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Innergex Renewable’s French wind acquisition sound, says Industrial Alliance

INE stock

Innergex RenewableThe acquisition of 131 megawatts of wind assets in France is a small but solid step for Innergex Renewable (Innergex Stock Quote, Chart, News: TSX:INE), says Industrial Alliance Securities analyst Jeremy Rosenfield.

Yesterday, Innergex announced it had signed a deal with Germany’s wpd europe GmbH to acquire of a portfolio of eight wind power projects in France for approximately $137-million.

“Establishing a foreign foothold is the cornerstone for the next growth stage at Innergex,” said CEO Michel Letellier. “This acquisition represents not only the outcome of a long process during which we laid the foundations for a new phase in the evolution of the corporation, but also the achievement of an ambitious objective — our desire to export our expertise and know-how to Europe. Furthermore, the transactions announced today lay the basis for the future development of Innergex in France, a highly attractive growth market.”

Rosenfield says the French assets are low-risk and are expected to generate stable cash flows for Innergex immediately. He says this adds to appealing mix of stable assets.

“We continue to like INE for its low-risk investment profile, supported by (1) the stability and longevity of its fully contracted renewable power portfolio, (2) significant near-term contracted growth through 2017, (3) longer-term development-oriented growth potential, and (4) potential dividend upside within the next two years,” says Rosenfield. “We attribute $0.50/share to the pending French wind acquisition based on our current valuation methodology, and continue to see INE as a solid long-term investment. However, we note that INE’s recent share price outperformance (up ~17% year-to-date vs. ~8% for the sector average) and its high relative valuation multiples could impede the shares from moving significantly beyond our target over the near term.”

In a research update to clients today, Rosenfield maintained his “Buy” rating, but raised his one-year target price on Innergex Renewable from $14.00 to $14.50, implying a return of 14.0 per cent at the time of publication.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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