Eolus Vind
Eolus Vind - The first warm wind of spring (ABG Sundal Collier)
2020-04-03 07:04
COVID-19 impact and low electricity prices a worry, but…
...we expect 21% CAGR in wind power until 2022
Eolus’s project pipeline well-positioned to capture growth
Massive price drop, but the same potential is thereEolus’s share price has fallen by 44% from its peak levels in mid-February. In this report, we dive into the company’s overall project portfolio and assess the impact from the ongoing headwinds of COVID-19 and low electricity prices. We argue that the group is likely well-positioned for future growth. With a near-term project portfolio of 607MW and a net cash position of ~SEK 800m, we expect that Eolus will remain resilient. In the near-term we highlight that the largest project is Öyfjellet (400MW), which is expected to be completed during autumn 2021. Although there may be slight delays in a few projects during 2020, we expect the net impact on our estimates to be largely unchanged, with a few minor additional costs.
Long-term growth with minor short-term headwinds
The uncertainty surrounding the effects of COVID-19 and the -60% electricity price decline YTD (in Sweden) have made investors cautious about investing in the share. Short-term electricity price pressure should not impact long-term investments, however, which are largely driven by long-term price levels that can be secured through e.g. PPAs, which appear to remain at a satisfactory level (see p. 19). Although the impact of COVID-19 is difficult to predict, we anticipate that ongoing projects should develop according to plan. In the long-term, there is no denying the growth potential of wind power. We expect that wind production will grow at a 21% CAGR until 2022 and 7% until 2040, driven by the dismantling of nuclear power, the Swedish government’s target of 100% renewable energy by 2040, a significant increase in energy demand, and lower production costs.
Value range SEK 100–150, depending on pipeline confidence
We derive a fair value range based on three different rates of probabilities for
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