Arise - Major revenue recognition to begin during ‘22e

Q4’20 report due on 17 February, 08:00 CET Project delays behind our estimate changes Fair value range of SEK 35-60 per share Q4’20 expectations We expect group sales of SEK 58m in Q4 (with 53% from development and management and the remaining 47% from own power production). According to the company, power production reached 87 GWh in Q4 (19% below the Q4 budget of 107 GWh). As a result of lower production and electricity prices remaining depressed in Q4’20 (~50% below Q4’19 price levels), we expect own production sales of SEK 28m (-28% y-o-y). We anticipate sales within development and management to reach SEK 27m, driven by revenue recognition of the Skaftåsen project (231 MW).

However, our estimated earnings growth in Q4 is limited due to a project delay announced in Dec ’20. All in all, we expect adj. EBIT to reach SEK 1m (SEK 127m in Q4’19), adjusted for a non-recurring cost of SEK 34m that occurred in connection with the company’s re-financing.

EBIT estimates down by -29% for ’21e, up 8% in ’22e In December, Arise announced delays within the Ranasjö and Saltsjöhöjden projects (240 MW). However, we still believe both projects will be sold, although it is difficult to say when, as a new environmental permit needs to be in place before project development can continue. Hence, we push the start of our revenue recognition estimates from Q4’20e into the latter part of ’21e, meaning that the major revenue recognition will not materialise before ’22e.

All in all, we now forecast adj. EBIT of SEK 164m ‘21e (-29%) and SEK 713m ‘22e (+8%). We expect management to provide guidance for a plan towards a new final project sales date for the projects.

Fair value range of SEK 35-60 (31-51) per share Although 2020 was a challenging year, with low electricity prices and project delays, we believe Arise’s 1,300 MW portfolio represents a solid foundation for growth, and we anticipate increasing electricity prices ahead. In light of the market’s appet.