Enersense’s Q3 report was soft and left doubts with respect to the FY ’21 guidance. The company has now made upgrades to the guidance, but these seem to have been to a large extent driven by acquisition-related revaluations. Enersense nevertheless continues to progress with long-term strategy and is about to close two investments.
We make some updates to our Q4 adj. EBIT(DA) estimates
Enersense revised its FY ’21 earnings guidance upwards. Enersense still expects EUR 215-245m in revenue, but now sees adj. EBITDA over EUR 19m (prev. EUR 17-20m) and adj. EBIT over EUR 11m (prev. EUR 8-11m). We leave our revenue estimate unchanged, update our Q4 adj. EBITDA estimate to EUR 7.4m (prev. EUR 5.6m) and that for adj. EBIT to EUR 5.1m (prev. EUR 3.3m). The underlying performance remains somewhat unclear because the guidance update was driven by revaluations related to the Enersense Offshore Oy acquisition.
Long-term earnings growth outlook should solidify
Enersense is about to expand its renewable energy solutions scope with the closure of two acquisitions in a month or so. The company will buy a significant stake in a green hydrogen producer called P2X and acquire an onshore wind farm developer in an all-share transaction. The latter target will be earnings accretive already in FY ’22; the acquisition of Megatuuli will contribute a cumulative EUR 20-40m in EBIT by 2025. Meanwhile an ERP investment will burden results this year along with a process related to the integration and development of Enersense Offshore, however the latter initiative should contribute to results in FY ’23. We leave our estimates for FY ’22 and ’23 unchanged for now, but Enersense will update its long-term financial targets in Q1.
Valuation remains undemanding
Enersense’s peer multiples have stayed pretty much unchanged over the past few months. Enersense continues to trade at modest multiples relative to peers. We believe Enersense’s vertical integration within the renewables value chain beyond construction and maintenance activities will help balance business risks, and hence long-term upside remains significant. Meanwhile short-term visibility isn’t still that great and thus we lower our TP to EUR 10 (11). Our rating remains BUY.
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