Boralex Inc

Boralex Inc (TSX: BLX) is an electricity company based out of Canada. The Company is engaged in the business of developing, constructing and operating power stations with renewable energy. The Group’s operations are divided into four reportable segments being solar, thermal, hydroelectric and wind. Business operations are in Canada, France and the United States.

Financial Highlights – Q1 of the Financial Year 2020 (31^st March 2020, CAD, millions)

(Source: Quarterly Report, Company Website) 

In the first quarter of the financial year 2020, driven by the higher wind production for the period, the total production increased by 19 per cent to 1,533 GWh (Q1 FY 2019: 1,284 GWh). The revenue from energy sales & Feed-in Premium surged by 16 per cent to CAD 200 million in the first quarter of the financial year 2020 (Q1 FY 2019: CAD 172 million), reflecting higher revenue from wind power stations and Hydroelectric power stations. The total revenue stood at CAD 203 million in Q1 FY2020 (Q1 FY 2019: CAD 174 million). Driven by higher revenues for the period, the EBITDA increased by 13 per cent to CAD 149 million in Q1 FY2020 (Q1 FY 2019: 131 million). The net earnings surged by 43 per cent to CAD 44 million in Q1 FY 2020 (Q1 FY2019: CAD 31 million), reflecting higher revenue and EBITDA. The basic earnings per share stood at $0.43 in Q1 FY2020 (Q1 FY 2019: $0.32), and diluted earnings per share stood at $0.43 in Q1 FY2020 (Q1 FY 2019: $0.31). The cash balance stood at CAD 281 million as on 31^st March 2020 versus CAD 153 million as on 31^st December 2019.

Share Price Performance

Daily Chart as of 7 July 2020, after the market close (Source: Refinitiv, Thomson Reuters)

Boralex Inc shares closed at CAD 32.36 at the time of writing after the market close on 7 July 2020. Stock's 52 weeks High is CAD 32.76 and Low is CAD 17.91.

Key Risks

The market conditions in which the Company operates is full of challenges and might impact the operational performance and reduce financial performance as well. Any change in regulations and government policies could affect the overall business of the Company. Risks related to environment and climate change could hamper the operations of the Group. Liquidity and interest rate risks may impact the business operations in the near term.

Conclusion

The Company has shown an increase in financial performance in the first quarter of the financial year 2020. Both the top-line and the bottom-line performance have increased, with improved profitability for the period. The Group has delivered excellent performance from French business. The liquidity position of the Company has improved, and the balance sheet remained well-positioned. The Group is focused toward its 2023 financial objectives and expects the sector to rapidly transform based on multiple technological innovations. The Company has started taking measures to optimize and diversify revenue sources and operations to extract benefits from the sector’s high growth potential. BLX also expects competition to increase due to the expansion and transformation of the industry.

Based on the above rationale, we have given a “Hold” recommendation at the closing price of CAD 32.36 (as on 7 July 2020).

Disclaimer

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