Fair value range down to SEK 95-135 (115-155)
Öyfjellet to be completed in Q2
Öyfjellet, the 400 MW project in Norway, has been the focus point for both management and investors over the last 12 months. The project suffered from COVID-related delays, compounded by bad weather over the winter. In Q1, the company wrote down previous estimated earnings, and we now assume very limited EBIT from the project overall. The handover to the customer, Aquila Capital, is planned for June ’22, and we hope this will be the end of this project. We have lowered ‘22e EBIT by 81%, mostly due to Öyfjellet. Our ’23-‘24e EBIT forecasts are roughly unchanged, while our sales in ‘23e is down 24% from changing the accounting effect related to the Stor-Skälsjön project.
~1.6GW in late-stage projects to come through in ’23-‘25
Eolus Vind should get a lot of chances to show its quality over the coming years. Demand for both onshore and offshore wind as well as solar projects remains high and the company’s late-stage portfolio totals ~1.6GW. This means that there is good earnings support in ’23-‘25e as long as the company can deliver improved project execution (compared to Öyfjellet). In H2’22, we expect project sales of 600-700 MW, with subsequent start of construction. The overall project portfolio amounted to ~16GW (end of Q1’22), up ~2.1GW q-o-q. Around 1GW comes from offshore wind, while the rest comes from a several onshore and solar projects across Sweden, Finland, the US and Poland. Eolus is investing in a larger organisation to be able to deal with the higher scope of operations that the ~16GW portfolio implies.
New fair value range affected by higher risk premium
We have lowered our fair value range from to SEK 95-135 (115-155) per share. This is due to the company’s poor project execution, mostly related to Öyfjellet, which we think raises questions about the quality in future project development. This can only be alleviated by improved execution, but investor confidence may take some time to re-build. The mid-point of our value range implies ~5x ‘23e EV/EBIT.
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