Eolus Vind: Growing pains weigh on margins - ABG

Q4 results
Eolus had Q4 sales of SEK 366m, partly driven by the inital payment from the sale of Centennial Flats, which contributed USD 12m. EBIT was SEK 27m, well below our expectations of SEK 100m. The company has increased its opex by growing the organisation and now has more than 100 employees. Moreover, Öyfjellet reached 95% completion and should contribute SEK ~200m in revenue until fully completed, but we continue to expect no EBIT contribution for the remainder of the project. All in all, this resulted in a net profit of SEK 41m (ABGSCe SEK 79m).

We lower '23e-'24e EBIT by 28-30%
We lower '23e-'24e EBIT by 28-30%, as we raise our opex expectations, driven by the organisation's ramp-up in personnel costs and as we now take a more conservative view on EBIT contributions from development projects. Still, our forecasts imply a clear step up in the earnings level from H2'23, operating then at an annualised EBIT level of around SEK 400m.

~22 GW total project portfolio, ~8 GW in offshore
The company added ~4 GW to its development project portfolio (offshore in Finland) and now has a solid ~22 GW project development portfolio, with a mix of different types of technology. It consists of storage (~2 GW), solar (~4 GW), offshore (~8 GW) and onshore (~8 GW). This puts the company in a good position for revenue recognition long-term. However, only 1.8 GW is in late-stage with commercial operating date (COD) in '24-'26, and we foresee most revenue recognition from these projects to come in '24-'25. The share is trading at 10-8x P/E on '23e and '24e. We lower our fair value to SEK 100-150 (125-175) as we expect lower EBIT margins for development projects due to increasing opex.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/eolus-vind/Equity-research/2023/2/eolus-vind---growing-pains-weigh-on-margins-/