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Edison Investment Research Limited
London, UK, 29 August 2023
SDCL Energy Efficiency Income Trust: Initiation of coverage SDCL Energy Efficiency Income Trust (SEEIT) is an investment trust focused on delivering energy and energy efficiency as a decentralised service directly to end users rather than supplying into the broader power grid. Its income comes from a range of services and is driven by cutting losses in energy generation, transmission and use. It has delivered a total NAV return of 7.2% pa (3.5p in NAV terms) since IPO in December 2018 and its 6p/share dividend is 1.2x covered, representing an attractive 8.9% yield.
SEEIT presents an attractive potential return to investors, in our view. We see possible further upside to NAV possible from management improvements within its current portfolio (eg efficiency improvements, utilisation of idle capacity and small capital projects), which we believe could provide 12–13% upside to NAV/share over two to three years. Assuming dividends at a CAGR of 3% could add a cumulative 27% to returns over three years, taking three-year returns to 39–40% (or 13–13.3% per year). This is before any potential closure of the discount to NAV, which stands currently at a significant 31.3%, providing an additional potential 45% return if this discount is closed over time (see Exhibit 14 for further detail). If all these factors were realised, this would present a combined potential 85% total return over three years.
All reports published by Edison are available to download free of charge from its website About Edison: Edison is a leading research and investor relations consultancy, connecting listed companies to the widest pool of global investors. By focusing on the volume and quality of investors reached – across institutions, family offices, wealth managers and retail investors – Edison can create and gauge intent to purchase, even in the darkest pools of capital, and then make introductions via non-deal roadshows, events or virtual meetings. Having been the first in-market 17 years ago, Edison now has more than 100 analysts covering every economic sector. Headquartered in London, Edison also has offices in New York, Frankfurt, Amsterdam and Tel Aviv and a presence in Athens, Johannesburg and Sydney. Edison is authorised and regulated by the . Edison is not an adviser or broker-dealer and does not provide investment advice. Edison’s reports are not solicitations to buy or sell any securities. For more information, please contact Edison: Andrew Keen +44 (0)20 3077 5700 Harry Kilby +44 (0)20 3077 5724 Learn more at and connect with Edison on: YouTube
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1714025 29-Aug-2023
