NextEnergy Solar Fund Ltd's (LSE:NESF) strong operational performance and cash generation is not being reflected in its market price, not according to analysts at Cavendish.
The broker argues that the 39.20% discount to NAV is “inconsistent” with the underlying performance and points to the board’s strategic review as a key potential catalyst.
Analysts, in a note, highlight that NAV per share fell to 88.80 pence after lower third-party power price forecasts, but notes that this was an external factor. The portfolio delivered power generation 7.6% ahead of budget, delivering an extra £2.5 million in cash.
Cavendish says the review process could include actions beyond the final phase of the capital recycling programme, which targets the disposal of a further 100MW of assets.
In the note, Cavendish flags the fund’s prospective dividend yield of 15.60% for FY26. Cavendish describes dividend cover as robust, supported by RPI-linked subsidies and contracted PPAs, and sees the yield as one of the highest available in the UK market.
Cavendish also draws attention to gearing at 49.20% of GAV and the consolidation of revolving credit facilities at a lower margin.
The broker views operational resilience, cash generation and asset life visibility as strong.