Polaris Infrastructure Inc

Polaris Infrastructure Inc (TSX: PIF) is an electricity Company based out of Canada. The Company is engaged in the business to acquire, develop and operate renewable energy projects in the Latin America region. The Company also operates energy projects in South and Central America.

Financial Highlights – H1 and Q2 Financial Year 2020 (30 June 2020, USD, thousand)

(Source: Quarterly Report, Company Website) 

In the first half of the financial year 2020, driven by higher revenue from Nicaragua and Peru, the revenue increased to USD 39,195 thousand (H1 FY2019: USD 35,870 thousand). The revenue in Q2 FY2020 surged to USD 18,923 thousand (Q2 FY2019: USD 17,269 thousand). Reflecting higher revenue and no impairment loss for the period, the operating income increased to USD 18,900 in H1 FY2020 (H1 FY2019: USD 6,155 thousand) and to USD 8,209 thousand in Q2 FY2020 (Q2 FY2019: operating loss of USD 3,581 thousand). The Company reported a PBT (profit before tax) of USD 546 thousand in Q2 FY2020 (Q2 FY2019: loss before tax (LBT) of USD 6,889 thousand), and USD 7,198 thousand in H1 FY2020 (H1 FY2019: loss before tax (LBT) of USD 2,086 thousand).

The Company reported total earnings of USD 3,366 thousand in the first half of the financial year 2020 (H1 FY2019: total loss of USD 5,230 thousand), while in Q2 FY2020 the Company reported a total loss of USD 1,025 thousand (Q2 FY2019: total loss of USD 8,610 thousand). The Company reported basic earnings per share of $0.21 in H1 FY2020 and basic loss per share of $0.07 in Q2 FY2020. The cash balance as on 30 June 2020 stood at USD 48,242 thousand (31 December 2019: USD 32,597 thousand).

Share Price Performance

PIF 1 Year daily Chart. Source: Refinitiv (Thomson Reuters)

Polaris Infrastructure Inc shares closed at CAD 14.18 at the time of writing after the market close on 2 September 2020. Stock's 52 weeks High is CAD 17.45 and Low is CAD 8.59.

Key Risks

Risks related to environment and climate change could hamper the operations of the Group. The market conditions in which the Company operates is full of challenges and might impact the operational performance and reduce financial performance as well. The Company’s operations are negatively impacted by risks related to interest rate and liquidity. Any change in regulations and government policies could affect the overall business of the Company.

Conclusion

The Company has shown an increase in financial performance in the first half and the second quarter of the financial year 2020. Both the top-line and bottom-line performance have increased. The Company operates in Nicaragua and Peru and receive full support from governments for the growth of domestic renewable energy sources. PIF has vastly experienced senior management to guide the Company through uncertain times. At present, the Company’s operations are not materially impacted by the changes to the supply chain due to imposed restrictions. However, the situation is still unpredictable and could cause a material impact on the supply chain, collection of accounts receivable, vendors and customers.

Based on the above rationale, we have given a “Hold” recommendation at the closing price of CAD 14.18 (as on 2 September 2020).

Disclaimer

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