Cloudberry (Buy, TP: NOK13.00) - Backlog progressing as planned

The underlying Q3 results were slightly better than we expected on higher realised power prices and lower opex. Maturing its backlog seems to be progressing well, with a storage project and the Nees Hede solar project looking set for FID over the next quarters. We believe Cloudberry is fully funded for this and that future growth is likely to be partially financed by asset rotation. We have upgraded to BUY (HOLD) and maintain our NOK13 target price.

Cloudberry (Hold, TP: NOK13.00) - Near-term headwinds

We expect Q3 to be soft, hampered by muted power production on lower-than-normal wind speeds and a somewhat slower-than-expected ramp-up of production at Odal. Combined with lower GoOs, we have thus cut our 2024–2026e proportionate EBITDA by 12-4%. We reiterate our HOLD, but have raised out target price to NOK13 (12), reflecting operational assets and near-term growth, and believe further crystallisation of the underlying values in its development organisation and project pipeline through e.g. a...

Cloudberry (Hold, TP: NOK12.00) - Trading in line with market multiple...

The Q2 report was decent, in our view, with better-than-expected realised power, construction activity progressing on time and budget, and a development agreement with Holmen for 1TWh SE3. Strong development activities have led us to assign a higher value to these activities; thus, we have raised our target price to NOK12 (11). However, as the stock is trading in line with recent asset sales and we struggle to see any near-term triggers, we reiterate our HOLD.

Cloudberry (Hold, TP: NOK11.00) - Worst Odal issues seem behind

Adjusted for accounting gains from the sale of three hydropower plants in Q2, we forecast proportionate EBITDA of NOK5m. Including these gains, we forecast NOK113m, broadly in line with consensus of NOK112m. With the first turbines in Odal recommencing production, we believe most of the issues at the windfarm are behind it. Ramp-up is likely in H2, when we expect Cloudberry to surpass the warranty cap with Siemens Gamesa. We reiterate our HOLD and NOK11 target price.

Cloudberry (Hold, TP: NOK11.00) - Limited effect from hydro transactio...

We consider it positive that Cloudberry is exploiting the strong market for hydropower projects, but consider the net effect of last week’s transactions neutral despite the wide spread in acquisition and sales multiples given the assets’ different profit-sharing mechanisms. We also see potential for greater uncovered losses at Odal, with further ramp-up delays. We reiterate our HOLD, but have raised our target price to NOK11 (9) to reflect the high private market interest for the company’s hydro...

Private markets seen cooling down

Renewable energy stocks have benefitted from higher private market valuations, despite elevated interest rates and lower power price expectations hitting project economics. We believe this is due to the tight supply/demand balance, underpinned by record-high infrastructure funds available for investment. As the private capital surplus diminishes with lower fundraising and more transactions, we see a risk of the sector valuation reverting. Among the names we cover, Scatec had the highest valuatio...

Trump vows to stop offshore wind development with executive order on d...

Over the weekend, former US president Donald Trump said he would issue an executive order targeting offshore wind on his first day as president if elected. A president can issue an executive order directing a study of the impact while halting permitting of new projects. While this could negatively affect US permitting and thus the growth of offshore wind in the country, all other elements for the wind farms are determined on a state level. Hence, permitted wind farms would likely see a limited e...

Positive read-across from OX2 offer

This morning, renewable energy project developer OX2 announced it has received an offer from infrastructure fund EQT at a 43.4% premium to Friday’s close. We view this as further evidence of a greater willingness to pay for renewables in the private markets than the public ones, and thus believe the bid offers a positive read-across for renewable energy companies with strong development capabilities in the Nordics/Northern Europe, such as Cloudberry and Bonheur. We also believe it could be posit...

Cloudberry (Hold, TP: NOK9.00) - Delivering on the factors it controls

While the turbine issues at Odal continue to create uncertainty, we see Cloudberry delivering on the factors it controls, with better realised power prices than expected, and its construction projects progressing on or ahead of schedule and on or below budget. We reiterate our HOLD and NOK9 target price, based on a 6.7% WACC, but note recent asset sales were made above this level.

Cloudberry (Hold, TP: NOK9.00) - A tough start to the year

With Q1e hit by turbine issues at Odal, we forecast power production of 172GWh, translating into proportionate EBITDA of NOK51m. Based on more lost production at Odal, lower forward power prices and an outlook for reduced guarantee of origin prices, we have significantly cut our estimates (proportionate EBITDA down 19% for 2024e, 27% for 2025e, and 46% for 2026e). Given the lower power price outlook, we have also lowered our target price to NOK9 (10). We reiterate our HOLD.

Cloudberry Clean Energy - Transformative FY23 with revenue rocketing

Cloudberry Clean Energy recorded a strong performance for FY23. Revenue nearly tripled compared to FY22 (NOK217m), reaching NOK610m. EBITDA also significantly increased to NOK263m (FY22: NOK151m). The company’s total portfolio capacity grew to 494MW (FY22: 316MW), with 267MW of producing assets. This expansion was reflected in Cloudberry’s increase in net assets, which rose to NOK6,691m (FY22: NOK4,603m). Despite the company’s substantial growth throughout FY23, it maintained a strong financial ...

Cloudberry (Hold, TP: NOK10.00) - Patience needed

While we expect Cloudberry to continue to manage the factors in its control and develop profitable renewable energy projects, we have cut our proportionate 2024–2025e EBITDA by 10–8% on still-declining forward power prices. This and a review of its liquidity available for growth have prompted us to lower our target price to NOK10 (12); we have thus downgraded to HOLD (BUY). We believe investors need to await clarity on the turbine issues at Odal, higher power prices, and/or accretive asset sales...

Cloudberry (Buy, TP: NOK12.00) - Burdened by Odal turbine issues

We believe key focus in the Q4 report will be the turbine issues at Odal, where we see a risk of the repair and maintenance – and thus lower power production – persisting well into 2024e. With lower production at Odal, an outlook for lower power prices and a weaker NOK, we have reduced our 2024–2025e proportionate EBITDA by 45–30%. We reiterate our BUY and NOK12 target price, factoring in a small premium to our NAV to account for recent asset transactions in the sector at levels above our NAV.

Supportive changes to Norwegian wind energy resource tax

Last night, the Norwegian Parliament agreed on an effective resource tax on wind energy of 25% versus the 35% previously proposed. At first glance, it seems the scheme will now be investment-neutral for new wind farms, which was a key pushback from the industry to the previous proposal. Among the renewable energy producers under our coverage, the new resource tax scheme will benefit Cloudberry and Bonheur. While some details are still unclear, we estimate it will increase the value of Cloudberry...

Cloudberry (Buy, TP: NOK12.00) - Limited effects from Q3 issues

Proportionate Q3 EBITDA was NOK14m, NOK11m below our forecast of NOK25m, primarily driven by higher-than-expected costs. However, as we believe most of the Q3 negatives were non-recurring and the company is well protected under its agreements with Siemens Gamesa at Odal (although compensation could be delayed), we have made only small changes to our EBITDA estimates. We reiterate our BUY and NOK12 target price, factoring in a premium to our NAV to account for recent asset transactions in the sec...

Cloudberry (Buy, TP: NOK12.00) - Low NO1 prices set to weigh in Q3

In the first full quarterly contribution from Odin, we expect power production of 160GWh, reflecting slightly below-average wind speeds. With Q3 hampered by low power prices in NO1, we forecast proportionate EBITDA of NOK25m. We have cut our 2023–2025e proportionate EBITDA by 13–3% on lower near-term power prices and capture rates. However, we reiterate our BUY and NOK12 target price, factoring in a premium to our NAV to account for recent asset transactions in the sector at levels above our NAV...

Cloudberry (Buy, TP: NOK12.00) - Business case intact

With development and construction proceeding according to plan and recyclable capital from recent asset sales at strong prices, we believe Cloudberry is progressing well towards becoming an integrated power producer with an organic growth platform. At current FX and forward power prices, our NAV is NOK10.9/share. We reiterate our NOK12 target price, which is set at a premium to our NAV to reflect recent supportive asset transactions and potential relief in the proposed resource tax, but have upg...

Northern Lights

Northern Lights

Cloudberry (Hold, TP: NOK12.00) - Power prices spark estimate cuts

With ~97% spot price exposure, Cloudberry will likely be hit hard by the sharp declines in forward Nordic power prices in recent months. We have cut our 2023–2025e proportionate EBITDA by 15–30% on our lower power price estimates, and in turn our NAV/share from NOK14.5 to NOK10.5. As a result, we have lowered our target price to NOK12 (14.5), including a slight premium to our NAV for recent supportive asset transactions. Given the limited potential upside, we have downgraded to HOLD (BUY).