Arise - Materialising the divestment of 240 MW

Divesting the Ranasjö and Salsjöhöjden wind farms ’21-’23e est. adjustments due to project timing and profits Fair value range reiterated; SEK 49-114 per share Arise announces the sale of two wind farms Arise announced on 26 May that it has entered into an agreement with The Renewables Infrastructure Group Limited (‘TRIG’) and funds managed by InfraRed for the sale of its projects Ranasjö and Salsjöhöjden (242 MW). At closing, Arise will receive a fixed price of EUR 8. 5m and an additional EUR 11.

6m in variable price is expected to be received once construction of the projects is completed. However, the variable price and expected profitability might vary, depending on Arise’s ability to deliver construction within budget and in time. The divestiture of the wind farms is expected to have a positive impact on earnings of ~SEK 140m (vs.

ABGSCe at SEK 164m) in total over ’21-’24, of which SEK 45m will be in Q2’21. The project construction is expected to begin in Q3’21. We note that, in our view, this divestment alleviates some of our previous concerns about execution of its late-stage portfolio.

Est. adjustments due to reallocation of project profits This sale was relatively in line with our expectations and we will keep our estimates largely intact, but make project earnings downgrades of SEK 24m, with slightly negative earnings contribution from Ranasjöhöjden (coming down from SEK 1. 0m/MW to SEK 0.

9m/MW) in terms of revenue recognition. However, the timing of project profits differs somewhat compared with our previous forecast assumptions, thus we make some reallocation in our earnings forecasts over ’21-’23. All in all, we raise ’21e EBIT by 4%, lower ‘22e EBIT by 10%, while leaving ‘23e almost intact.

Fair value range of SEK 49-114/share maintained With the current level of late-stage projects and if everything goes as expected, Arise should see sizeable profit growth over ‘22e-‘23e. The stock is down 11% over the.