Northland Power Inc

Northland Power Inc (TSX: NPI) is a power producer Company based out of Canada. The Company is engaged in the business of developing, owning, building and operating green and clean power infrastructure assets in Europe, Canada and other regions globally.

Financial Highlights – Q2 and H1 FY2020 (30 June 2020, CAD, thousand)

(Source: Quarterly Report, Company Website) 

In the first half of the financial year 2020, driven by increase sale of regulated electricity and electricity & related products, the sales increased to CAD 1,096,926 thousand (H1 FY2019: CAD 842,362 thousand), and the sales in Q2 FY2020 increased to CAD 429,231 thousand (Q2 FY2019: CAD 343,822 thousand). Reflecting higher sales, the adjusted EBITDA increased to CAD 647,284 thousand and CAD 226,513 thousand in H1 FY2020 and Q2 FY2020, respectively. The operating profit increased to CAD 543,692 thousand H1 FY2020 and CAD 149,141 thousand in Q2 FY2020, reflecting increased revenue and adjusted EBITDA.

The net income in H1 FY2020 surged to CAD 349,296 thousand in H1 FY2020 (H1 FY2019: CAD 280,464 thousand). Due to higher taxes paid, the net income in Q2 FY2020 declined to CAD 74,277 thousand (Q2 FY2019: CAD 76,234 thousand). The basic earnings per share stood at $1.27 in H1 FY2020 (H1 FY2019: $1.06), and basic earnings per share stood at $0.26 on Q2 FY2020 (Q2 FY2019: $0.28).

The cash flow from operating activities surged to CAD 365,127 thousand and CAD 732,721 thousand in Q2 FY2020 and H1 FY2020, respectively. The cash balance as on 30 June 2020 stood at CAD 409,074 thousand (31 December 2019: CAD 268,193 thousand).

Share Price Performance

NPI 1 Year Daily Technical Chart. Source: Refinitiv, Thomson Reuters

Northland Power Inc shares closed at CAD 37.02 at the time of writing after the market close on 21 August 2020. Stock's 52 weeks High is CAD 37.73 and Low is CAD 20.52.

Key Risks

Risks related to environment and climate change such as hurricanes, tornadoes, avalanches and rockslides etc. could hamper the operations of the Group. Any change in regulations and government policies could affect the overall business of the Company. The Company’s operations are negatively impacted by risks related to interest rate and Liquidity.

Conclusion

The Company has shown an increase in financial performance in the first half of the financial year 2020. The Company witnessed an increase in revenue from core operations, with a well-positioned balance sheet and increased cash balance. Management does not expect any material impact on the financial condition, operations, capital resources and liquidity of Northland, due to the impact of covid-19. The wholesale market prices of electricity will have a moderately negative effect on revenue of the Company in the first half of the financial year 2020. NPI is progressing well with construction activities at Mexico based La Lucha solar project. The Company believes it has sufficient liquidity available to mitigate the impact of the covid-19 crisis. NPI 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 37.02 (as on 21 August 2020).

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.