There are many depressed children these days.

There are many depressed children these days. When we were young, ordinary children were just happy unless there were special problems at home. When I went to school, I threw my bag and went out and came in when the sun set.

Most of the children did not study much, and they were exemplary even if they did their homework sincerely. I take care of my children's math at home and scold them if they don't want to do it, but in fact, I didn't have the experience of solving all the workbooks when I was in elementary school.  

I was envious of someone who was good at studying. Even a child who was not good at studying did not have a severe sense of inferiority because of that, and I had a lot of fun with my friends.

Now is the time when competition starts from first to last, and everything has to be better and better than others. There are some areas that require competition, but it's okay to just do your job well and live well with the people around you, and there are many fields.

Even fun things in the world can be better and better than others, but it may be more fun to just hang out with friends and chat with them on childish topics.

Competition has raised our country like this, but now this has made people tired, have no children, and children depressed. About the business of renewable energy, which we look into through NextEra

Among my personal portfolios, it is called NEP. It is a subsidiary of NEE, or NextEra, the largest electrical infrastructure company in the world, operating about 10 GW of wind and solar assets as of the end of last year.

To properly understand NEP, you need to understand the parent company, NEE. NEE is made up of two major companies: one called Florida Power, FPL, and the other is NEER, called NextEra Energy Resources.

FPL is a company that produces, transmits, and distributes electricity across Florida, and has about 5.9 million customers. Sales are about 18.4 bUSD, and KEPCO's annual sales are about 92 trillion won, which is about a quarter of KEPCO's company.

NEER, which is in charge of the other, is developing renewable energy businesses across the United States, and currently operates about 30.6 GW of assets based on power generation capacity. It is said to be the best in the world. Sales are 9.8 bUSD, and the operating profit from this is approximately 40%. In terms of sales, the proportion of FPL is much higher, but in terms of operating profit, the proportion of NEER will increase considerably.

Here, NEP, a subsidiary of NEER, was established in 2014, and it is written in the Annual Report that the purpose of the establishment is to allocate cash to shareholders. In general, the concern for developers who develop business is cash flow. In the case of renewable energy, business development is generally a long work of more than 5 years, but when profits are generated, not all of them are compensated at once, but are divided and introduced in 20 to 30 years.

In this case, no matter how good the business is, long-term investment is inevitable, and as a result, I always have concerns about cash liquidity. However, if you exit as soon as you develop a business and bring cash, you will lose the market's trust again. If that developer develops a business and becomes aware that it is a company that is always exit, it will be difficult to invest or attract large lenders in the future.

I think it was NEP that rolled Crayon Shin-chan to create a pheasant-eating, egg-eating structure. In fact, the list started from the NEE listed in the NEP's business report is very complicated, but the order in which GPs and LPs are intertwined like this makes it hard for most people to understand what it means.

In any case, NEE ambitiously established the NEP 10 years ago and has been steadily increasing its dividends. Even the annual growth rate of the dividend was around 12%, which at this point was the reincarnation of Buffett's Siscandy, which was only heard about. The quarterly dividend amount, which started at $0.18/share in 2014, has steadily risen to $0.89/share in 2024.

In fact, the above structure was effective in the era of low-interest rates, but as the era of high-interest rates entered, the company also had a very difficult time raising funds. The variable procurement rate according to the company's 2020 business report was 1.8%, which is 7.4% in the 2023 business report. At this point, it becomes difficult for NEE to develop new businesses, and for NEP, it becomes difficult for them to acquire NEE assets.

Eventually, NEE management announced that it would lower NEP's annual dividend growth rate from 12% to 5-8%. During this period, the price of NEE and NEP stocks plummeted. Thanks to this, NEP's current market dividend rate reaches 12%, but at this point, I am worried again.

If the market price dividend is 12%, you can recover all the principal in eight years. I wonder if it is a good thing. The annual growth rate of the lowered dividend is 5-8%, which means that the principal can be recovered from the periphery for 6-7 years rather than 8 years. Additionally, the market price margin gained from the stock price's recovery to its previous level is a bonus. Buffett's reincarnation of Coca-Cola or Siscandy comes to mind.

Of course, the risks are enormous. It is questionable when interest rates will fall, and whether the company can hold on properly during that period. It would be a big deal if the company was rolled up, just as the company's executives turned PowerPoint into a mess. And one of the reasons the company has been holding on is incentives such as ITC and PTC, which originated from Biden's IRA, and this is also the end of it when it comes in. Originally, these tax incentives were attached to the sunset, but if Dorampu comes out, the forehead will be pointed out by hand.

But from an Opportunity point of view, the recent increase in power demand caused by AI is a relief for these companies. Silicon Valley honors students like Magnificent 7, who always insist on using only good energy, will run their data centers with bad energy such as coal or nuclear power. At this point, RE100 can't help but come to mind that it is one of the top five words the president hates. In fact, this has led to excessive stock price increases in the past.

Of course, it is not a merchant that these companies sell electricity, but a long-term PPA, so the immediate increase in power unit prices will not help, but it is difficult to ignore because there are other opportunities such as repowering. In addition, the unit price of PPA will rise for newly developed projects, and now there is an additional opportunity called batteries, so it can be said that the upper side is still open. It is a trend these days to build a battery called BESS in the United States for the business of making wind or solar farms. BESS also receives all IPC/TPC tax benefits.

I believe that the power industry is a field that can directly expect a trickle-down effect from the current AI and data center boom. Of course, the power industry can also be divided into a utility market and an equipment market, and the equipment market is higher up there. However, if the market cools, the equipment market can be directly hit by inventory factors. It means that it is cyclical. However, in the case of utilities, you can still generate consistent profits from assets. From that point of view, the equipment market should be viewed from a short point of view, and the utility market should be viewed from a long point of view.

From that point of view, it is still true that NEP is an attractive company in the long run, but the question is how much we can trust the management of a company called NEE. The stock price has plummeted, but NEP is still increasing its dividends. When the stock price rises, the company raised funds by increasing the number of shares. Perhaps if you have any thoughts, you won't be able to increase the number of shares for the time being.

Regardless of the situation, I am constantly reading the quarterly reports of this NEE or NEP (while also occasionally watering down) apart from the investment. This is because I want to see if there are any new business opportunities or methods that I have not seen in Joseon. In fact, the existence of a company called NEP itself is a power company that is difficult to find in Joseon. There is only a cut-off, and both hands and feet are in collaboration with the parent company and siblings marked with MSA!

Anyway, it's May now, and my grandfather Powell doesn't think about lowering interest rates, and the market's interest rate is now running toward May, and it's a day of spring when I'm worried. Someone asks if you've made a lot from NVDA, but I also have a miscellaneous share called -90% BIRD in my account. Lee Jung-hoo is only 27%, so can I exceed 50%? lol

Our investment will always exist somewhere between risk and opportunity, but I read the business reports of NEE and NEP today under the pretext of reading the trend of the times. That's how the weekend ended

#He won't be as popular as Tesla for a long time