(MENAFN- ValueWalk)
mohamed_hassan / Pixabay
Sunrun Inc (NASDAQ:RUN) continues the grand tradition of consultant-advised responses that largely avoid substance , yet span several pages. We herein focus the discussion on what was unsaid, and the little that was said.
Earning Assets
Perhaps Sunrun started this explanation on page 5 because it hoped to lose readers with technicalities about the tax code. In any event, RUN fails to convince us that there is anything remotely conservative – let alone realistic – about assuming that 90% of customers renew at the end of their PPA terms their leases on 20-year old technology that RUN itself admits is currently experiencing rapid efficiency gains. If the PV leasing business is as attractive as RUN makes it out to be, at the expirations of the contracts, there should be no shortage of competition offering state-of-the art systems with zero upfront costs.
Get The Full Henry Singleton Series in PDF
Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues
Q2 2022 hedge fund letters, conferences and more
Statar Capital Is Still Enjoying A Healthy YTD Return Despite June Setbacks [Exclusive]
Statar Capital generated a net return of 0.21% for June, bringing its year-to-date return to 23.72% for 2022. Since its inception, the commodity fund has generated a return of 352.88%. Statar Capital has $3.5 billion in assets under management. The fund reported a daily correlation of -0.04 to the S&P 500 and 0.04 to the Read More
Customers switching PV system providers seemingly will require RUN to remove the old systems (at RUN's expense), yet RUN still pretends panel removal is not a real liability. (We estimate the liability at a present value of $668 million). RUN's justification is that some competitors purportedly assume even more egregious time periods of post-contract cash flows than RUN does. That's like claiming it's better to fall from a 10-story building than one that's 20 stories.
Renewal rates and panel removal costs are the two largest adjustments in our recreation of Sunrun's Investor Models.
Tax Basis
Sunrun protests that its valuation methodologies are“best practice”, and throws a lot of verbiage out, including moaning about a singular reference to a purportedly inapplicable section of the tax code. (Note that nothing in Section 48 provides for an investment tax credit given on an investment tax credit .) RUN also falls back on the tried-and-true (in middle school) strategy of“But they do it too!” But at no point does RUN state what its claimed tax bases have been in recent years, let alone the values derived from each of the Income and Cost Approach. Our questions about RUN's tax bases therefore are:
What is the weighted average per watt tax basis that RUN's SPVs have claimed for each year since 2018?
What is the amount of the aggregate tax benefits that RUN's tax equity investors have claimed since 2018?
Article by Muddy Waters
Updated on Aug 4, 2022, 2:28 pm
MENAFN04082022005205011743ID1104649491
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.