ABO Wind (ABO) has achieved consistent levels of profitability in recent years and looks set to meet FY18 guidance. The company has over 20 years’ experience in developing renewable projects, both in Germany and abroad, and is well positioned to capitalise on the continuing growth expected in the market for renewable energy. The current rating of the shares appears undemanding in comparison to its renewable energy peer group and the wider market.
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ABO Wind |
Renewable energy |
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Consistent levels of profitability
ABO Wind (ABO) has achieved consistent levels of profitability in recent years and looks set to meet FY18 guidance. The company has over 20 years’ experience in developing renewable projects, both in Germany and abroad, and is well positioned to capitalise on the continuing growth expected in the market for renewable energy. The current rating of the shares appears undemanding in comparison to its renewable energy peer group and the wider market.
H118 results show on track to meet FY18 guidance
Recent H118 results from ABO revealed a net profit of c €5.5m and revenue of €56.4m (mainly from wind farms in Germany and Finland). In addition, the company announced that it had grown its pipeline of wind and solar projects in the period and secured new projects with total capacity of 1,600MW. Post the publication of the results ABO also sold a project (up to 50MW not yet built) to Finnish wind farm operator Suomen Hyötytuuli.
Outlook remains strong
According to management the sales planned for the remainder of the year are on schedule and the company remains on track to meet its FY18 guidance of net profit of at least €10m. While profits will not reach the level achieved in FY17, they should amount to the average of the last four years. The macro outlook appears favourable, with strong energy growth anticipated and an increasing renewable energy share, so that by 2040 almost a quarter of all energy is expected to be generated from renewable sources. ABO remains confident and expects that, for the period 2018-20, it will complete projects of c 250MW on an annual basis from the existing pipeline.
Consensus forecasts and valuation
Bloomberg shows consensus forecasts based on the contribution of one analyst. Total output (revenue plus change in WIP) is estimated to be €134m in FY18 (H1 €61.7m) and net profit for the year is forecast to be €11.3m, broadly in line with management’s guidance. ABO’s valuation appears modest based on consensus-based market multiples with an FY18e P/E of c 8.7x and an EV/EBITDA multiple of 2.7x. Both of these multiples are at a significant discount to both wider market multiples (DJ Stoxx 600) of c 14.0x P/E and 9.0x EV/EBITDA and peer group averages of c 20.x and 8.0x, respectively.
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Consensus estimates
Source: Bloomberg at 10 October 2018 |
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Research: Financials
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