<Results Analysis> FY23 results in-line, outlook reaffirmed
- FY23 adjusted EPS in-line with consensus, slightly above management’s guidance
- Reiterate earnings outlook of 6-8% EPS CAGR up until 2026, consensus outlook remains bright
- Well positioned to ride on US’s green transition with NEE’s robust project pipeline. Maintain BUY with unchanged TP of US$70.
FY23 in-line with consensus, slightly above management’s guidance. NEE reported FY23 adjusted EPS of US$3.17 (+9.3% yoy), in-line with consensus estimates of US$3.14, and slightly exceeding management’s FY23 EPS guidance range of US$2.98-3.13. Both Florida Power & Light (FPL) and renewable energy (NEER) segments saw firm performance, with FPL delivering 12% EPS yoy growth on the back of new investments, with among the highest ROEs (FY23 at 11.8%) among US utilities. Separately, while NEER saw some impacts from weaker wind resources and increased borrowing costs, NEER manages to deliver 13% EPS yoy growth on the back of new investments and higher margins from customer supply and trading, in-line with consensus. NEE continues to outperform its peers with a 10-year average EPS growth of 10%, outpacing its utility peers at 2%.
Outlook reaffirmed with targeted 6-8% adjusted EPS CAGR growth. Management continues to expect to deliver results at the top end of its adjusted EPS guided ranges in 2024 – 2026, and a c.10% annual DPS growth up until 2024. Post FY23 results, consensus has maintained their FY24 EPS estimate at US$3.41 while slightly upgrading FY25/26 EPS estimates by +2%/+6% to US$3.69/US$4.03, which lies at the upper ranges of management’s targets. We remain confident on NEE growth outlook as seen from its robust project backlog. FY23 was a record origination year for NEE with 9.0GW of new renewables and storage added to its backlog, bringing total backlog at more than 20GW (a record high, which forms 75% of NEER’s FY22A capacity). Risk of equity financing also remains minimal for now which is a positive for shareholders, with NEE expected to mostly tap onto its operating cashflows, debt financing and tax equity/project finance. Other catalysts include (i) co-locate battery storage project opportunities in tandem with NEE’s renewable projects, (ii) addition of US$1.9bn in capital towards transmission projects by 2027 and more. Potential rate cuts in 2H24F is also a key catalyst to watch, with NEE’s US$18.5bn interest rate swaps well positioned to ride on this tailwind. Maintain BUY with unchanged TP of US$70. We continue to favour NEE with its crown jewel utility business and robust renewable energy outlook.