Boralex engages in the development and operation of renewable energy power facilities in Canada, France, the UK, and the U.S. It is the largest independent producer of onshore wind power in France.
Its operating segments include wind (88% of its portfolio), hydroelectric (8%), thermal (2%), and solar assets (1%) with a total production capacity of 1,919 MW. By geography, Canada and France are its largest markets accounting for 42% and 52% respectively, of its total asset allocation, followed by the U.S. (6%).
More than 98% of Boralex’s revenues are derived from energy sales under contract, which ensures stable and predictable cash flow. With more than thirty years of experience, the company has developed strong expertise and established diversified businesses.
As a major player in the renewable energy sector, Boralex should benefit from the increasing rates of clean energy adoption in its major markets given its solid reputation as an independent power producer.
- Opportunity Score: 40
- Ticker: TSE:BLX
- Sector: Utilities
- Industry: Utilities - Renewable
- Market Cap: 4.04B
- P/E: 70.60
- Dividend Yield: 1.68%
- Payout Ratio (Earnings): 117.86%
- Canadian Dividend Aristocrat: YES
- Chowder Score: Members Only
- Revenue Growth: Members Only
- Dividend Growth: Members Only
- Dividend Growth Fit: 4/10
- Dividend Income Fit: 3/10
Revenue Growth & Market Exposure
Over the years, Boralex has developed extensive expertise in the development of small and mid-sized projects.
The wind power segment is its top growth vector. As a leader in the Canadian market and France’s largest independent producer of onshore wind power, Boralex’s net installed capacity was 2,040 MW as of December 31, 2019. It commissioned four wind farms and two hydropower stations totalling 95 MW in 2019.
The company will expand and continue its development activities in Europe and North America which are high growth energy markets and have an installed capacity of more than 2800 MW in 2023.
Boralex continues to explore new business models to sell energy directly to corporations and deliver complementary services for energy transmission networks and large-scale power users.
Projects under construction or ready to build represent 58 MW expected to be commissioned by the end of 2021, while the secure pipeline of projects amounts to 167 MW. The repowering projects for the Cham Longe I wind farm and Buckingham hydroelectric power station are well underway.
Boralex reported solid Q1 results driven by a 38% increase in wind power production in France.
Boralex has more than doubled in size in the past five years. The company’s growth is both organically as well as through acquisitions. Its net installed capacity has registered an annual compound growth of 17% in the last five-year period.
Renewable energy plants continued to operate even amidst the COVID-19 crisis given their must-run status. Energy production is an essential service. Most of Boralex’s production is under contracts containing pre-set conditions. The company is on track to fulfill its financial objectives for 2023.
Boralex is a Canadian Dividend Aristocrat with a history of decent dividend growth. It has maintained a sustained dividend growth since it introduced it in 2014. The company has compounded its payout at a rate of 4.9% annually, over the last five years. It last raised its dividend by 4.7% and offers a dividend yield of 2.1% currently.
The major proportion of the company’s cash flow is derived from long term contracts which also grants limited exposure to interest rate fluctuations.
In order to further increase its cash flow visibility, Boralex focuses on entering long-term, indexed, fixed-price energy sales contracts and about 97% of the GWh generated by Boralex is covered by such contracts. These contracts have a weighted average remaining contractual term of 13 years. Boralex expects 96% of its revenues to come from such contracts in 2023.
The company has a target to generate $140-$150 million in discretionary cash flow in 2023 and maintain a dividend payout ratio of 40%-50%. It reported a $60 million increase in discretionary cash flows driven by improved results of the wind and hydroelectric power segments. Its strong balance sheet further grants the financial flexibility to support growth.
The wind power segment in Europe and North America is a primary growth driver for Boralex, as it has a potential target market size of 9,500 MW and 1,050 MW, respectively. The company is also targeting a potential solar power generation market of 20,000 MW in both countries.
Boralex is well-positioned to capitalize on the favourable environment for growth in renewable energy, especially in the wind power segment. The growing trends of cost reductions in battery storage technology also act as a significant tailwind for Boralex.
Boralex operates in a very competitive environment. It competes with large utilities, large independent energy producers as well as small independent power producers. Brookfield Renewable Partners, Algonquin Power & Utilities, Northland Power, TransAlta Renewables, Innergex Renewable Energy are Boralex’s strong competitors.
The company’s development is focused on key markets with more complex processes creating barriers to entry for larger players.
|TickerKey||Ticker||Company||Sector||Industry||Score||Quote||Market Cap||P/E||FPE||EPS||Yield Raw||Yield||PayoutRatio||Payments||Dividend||Chowder||GrowthRating||IncomeRating||Tollbooth||Ambassador||Achiever||Aristocrat||King||Country||Graph|
|TSE:BEPC||BEPC||Brookfield Renewable Partners L.P.||Utilities||Utilities - Renewable||0.38||50.95||15.01||0.00||0.00||0.00||0.0293||2.93||1.0000||4||1.22||0.0293||3||3||Tollbooth - Unregulated||NO||NO||NO||NO||Canada||1|
|TSE:BEP.UN||BEP.UN||Brookfield Renewable Partners L.P.||Utilities||Utilities - Renewable||0.47||48.33||13.29||0.00||0.00||-0.82||0.0309||3.09||1.0000||4||1.22||0.0948||4||4||Tollbooth - Unregulated||NO||NO||NO||NO||Canada||1|
|TSE:AQN||AQN||Algonquin Power & Utilitties Corp||Utilities||Utilities - Renewable||0.79||19.83||11.84||11.68||11.68||1.70||0.0384||3.84||0.4485||4||0.62||0.1286||8||8||Tollbooth - Unregulated||NO||YES||YES||NO||Canada||1|
|TSE:NPI||NPI||Northland Power Inc.||Utilities||Utilities - Renewable||0.54||42.34||9.53||24.23||24.23||1.75||0.0283||2.83||0.6857||12||1.20||0.0389||3||4||Tollbooth - Unregulated||NO||NO||NO||NO||Canada||1|
|TSE:RNW||RNW||TransAlta Renewables Inc.||Utilities||Utilities - Renewable||0.44||19.47||5.20||56.29||56.29||0.35||0.0483||4.83||2.6846||12||0.94||0.0608||2||4||Tollbooth - Unregulated||NO||NO||NO||NO||Canada||1|
|TSE:BLX||BLX||Boralex Inc.||Utilities||Utilities - Renewable||0.40||39.40||4.04||70.60||70.60||0.56||0.0168||1.68||1.1786||4||0.66||0.0490||4||3||Tollbooth - Unregulated||NO||NO||YES||NO||Canada||1|
|TSE:INE||INE||Innergex Renewable Energy Inc||Utilities||Utilities - Renewable||0.53||21.00||3.67||0.00||0.00||-0.23||0.0343||3.43||1.0000||4||0.72||0.0519||5||7||Tollbooth - Unregulated||NO||NO||YES||NO||Canada||1|
The energy market is undergoing a rapid industry transformation fuelled by strong innovation and technological change. Renewable Energy is now cheaper than most traditional power sources.
The company’s efforts to diversify and optimize operations and revenue sources in this regard should further support growth. Boralex expects 96% of its revenues to be generated from long-term contracts which will further make its earnings safe and secure.