Arise: Pipeline expansion from partnership - ABG
Announces partnership with landowner
Earlier today (19 July), Arise announced that it has entered into a partnership with the landowner Hällefors Tierp Skogar (HT Skogar). The partnership agreement gives Arise exclusive rights to develop >1,500 MW of greenfield onshore wind power on land owned by HT Skogar. The land areas are in electricity price area SE3 in Sweden, which is known for higher-than-average electricity prices and therefore greater investor interest. As this is a greenfield project, it will, if successful, start to generate sales 5-7 years from now. Therefore, there is a long way to go before the project will be handed over, meaning that several uncertainties remain.
No impact on near-term estimates, but strong pipeline uplift
This partnership will increase Arise’s development portfolio to >2,600 MW from the previous ~1,100 MW, but it does not have any impact on our near-term (’21-‘23e) estimates.
New fair value range of SEK 53-122, depending on execution
The stock is down recently (-9% L3M) and is currently trading below our fair value range. However, this announcement strengthens our view of Arise’s ability to find different ways to increase its development portfolio and it increases the pipeline visibility. On this event alone, we raise our fair value range to SEK 53-122 (49-114) per share. Our valuation is based on a SOTP approach, where we factor in announced projects, partnerships, own wind and asset management operations as well as the probability of success for the long-term pipeline.
https://www.introduce.se/foretag/arise/Equity-research/2021/7/arise---pipeline-expansion-from-partnership/
