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dydo

TerraForm Power, Inc. (TERP)

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Sounds goofy, ppa does matter or like you said efficiency factors do not?

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2 minutes ago, odyd said:

Sounds goofy, ppa does matter or like you said efficiency factors do not?
 

Looks like I should re-evaluation PEGI then.  I was going on CS's TP of 22 a share, thinking their other valuations seemed well thought out.   I have enough money there where I should really understand their biz model & valuation.

Thank you

Matt

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I never seen valuation of yieldco using selling price of the asset, but I guess anything goes,

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I guess this belongs in the PEGI group.  I think it was just a secondary calculation to verify their primary.  That was from Nov 17:

Valuation: Our $22 target price is based on an 9% target yield applied to our 2018 dividend per share forecast of $1.95. Valuation implies a reasonable 11.1x multiple on our 2018 EBITDA projections and a conservative 1.1x multiple on our assessment of current portfolio net asset value (NAV).

How does that sound?

Matt

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Interesting reaction to 9 months old metric

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Looks like TERP is already getting value from the new sponsor.

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Terp sold its UK portfolio, that is a good news.

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6 hours ago, odyd said:

Terp sold its UK portfolio, that is a good news.

Time to show my ignorance--why is this good news?  I thought the purpose of a yieldco was to buy completed projects from the parent (thereby returning capital to the parent so it can build more projects), then operate them long enough to recover the capital, plus extra which is paid out as dividends spread out over the operational life of the project.  No projects, no yieldco.  So why would a yieldco sell a project?

I can think of two reasons:  either the metrics have changed and the project will no longer pay for itself (total income derived over operational life of project is now projected to be less than initial capital expense plus dividends), or the yieldco needs cash.  Solar project metrics are usually pretty stable (operational plants have long-term power production agreements).  So does TERP need cash?  For what?  To buy more projects (swapping out an older, less productive project for a newer, more productive one)?

Interested in hearing your thoughts on this....

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