The FTSE 100-listed Rolls-Royce Holdings PLC (GB:RR) is reportedly considering a stake sale in its mini-nuclear reactor unit to secure new funding. According to the Telegraph, the company has attracted interest from several investors, with the unit projected to run out of cash by early 2025. Following the reports over the weekend, RR stock opened lower on Monday and has declined 4.18% as of writing.
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Year-to-date, the stock has gained almost 50%.
Rolls-Royce Seeks Additional Funding
With this sale, Rolls-Royce seeks to secure additional funding for small modular reactors (SMR). The company’s last funding of £210 million was a government grant secured in November 2021. RR’s small nuclear business, which is developing compact nuclear reactors, has so far secured nearly £500 million in funding.
The news about the potential stake sale in the mini-nuclear reactor unit came after the UK’s Office for Nuclear Regulation (ONR) approved Rolls-Royce’s SMR for the next stage last week. The ONR stated that the company’s SMR design has successfully completed the fundamental assessment. The next step will be the third stage of the process, which involves examining potential site-specific proposals.
The company’s CEO, Tufan Erginbilgic, is confident about the prospects of the SMR business and stated that he was “very comfortable” with the funding process.
Rolls-Royce’s First-Half Performance
Last week, Rolls-Royce announced solid results for the first half of 2024 and resumed its dividends following its last payment in 2020. In the first half of the year, RR’s revenue rose 18% year over year and its underlying operating profit surged 74%.
Additionally, the company upgraded its full-year guidance for underlying operating profit to the range of £2.1 billion to £2.3 billion from the previous forecast of £1.7 billion to £2 billion.
Are Rolls-Royce Shares a Buy?
According to TipRanks, RR stock has received a Strong Buy rating based on all Buy recommendations from nine analysts. The Rolls-Royce share price forecast is 544.98p, which is 22.25% higher than the current trading level.
