London, UK, 7 August 2023
Edison issues update on Triple Point Energy Transition (TENT)
Triple Point Energy Transition's (TENT's) cash dividend cover ratio was 1.1x (1.2x excluding one-off listing expenses) for FY23, up from 0.14x a year ago when the portfolio was not fully deployed. TENT's relatively strong dividend yield (9%) and high discount to NAV (32%) have been difficult to explain and have become more anomalous now the dividend is clearly covered by ongoing cash flows. TENT's 1.1x dividend coverage was ahead of our estimate of 1.0x and our forecasts are now under review. NAV per share was 99.44p, up from 99.12p a year ago, and virtually flat on September 2022 (99.53p), with a total NAV return of 9.2% for the year.
Clearing 1.0x dividend cover by a 20% margin to 1.2x (including one-off listing costs 1.1x) is clearly a good result. TENT has set a target of a 5.5p dividend for 2024, which is flat on 2023, but given the 9% yield and continued attractive risk-adjusted yields in its pipeline, seem a sensible strategy. Given the long-term (92% contracted over 10 years) and inflation-protected (47% linked to inflation) nature of its income, TENT shares trade at an unwarranted discount to NAV in our view.
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