Scatec Solar (Sell, TP: NOK195.00) - Style over substance
We view the offer for SN Power as fair, although its partner in the Philippines is trading at 2020-2022e EV/EBITDAs of 8–10x (the Philippines account for 71% of SN Power’s EBITDA), and we struggle to justify the strong Scatec Solar share price reaction following Friday’s announcement. However, if the market is willing to price in premium multiples, we see ample M&A growth opportunities for Scatec Solar, although this is not our base case. Indeed, over time we believe investor focus will shift to Scatec Solar’s underlying performance, which was weak in Q3. We maintain our SELL, but have raised our target price to NOK195 (190).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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