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 (82% of its portfolio), solar (9%), hydroelectric (7%), and thermal (2%), with a total installed capacity of 2,455 MW. By geography, Canada and France are its largest markets accounting for 46% and 42% respectively, of its total capacity, followed by the U.S. (12%).
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.
Key Investment Data
- Opportunity Score: 35
- Ticker: TSE:BLX
- Sector: Utilities
- Industry: Utilities - Renewable
- Market Cap: 4.03B
- P/E: 85.05
- Dividend Yield: 1.68%
- Payout Ratio (TTM): 139.60%
- 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
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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 2,455 MW as of February 2020.
It registered an annual compound growth of 17% in installed capacity in the last five year period. The company will expand and continue its development activities in attractive markets of Europe and North America which are high growth energy markets and projects to 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 development represent more than 544 MW, including 64 MW of projects under construction or ready to build expected to be commissioned during 2021-2023.
Boralex also has a strong pipeline of wind and solar projects totaling 2,502 MW. Boralex has more than doubled in size from both organically as well as through acquisitions. The company acquired three Quebec wind farms, with a total installed capacity of 296 MW in 2020 and has entered into agreements with Centaurus Renewable Energy to acquire interests in seven solar plants in the U.S.
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. Its total production in 2020 increased by 5% YoY. The company is on track to fulfill its financial objectives for 2023.
Boralex is a 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 more than 6% annually, over the last three years. It last raised its dividend by 4.7% in 2018 and offers a dividend yield of 1.5% currently but a high payout ratio. Its 2020 AFFO increased by 22% YoY.
In order to further increase its cash flow visibility, Boralex focuses on entering long-term, indexed, fixed-price energy sales contracts. The major proportion of the company’s cash flow is derived from long-term contracts (~98 % of capacity are under contracts with an average remaining time of 13 years) which also grants limited exposure to interest rate fluctuations.
The company has a target to generate $140-$150 million in discretionary cash flow in 2023 and maintain a dividend payout ratio of 40%-60%. YTD, Boralex is making good progress on its financial objectives driven by improved results of the wind and hydroelectric power segments. Its strong balance sheet further grants the financial flexibility to support growth.
The company’s target markets total 30,500 MW. Boralex is well-positioned to capitalize on the favorable environment for growth in renewable energy, especially in the wind power segment. The favorable trends of cost reductions in renewable energy and storage technology and increased global consumption of renewable energy 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.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.
|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||0.40||52.94||19.15||0.00||0.00||0.00||0.0286||2.86||0.0000||4||1.22||0.0286||3||5||Tollbooth - Unregulated||NO||NO||NO||NO||Canada||1|
|TSE:BEP.UN||BEP.UN||Brookfield Renewable Partners L.P.||Utilities||Utilities - Renewable||0.34||49.12||13.50||0.00||0.00||-0.92||0.0309||3.09||0.0000||4||1.22||0.0947||4||2||Tollbooth - Unregulated||NO||NO||NO||NO||Canada||1|
|TSE:AQN||AQN||Algonquin Power & Utilitties Corp||Utilities||Utilities - Renewable||0.73||19.88||12.16||10.75||10.75||0.83||0.0428||4.28||0.4280||4||0.68||0.1330||8||8||Tollbooth - Unregulated||NO||YES||YES||NO||Canada||1|
|TSE:NPI||NPI||Northland Power Inc.||Utilities||Utilities - Renewable||0.43||43.78||9.88||36.27||36.27||1.21||0.0274||2.74||0.8180||12||1.20||0.0380||3||4||Tollbooth - Unregulated||NO||NO||NO||NO||Canada||1|
|TSE:RNW||RNW||TransAlta Renewables Inc.||Utilities||Utilities - Renewable||0.41||21.97||5.86||41.50||41.50||0.52||0.0428||4.28||1.7730||12||0.94||0.0554||2||4||Tollbooth - Unregulated||NO||NO||NO||NO||Canada||1|
|TSE:BLX||BLX||Boralex Inc.||Utilities||Utilities - Renewable||0.35||39.27||4.03||85.05||85.05||0.44||0.0168||1.68||1.3960||4||0.66||0.0491||4||3||Tollbooth - Unregulated||NO||NO||YES||NO||Canada||1|
|TSE:INE||INE||Innergex Renewable Energy Inc||Utilities||Utilities - Renewable||0.54||21.75||3.91||0.00||0.00||0.07||0.0331||3.31||0.0000||4||0.72||0.0507||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.