There are five compelling reasons why Sif could represent an attractive investment opportunity:

• First, Sif offers great exposure to the fast-growing wind farm market at a time when countries want to be independent in meeting their energy needs while also reducing fossil fuel dependency. As such, Sif has a strong ESG profile.
• Second, as the largest producer of monopiles for offshore wind farms, together with German producer EEW, it has developed difficult-to-copy technology to produce monopiles according to specifications. As a subcontractor it has less exposure to the large project risks that offshore wind operators have, as orders include guarantees for Sif.
• Third, Sif’s production capacity for 2024 and 2025 is fully utilised and large orders are currently being booked or are in exclusive negotiations for 2026 and beyond.
• Fourth, Sif expects to realise adjusted EBITDA of €35m in FY24. However, once the company’s expanded facilities, partly financed by clients, start producing, EBITDA is expected to increase to at least €160m in 2026 and the years beyond, according to the company.
• Finally, Sif’s market capitalisation of around €420m and enterprise value of around €600m at 11 November 2024 certainly do not look demanding as they represent an FY25e P/E of ~12x and an FY25e EV/EBITDA of <5x, compared to an FY25e P/E of 16.1x for Vestas (EV/EBITDA 6.7x) and 53.7x for Siemens Energy (EV/EBITDA 9.8x).

A European market leader in producing large monopiles for offshore wind farms, Sif offers exposure to the fast-growing wind farm market while also having a technological edge and proximity to new offshore wind developments. Strong execution is reflected in increasing earnings and cash flows metrics. The company has high ESG ratings from agencies like MSCI and ISS and trades at undemanding multiples.

Published 18 November 2024.