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Investing.com -- Shares of NextEnergy Solar Fund Limited (LON:NESF) ticked up marginally by 0.1% on Thursday following the announcement of its March Net Asset Value (NAV) per share at 95.1p, which indicated a 2.4% decline over the quarter.
The slight increase in stock price comes amid a mixed financial update that showed a 1.1x dividend cover and a flat dividend target for FY26.
The primary movement in the company’s NAV was attributed to lower short-term power price assumptions for 2026-2030, which resulted in a 1.8p per share decrease. This was based on revised third-party consultant curves.
However, this negative impact was somewhat mitigated by positive revaluations of co-investments, revised inflation assumptions, and accretion from an ongoing £20 million share buyback program.
Operationally, the portfolio’s performance was largely on budget, with only a minor negative variance. The company anticipates providing more details at the full-year 2025 results presentation in June.
NextEnergy Solar Fund’s total gearing, which includes preference shares, was reported at 48.4%, up from 47.2% in December of the previous year.
The increase in gearing was primarily due to a decline in asset valuations, while long-term amortizing debt continued to decrease over the quarter.
Looking ahead, NextEnergy Solar Fund has maintained its dividend target at 8.43p per share for FY26, expecting it to be covered between 1.1x and 1.3x.
The company is optimistic about an improvement in dividend cover in FY26, considering that asset generation in 2025 was affected by exceptionally low levels of solar irradiation in the UK.
Regarding power price risks in the near term, the company is well-hedged, with approximately 94% of FY26E revenue already contracted and about 72% for FY27E.
RBC analysts have adjusted their estimates to reflect mark-to-market on power prices and the new dividend guidance, noting a forecast period decline of roughly 2-3%.
"We update our estimates to reflect MtM on power prices, and update for new dividend guidance, with our estimates over the forecast period declining ~2-3%," the analysts commented.
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