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- ASX-listed New Energy Solar (NEW) is tossing up the idea of selling off its US solar assets as it continues to trade at a deep discount to its net asset value
- The news follows softer-than-expected full-year revenue and production for the company, driven by ongoing remediation work at its Rosamond plants in California
- Meanwhile, with shares still trading at a discount to the company’s net asset value, New Energy says it will now consider selling its US assets as per its 2020 Strategic Review
- While it works out the best path moving forward, New Energy has cut its end-of-year dividend to just one cent per share
- Shares in New Energy Solar are up 3.09 per cent to 84 cents each at 2:14 pm AEDT
ASX-listed New Energy Solar (NEW) is tossing up the idea of selling off its US solar assets as it continues to trade at a deep discount to its net asset value.
The news follows an announcement of softer-than-expected half-yearly revenue for the second half of 2021, which New Energy said was impacted by its ongoing remediation work at its fire-affected Rosamond plants in California.
New Energy said business interruption payment payments for the Rosamond operations ceased in July 2021, and the plant did not return to full capacity until November.
Generation performance for the second half of the year fell 9 per cent below New Energy’s expectations, with revenues 7 per cent below expectations.
This takes full-year generation and revenues to 13 per cent below expectations at 883,655 megawatt-hours (MWh), with full-year revenue 6 per cent below company expectations at US$53 million (A$74 million).
Dogged discount and decreased dividend
New Energy announced a major strategic review back in 2020 in a bid to get its kick its share price into gear as shares traded at a discount to its net assets.
The review included the sale of some key Australian assets and a share buyback plan. Under the off-market buyback, New Energy purchased 35.5 million shares at 91 cents each, which equalled around 9.9 per cent of the company’s total shares on issue.
However, despite its best efforts, New Energy’s shares have failed to return to prices seen in 2018 and 2019, consistently trading for between 80 and 90 cents each for the better part of the last 18 months.
“In assessing the first phase of the Strategic Review, the board recognises that it has succeeded in reducing gearing and returning some value to shareholders,” New Energy said today in an announcement to the ASX.
“However, as the share price has continued to trade at a significant discount to net asset value the board, together with its advisor RBC Capital Markets, is revisiting the recommendations of the 2020 Strategic Review with the objective of maximising shareholder value.”
These recommendations include the sale of its remaining US solar assets either in a whole-of-portfolio transaction or individual sales.
New Energy said the US renewable energy market saw a high level of utility-scale solar divestment and acquisition activity in 2021, and this was expected to continue into 2022.
The company said it would not continue its share buyback program while it is focussed on asset sales.
Meanwhile, as New Energy considers how best to implement recommendations in its 2020 strategic review, it has made the call to cut its annual dividend to just one cent per share.
For reference, the company issued three-cent dividends at the end of 2020 and the first half of 2021.
New Energy said US Solar Fund was busy exercising its purchase option over a further 25 per cent of the Mount Signal 2 plant. The company said this was expected to be completed on February 10, at which stage it will declare a further dividend or return of capital of three cents per share.
Shares in New Energy Solar were up 3.09 per cent to 84 cents each at 2:14 pm AEDT. The company has a $298 million market cap.
