Arise - Stronger wind, prices and projects in sight
Ended 2020 in a challenging environment Est. up by 8% in ‘21e, 3% in ‘22e, impact from price hikes Fair value range of SEK 35-60 per share, 2x EV/RR ‘22e Weaker wind conditions and lower contracting activity Arise delivered Q4 sales of SEK 26m (vs. ABGSCe at SEK 42m, FactSet cons. at SEK 60.
5m), with SEK 17m from electricity income (-41% y-o-y) and SEK 9m from project development and asset management services (-96% y-o-y). The main drivers behind the decline were lower contracting activity and low revenue recognition of projects sold, as only Skaftåsen (231 MW) was on plan and under construction. Own production was held back, as expected, owing to weaker wind conditions and electricity prices, as well as certificate prices remaining depressed.
Costs were down, meaning that group profitability was not affected in the same way. Group EBITDA was SEK 1m (vs. ABGSCe at SEK -15m and FactSet cons at SEK 13m).
Net profit was SEK -24m and EPS was SEK -1. 17 (ABGSCe at SEK -1. 11 vs.
FactSet cons. at 0. 18), negatively affected by a re-financing cost of SEK -32m.
Estimates slightly up on higher prices and less depreciation Looking back at 2020, production at Arise own farms rose to 355 GWh (333 GWh), but earnings were held back by lower avg. income for electricity, down to SEK 204 per MWh (SEK 333 per MWh in FY’19), due to a combination of low market prices and unfavourable capture prices. However, at the start of 2021, electricity prices recovered back to normal levels, ensuring more favourable prices for Arise in 2021.
Our estimates are relatively unchanged, with no new projects launched, but we expect own production to deliver slightly higher earnings, helped by higher electricity prices. Overall, we raise adj. EBIT by 8% for ‘21e and 3% for ‘22e, supported by lower depreciation per year as a result of extended service life of Arise own wind farms (now 30 years).
Share up 26% last six months, trading at c. 2x EV/RR in ’22e The share is up c. 26% in the last si.
