Tuesday, 5 January 2021

Neoen - Portfolio Addition


It's a new year and I have added another renewable energy company to my green portfolio. Neoen is listed on the Paris exchange. It floated with an IPO in 2018 and has more than doubled it's market cap. over the past year to currently €5bn.

Neoen owns and operates a range of renewable energy operations in 14 countries around the world. They currently have 50 solar energy farms including the largest in France and this is the main source of revenues (47%). Onshore wind farms are operational in Australia, Finland, France and Ireland and capacity is now approaching 1GW. The third and fastest growing sector is energy storage and Neoen operate the world's largest lithium-ion battery plant at Hornsdale in Australia developed with Tesla.

The current target is for 5GW of operational capacity across these three renewable energy sources by the end of this year.

Cestas Nr Bordeaux - Europe's largest solar farm

Results

According to the latest half-year report (pdf) to end June 2020, revenues increased by 33% to €157m and a robust cash holding of €590m. Assets in operation or under construction increased by 20% to 3.6GW over the 6 month period.

Energy storage contributed €24.6m to revenues in the first half, an increase of €16.2m or 193% compared to 2019.

Results for the full year are due mid February.

Conclusion

Neoen is a fast-growing global renewable energy company with a current portfolio capacity of over 3GW and a target of 5GW by 2022. The shares have had a good run this past few months in common with most other companies in the green energy sector. There may well be some pull back over the next few weeks/months which may have provided a better opportunity to add but as with so many others on my watchlist, they could just as easily keep rising so I have decided to bring this one on board now.

There are lots of positives which will drive forward the sector - the new president in the US and his pledge for a green deal, the EU's €1 trillion green deal which has just come into force, China announced it would hit peak carbon before 2030 and become carbon neutral by 2060 and the general global move towards net zero carbon emissions.

Neoen 1 yr Share Price

Obviously the excellent returns from my green portfolio over the past couple of years gives me the confidence to continue to expand this sector. Fingers crossed Neoen (and others) will continue to benefit from the transition away from fossil fuels.

The share price has risen over 100% from €30 this time last year and Neoen was added to my ISA at the price of €62.5 earlier this week. More on this following the release of full-year results.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation... investing in individual companies can be rewarding but is higher risk compared to collective investments - always DYOR!

10 comments:

  1. I’ve followed you for a long time and in General have really admired your recommendations. What concerns me is though you do say DYOR I worry that people might follow you blindly and virtually all your recommendations now appear to be focused on renewables green energy etc. Almost like Greta. It concerns me that so many of these green/renewables etc are relying on government grants etc that the rate of failure will be quite high and people will follow you blindly without thoughts about the consequences. Have you gone completely away from investing into anything other than ECO /flat earther investments

    ReplyDelete
    Replies
    1. Hi,

      This blog is just a record of my personal investing journey. The investments that I buy are NOT recommendations and I try to make this clear when posting.

      I hope those readers who wish to make their portfolios more sustainable/climate friendly will avoid blindly following what I do, or anyone else, but use the articles as a starting point for their own research and investigation. This is at the heart of a DIY approach.

      Delete
  2. Thank you very much for your insight and tips on investment ideas. I am just wondering how to find these investments on the stock market? I've looked on the AJ Bell site and am unable to find this latest French company or the last Norwegian one you talked about? I for one am all for green investing and very much appreciate your recommendations.

    ReplyDelete
    Replies
    1. Yes, some of those listed on the European exchanges may not appear when searching by the company name. In that case I find the SEDOL reference and inset that in the search box at Youinvest.

      For example the SEDOL for Nel Hydrogen is B28GRN5 and for Neoen it is BGV7F95. I hope that helps.

      Finally, as per previous comment, my purchases are not a recommendation but merely a record of my personal choice and reflects my feelings about the climate crisis and also my personal circumstances which may well be different to other investors.

      Delete
  3. Thank you for your reply. I am able to find them now! Great. Have a good weekend.

    ReplyDelete
  4. Hi, thank you very much for your very valuable insights and analysis.

    I was just wondering if you had an ad-hoc process for screening renewables / hydrogen stocks? How did you come across some of the smaller names such as Octopus or Nel?

    Thanks!

    ReplyDelete
    Replies
    1. Nothing very formal...I follow many of these smaller companies via social media which often throws up an article or link to related areas of interest. I guess its still a fairly niche area with lots of interconnected areas so it helps that I have the time to do some follow-up research. Usually when I find a listed company, I will place it on a watch-list and follow via Google finance to see how the share price performs in relation to others in the same sector.

      It obviously helps having a basic understanding of climate-related issues and getting a steer on how various sectors are likely to play out during the transition from fossil fuels to renewables and the research done in 2019 for my "Climate Emergency" book has helped in this aspect.

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  5. I've followed you for a while, both via your DIY Pensions book and this blog. It is well known that you've moved in the direction of 'green/sustainable' investing over recent years, as well as Technology. However, it also seems to me you have changed the approach of how you invest, as well as what you invest in. In the past you've espoused the low-cost ETF approach, but you seem to have adopted the approach of active funds and individual stocks. For my part I also want to invest 'sustainably', but I find it is possible to do this successfully with a careful choice of relatively low-cost ETFs and passive funds. I'd be interested to know your views on this.

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    Replies
    1. Hi mordac,

      Yes, a few years back I was using the low cost, global multi-asset funds as the core of my portfolio. However, with the change of strategy towards a more green and fossil free emphasis, it has been necessary for me to cherry pick the areas I need whilst avoiding the areas I wish to avoid and so a more active approach.

      Of course, as the move towards sustainable investing gains in popularity, there should be a wider choice of passive funds coming on to the market to make it easier for investors but I am wary of 'greenwash' from the industry and funds being categorised as ESG which continue to hold fossil fuel companies as well as the big banks which fund their operations.

      For the time being I will probably stick with my active stock picking combined with a few selected collectives such as iShares Global Clean Energy and Allianz Technology.

      I added the iShares World SRI fund to my green portfolio last year...here's the link
      http://diyinvestoruk.blogspot.com/2020/07/ishares-msci-world-sri-fund.html

      Without knowing which sustainable passive funds you hold, I am unable to comment but if you are happy with their holdings carbon impact and performance so far then go with it.

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    2. Hi DIY,

      I also found the iShares World SRI Fund, and I've made it the core of my pension fund equity holdings. I like that it specifically excludes fossil fuels. BG Positive Change, iShares Clean Energy and Allianz Tech also play a big role in my portfolio.

      I'm trying to diversify via funds while retaining a Green approach - and avoiding 'greenwashing'. Have you had a look at the iShares MSCI Emerging Markets SRI fund? (SUES) it is specifically 'reduced fossil fuel', I bought at the start of this year and it is up 7%

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