Arise: Performing in all areas – ABG

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EBITDA of SEK 69m, below ABGSCe due to project timingOwn production better, we raise ’23e EBITDA by 8%The share trades at 9x P/E on 2023eQ2’23

Arise had Q2’23 sales of SEK 110m, below ABGSCe at SEK 186m. However, this was due to the timing of the sale of the Fasikan project, which we now expect to go through in Q3’23. Likewise, the Q2 EBITDA of SEK 69m was below our forecast of SEK 127m, but adjusting for Fasikan we think the Q2 results were good. Arise’s own production delivered an EBITDA of SEK 36m, above ABGSCe of SEK 23m, due to higher realised prices. Lower electricity price volatility coupled with hedging prices clearly above market prices helped to offset lower electricity production during the quarter.We raise ’23e EBITDA by 8%

We have moved the Fasikan project sale to Q3 from Q2 and our ’23e development EBITDA is roughly unchanged. The positive driver comes from assuming higher realised prices in own production for H2’23, which helps to drive an 8% upgrade to the group ’23e EBITDA. A key upside potential could come from increased electricity production. As wind conditions have continuously been less supportive compared to the company’s budget, we have adjusted forecasts to reflect the recent performance rather than relying on historical wind data, hence should wind conditions improve again, it would support further earnings upgrades. Late-stage portfolio of 1,000 MW

Arise now has a late-stage project portfolio of ~1,000 MW (total portfolio ~5.7 GW), after revising up Finnåberget to 200 MW (120). In addition, the company stated that it will continue to look for investment opportunities to increase the portfolio further. The combination of a growing project portfolio and good earnings from electricity production supports good earnings going forward. The share is trading at 9x P/E on 2023e and we reiterate our fair value range of SEK 65-110, based on a ’24e EV/EBITDA of 6-11x vs. a peer group at ~11x.

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https://cr.abgsc.com/foretag/arise/Equity-research/2023/7/arise—performing-in-all-areas/

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