Hurt by the usual suspects

Q1: Operating PTP NOK 173m vs. cons NOK 230m. Our equity case is broadly unchanged. BUY, TP NOK 155.

Renewable Weekly – 15 May 2024

This week, we take a preliminary look at Vestas' Q2 announced order intake quarter to date.

Below expectations driven by the Betonmast units

Improved confidence in the growth story

Q1 EBITDA below, but guidance better. Headline estimates unchanged. Guidance de-risks and boosts confidence in the growth story. We raise our TP to NOK 28 (23) and keep BUY.

Renewable Weekly – 8 May 2024

This week, we look at key takeaways from GWEC's 2024 Global Wind Report.

Renewable Weekly – 29 April 2024

This week, we summarise our Q1 previews for the sector.

All about Cummins' 15L engine launch

Q1e EBITDA of NOK 68m – minor estimate changes. We expect newsflow related to Cummins' 15L with the Q1 report. BUY, TP down to NOK 23 (28) on lower HPUR valuation.

Renovation rules now a reality

The Energy Performance of Buildings Directive (EPBD) was approved on 12 April, requiring the modernisation of existing real estate in the EU, and will soon enter the Official Journal of the EU. Member states will have two years to incorporate the provisions into their national legislation. While Q1 is Nordic construction’s low season due to winter effects, we see some downside risk to Q1e consensus and longer-term to 2024–2026e EBIT on lower development gains. We recommend a stock-picking approa...

AF Gruppen (Sell, TP: NOK100.00) - Expectations look too high

We continue to see downside risk to consensus, both short-term ahead of the Q1 results (due at 07:00 CET on 15 May) and longer-term (2024–2026e). After a 2023 EBIT margin of 2.5%, consensus is for 4.8% in 2024 and 5.2% in 2025. We believe this is too optimistic, and reiterate our SELL. However, we have raised our target price to NOK100 (95) on increased peer valuation.

AF Gruppen (Sell, TP: NOK95.00) - Q4 disappoints

Following the disappointing Q4 results, explained by lower Betonmast, Sweden, and Offshore margins than we forecast on project writedowns in all three, we have lowered our 2024e Sweden and Betonmast EBIT margins, and in turn cut our group 2024–2026e EPS by c3–4% and our target price to NOK95 (100). We reiterate our SELL.

Bergman & Beving (Buy, TP: SEK200.00) - New target ‘500/10/45’ by 2025...

The Q3 report showed stronger profit margins and FCF generation, which we believe allows for a continued acquisition focus (six deals YTD), offsetting weaker demand indicators and FX. We have raised our 2023/24–2025/26e EPS by 4–7%. We see potential in the ‘focus model’ to reach a 10% EBIT margin and EBIT of SEK500m by 2025/26 and P/working capital of 45% by 2026/27, now in our value gap analysis. We reiterate our BUY and have raised our target price to SEK200 (170).

Large-cap commentary supports long-term offshore upcycle

Key takeaways from SLB, Halliburton and Baker Hughes Q4 earning calls include positive commentary on the ongoing offshore upcycle. They see continued growth in global EP spending in 2024 (high-single to low-doble digits), driven by offshore and international markets, while North America onshore outlook are less favourable. Lastly, SLB sees potential for more than USD100bn in global offshore FIDs in 2024 and 2025, while Baker Hughes expects over 300 subsea tree awards annually for the next 2–3 ye...

Renovation regulation approaching

The ‘trilogue’ process regarding the Energy Performance of Buildings Directive (EPBD) that aims to double renovation rates of commercial and residential properties has been concluded, and the new legislative text is due to be published in spring 2024. Also, the recent pivot in market interest rates has improved the sector outlook, but with long profit lead times. Names with high short interest (JM and SBO) have rallied the recently, but we believe the current valuation underestimates the profit ...

AF Gruppen (Sell, TP: NOK100.00) - Valuation still too high

Our Q4 forecasts are broadly in line with consensus, but we find consensus too bullish long-term. The company has already guided that no dividend will be paid for H2 2023. We find the valuation premium versus peers too high based on P/E, despite the share price decline over the past 12 months. We reiterate our SELL but have raised our target price to NOK100 (95) on updated estimates and peer valuations.

Political agreement for EPBD

Yesterday evening saw a political agreement and the conclusion of the final trilogue meeting on EPBD revisions. There are some revisions to earlier drafts, but EU member states will now prepare requirements for lower energy building stocks. We believe that once in place this regulation should be a positive for construction companies, but CAPEX for real estate companies.

Solid medium-term, but mixed long-term signals from Petrobras

As the largest global consumer of deepwater oil services, Petrobras’ strategic plans tend to attract investor attention. We consider its new 5-year plan mixed, but with solid support for near- to medium-term offshore activity from increased and high spending in 2024–2026. On the other hand, 2027–2028 spending looks set to trend down c20% sequentially, despite having been revised higher compared to its previous plan. Total spending is seen up 31% compared to the previous plan, driven by downstrea...