Michael SprungNorthland Power IncNPI.TOHOLDMar 22, 2023

Tough year 2023. Renewables sentiment turned, interest rates rose, turbine manufacturing problems. Pretty confident they can execute projects well. Long term, renewables aren't going off the map. At these levels, lots of optionality. The riskiest of his 3 Top Picks. He owns a lot and is buying more. Yield is 4.91%.

Unlike other some other utilities names, NPI’s leverage level is a bit better: currently, the net debt/EBITDA is around 5.0x (high but okay with industry averages). Shares have been weak due to a decline in revenue and profitability, which was magnified by a higher interest rates. If revenue recovers, we think NPI could experience decent upside potential. Regardless, lower interest rates should help the shares anyway. Overall, NPI has a cheap valuation (EV/EBITDA is the lowest in years), and has a decent dividend well-covered by cash flow. Analysts do expect a very big earnings recovery this year, and if the company can execute on this the shares will follow. It is not our favourite but does look better after its 31% decline over the past year. 
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They offer a lot of foreign exposure compared to their peers. The valuation has come off a lot in the past year. But he prefers other peers like Altagas. NPI has some issues to work through.

Sold it a while ago, but likes it and its managers especially. Is sensitive to interest rates. He will look at this, the utilities and REITs as interest rates fall. Headwinds that arose in late 2022 have passed. He sold it on concerns of a gap in their development pipeline. He'll look at this again, starting with its debt. Tight management that he expects will do well. Hold on, if you already own.

Renewables have been hit hard the past 6-12 months. Not unique to this stock. Has been buying shares in this company around $25 per share. Share price a good time to buy given weakness. 

NPI has great fundamentals and projects, but has disappointed. Interest rates weighed on these stocks, but there were concerns of developing wind projects off Taiwan given threats from China. These projects take a long time and money to build, so it's for the long haul. Should do better in 2024 as rates will decline. Will hold on.

Caught up in rising rates for labour and materials. Contract prices set years in advance of a project's start date turn out to be insufficient to cover project costs. Her play is BEP.UN, more diversified and more global.

Past 12 months has been tough on shareholders. Cost overruns and rising interest rates hard on bottom line. Not executing on business plan. Better options available for investors in the markets. 

There had been a "green premium" because there was short supply of renewable investments. Higher rates hit valuations and profit from operations. Steer clear. Try BEP.UN instead, with more asset diversification, FTS, or BIP.UN.

Fairly interesting. Two acquisitions caused leverage to go up, but plans to sell an asset. Will expand over the years. Trades just over book value. Payout ratio around 65% of cashflow. Yield is around 5.5%.

Will go lower as interest rates rise. 

Renewable space facing headwinds from interest rates and project costs. Some new agreements are inflation-indexed. A long-term, attractive sector. She's chosen BEP.UN, as it's more diversified, larger cap, global scale.

There has been a big pullback. It has great offshore properties as well as onshore. Headwinds caused by high interest rates should lessen.

Higher interest rates weighing down share price. 
Demand for electricity rising.
Business model looks safe.
Good hard assets for long term investor.