Green stocks on the slide

The share price of some of Australia's renewable energy companies are on the slide as investors become frustrated over technological delays, disappointing profit results and fears of large-scale capital requirements.

A case in point is hydro and wind power generation company Pacific Hydro. Despite posting a 19 per cent growth in pre-abnormal earnings per share, the share price fell 5 per cent to $3.76 on fears of a need to raise capital to fund a raft of projects and the prospect of a sell-down by a majority shareholder.

Broker Burdett Buckeridge Young said this week that Pacific Hydro had capital requirements of more than $1.4 billion to fund projects locally and overseas over the next six years. The broker also said Pacific Hydro's biggest shareholder, Development Australian Fund, wanted to reduce its holding in the company from 35% to 20%.

Another green energy stock to have been marked down by the market is Energy Development, promoter of solid waste-to-energy technology. Its stock this week fell by 10% on Tuesday and further 5.5% on Wednesday after a disappointing full-year profit result and ongoing frustration with the development of its SWERF technology.

Despite the fall in share price, some brokers still rate the green energy company a buy. ABN Amro has a $6 price target while JB Were values the stock at $10.40 if SWERF technology is included, but that valuation collapses to $3.70 if SWERF is excluded. Currently, Energy Development stock is trading at $4.36.

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