Scatec ASA (Sell, TP: NOK205.00) - First quarter with hydropower
Given management provided Q1 power production EBITDA guidance towards the end of the quarter, we believe the Q1 results will be more in line than recent quarters. A conclusion of the South Africa pricing negotiations will be important in our view, but highlights our concern that the company could need to sacrifice returns or growth. While we have raised our target price to NOK205 (195), with the premium to core NAV at 161%, we believe investor expectations of profitable growth are too bullish, and reiterate our SELL.Scatec Solar ASA is a Norway-based integrated independent solar power producer. It develops, builds, owns, operates and maintains solar power plants, and has several projects under development in Africa, the United States, Japan, Brazil the Middle East and Europe. The Company has three operating business segments: Power Production (PP), Operation & Maintenance (O&M), and Development & Construction (D&C). The PP segment comprises the Kalkbult and Linde plants in South Africa, the ASYV plant in Rwanda and four plants in the Czech Republic. The O&M includes services provided to solar power plants in which Scatec Solar participates or to third party plants constructed by the Company. The D&C comprises development activities as well as construction of solar power plants developed by Scatec Solar.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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