Arise delivered a slightly disappointing Q4 report. Q4 sales came in at SEK 79m, 17% below our forecast of SEK 95m. The main deviation was in the Production segment, which had sales of SEK 67m vs. ABGSCe at SEK 78m, due to lower-than-expected realised electricity prices. The group adj. EBITDA came in at SEK 46m, 34% below ABGSCe. Reported EBITDA was SEK 32m, as Arise took a charge of SEK 14m related to when the company leased out wind parks in ’13-’16. The reported net profit was SEK 13m vs. ABGSCe SEK 46m.
Still targeting sales of Kölvallen in Q2
Management still expects the ~280 MW Kölvallen project to be sold in Q2, although it adds that it could be towards the end of the quarter. Moreover, an investment decision for the smaller Lebo project will be made before mid-year. Costs for turbines, transportation, and general components remain high but the market for new projects remains very strong, meaning that the positive pricing achieved due to high electricity prices offsets the underlying cost inflation in the construction part. In Q4 Arise’s average electricity price was 35% below the average electricity price in its markets. This is partly due to the high volatility of electricity prices, with the company’s production not always coinciding with peak pricing. We have increased the discount to average prices (ex hedges) from 10% to 20% in our forecasts. We have also taken a slightly more cautious view on margins for the upcoming development projects, to be on the right side should cost inflation actually have a negative effect. All in all, we lower ’22e-’23e EBIT by 19% and 7%.
Trades at low multiples despite stability in production
We have lowered our value range slightly to SEK 60-120 (60-140). The stock trades at 4.7x and 3.3x ’22e-’23e EV/EBIT, despite the fact that 45% of ’22e EBITDA should com
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