Is This Junior Player Set To Find A Foothold In Renewable Energy Space– ASX: GNX?

  • Jan 21, 2019 AEDT
  • Team Kalkine
Is This Junior Player Set To Find A Foothold In Renewable Energy Space– ASX: GNX?

There are few market analysts who are sceptical and uncertain of the investment in Australian renewable energy sector given the national government’s decision undertaken in September 2018 on not to revising the country’s renewable energy target (RET) after 2020 and scrapping the National Energy Guarantee (NEG), which aimed to reducing emissions by 26% by 2030.

However, there is a potential upside based on the data released by Clean Energy Regulatory, which represents solar, wind, energy efficiency, hydro, bioenergy, energy storage, geothermal and marine businesses, along with more than 5,000 solar installers. Evidence exists to suggest that the nation would see about 10,400 MW installation of new renewable energy in 2018 and 2019, comprising 7,200MW of large-scale renewables and 3,200MW of rooftop solar. This signifies the highest per-capita rate of 224 watts per person per year across the globe. Given the current frequency of renewable energy installation, Australia has been estimated to obtain 29% renewable electricity by next year and 50% by 2025.

With this backdrop, a junior player in Australia’s renewable energy landscape that is gaining traction lately is Genex Power Limited (ASX: GNX). GNX is primarily engaged in renewable energy generation and storage. GNX stock closed the day’s session at A$0.272, up by 0.74% as on 21 January 2019. The price of the scrip is trending upwards over last month with a positive return of 17.39%, although the share price has fallen by 14.29% this year.

The project pipeline of the renewable power generation company includes 50MW Kidston Solar Project (KS1), 250MW Kidston Pumped Storage Hydro Project (K2H), 270MW Kidston Solar Project (K2S), 150MW Kidston Wind Project and 50MW Jemalong Solar Project. As announced on 3 December 2018, the company’s KS1 has successfully reached Practical Completion stage. Genex signed a long-term energy storage services agreement with Energy Australia Pty Ltd for its K2H project on 20 December 2018. The Company is anticipating financial close for K2H in 1H2019, followed by K2S upon project financing of K2H.

During 2018, Genex Power had received its maiden project revenue post the timely and within-budget energization of the KS1 project. KS1 has been generating electricity and earning revenue for sale into the National Electricity Market (NEM) since December 2017. Besides, the Company has made significant progress on the development of its Stage 2 projects namely K2H and K2S. The Company also announced the viability study into the development of 150MW Kidston Wind Project.

Genex has received significant funding support from the Federal Government: $8.9 million for the construction of KS1 and $9 million for Stage 2 projects in FY18. The Northern Australia Infrastructure Facility also strengthened the financing structure for Stage 2 projects by providing long-term concessional debt facility of up to $516m.

The Company’s financial status was enhanced from the exercise of the Loyalty Options issued in conjunction with the Company’s IPO in 2015 with a total of just over $3.2m raised while most of those funds pouring in FY18. The company is looking forward to the development of a wind farm at Kidston with significant additional generation capacity for dispatch into the NEM in combination with KS1 and the Stage 2 projects. The company’s revenue stood at $9.94 million for the year ended 30 June 2018 as compared to $2.48 million for the previous year. The company reported Net Loss After Tax of $7.46 million in FY18 as compared to $8.61 million in FY17. From the balance sheet perspective, Net Assets of $15.28 million represented a decrease from $19.16 million in the previous year.

While the performance of the stock is driven by macro factors to some extent (in terms of regulatory norms etc.), the group’s projects hold significant importance and long-term services agreement (including the one with EnergyAustralia) can boost the scenario for GNX to set a good foothold in the renewable energy space.


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