He sees a 35 percent lift for the energy product

He sees a 35 percent lift for the energy product

– After a difficult couple of years for renewable stocks, investors can certainly increase their exposure to parts of the sector, says Næss at SpareBank 1 Markets.

However, it is important to be selective, and we particularly focus on companies with a proven business model, strong profits and limited capital requirements.

NICE believes that many renewable energy companies have become attractive, following the sharp decline in prices.

– Although we have become more positive about this sector, we remain skeptical about companies that are still in the maturity stage, continues the analyst.

– Many companies without profits still have high prices, and it is uncertain how far prices can fall without fundamental value support.

Attractive energy product

According to Næss, many energy producers are particularly “cheap” at the moment, even though they are well-established and making money.

Cloudberry is priced at a 30 percent discount to reserve stock, which is again below the current build cost, he says.

– If we used multiples of transactions observed in the private market over the past year to evaluate the entire Cloudberry portfolio, we would find an upside of approximately 80 percent from today's prices.

SpareBank 1 Markets also recommends Scatec, although the price has risen a lot since the bottom in October. Ness points out that the current operating portfolio gives a return of about 13 percent to shareholders, under zero growth. At the same time, the prospects for profitable solar and battery projects are better than they have been for a long time, given sharp declines in costs, increasing long fixed-rate agreements for electricity, and an interest rate trajectory that points to cheaper financing.

See also  The app turns the iPad into advanced multitasking

Cloudberry is priced at a 30 percent discount to reserve stock

Thomas Dowling Ness, Sberbank Markets 1

Favorite players: Analyst Thomas Dowling Næss at Sparebank 1 Markets. Photo: Thomas Björnflaten

Strong free cash flow

– Among energy producers, we also want to highlight Bonheur, which is priced at a P/E multiple of 6 to 10 times for the period 2023-2026, taking into account two leverage upgrades in this period, continues the analyst.

– Core operations and the sale of Codling Bank could generate free cash flow over the next five years that exceeds the total value of the company today.

Moreover, SpareBank 1 Markets has confidence in Cadeler, which after its merger with Eneti has become the market leader in the field of offshore wind turbine installation.

The market for turbine installation has remained tight, and prices have never been higher, despite many projects being canceled and delayed, Ness says.

– Cadeler is currently priced at the value of steel, and if you take into account the current value of the company's collateralized backlog, the stock should trade approximately 30-40 percent higher.

He buys:

Scatic (90)*

Cloudberry Clean Energy (14)

Good morning (290)**

Kadler (60)**

He sells:

Neil (5)

Vestas (115)

Course objectives are in parentheses. SpareBank 1 Markets as a company does not own any of the above stocks.

*SpareBank 1 Markets has undertaken corporate assignments in the last 12 months.

** The share was covered by another analyst on the Renewable Energy team (Jonas Freming).

Hanisi Anenih

Hanisi Anenih

"Web specialist. Lifelong zombie maven. Coffee ninja. Hipster-friendly analyst."

Leave a Reply

Your email address will not be published. Required fields are marked *