspect some shareholders are hoping for something more dramatic. With the potential disruption from zonal pricing no longer a threat, it will be easier for bidders to put a value on the business. I don’t want to see these trusts taken over, but these discounts are still too wide and are bound to attract attention.]
