Energiekontor

Depot overview & individual analyses

Depot overview & individual analyses


Energiekontor

Update 02.06.2022

Energiekontor

Update 02.06.2022

business model

Energiekontor's core business ranges from the planning and construction to the operational management of wind farms in Germany, France, Great Britain, Portugal and the USA. Since 2010 they have also been active in the field of solar energy. There are 3 business areas:
  1. Project development: This includes the entire value chainfrom acquisition to commissioningand the sale of the projects including repowering - for both wind and solar farms.
  2. Electricity production: Energiekontor currently operates wind and solar parks with a nominal output of around 330 megawatts and the number is set to increase to 500 megawatts by 2023.
  3. Operational development: This includes all activities after the plants have been commissioned, such asoperational management or efficiency gains

Investmentcase

Only with a massive expansion of renewable energies will Germany achieve its goals of stopping climate change and making itself independent of Russian gas. However, this expansion is only possible via the project planners and here Energiekontor is excellently positioned with a pipeline >7.7 GW. While the lengthy approval procedures were the main problem up to now, the "wind turned" in the truest sense of the word with the traffic light government and at the latest with the Ukraine war.The pipeline, which is already valuable, has gained even more value thanks to the federal government's goal of accelerating the approval process and adapting distance rules. But there is also political "tailwind" for Energiekontor in Great Britain and the USA. Own stock benefits from the currently high electricity prices and since you only invest in projects what you earn with your own stock, this temporary phenomenon improves the long-term perspectives significantly.

Trigger

The federal government's summer package should provide another impetus with further simplifications in the approval process. However, the figures for the first half of the year will be the biggest trigger, since according to my analyzes the wind yield is at a high level and this then meets with high electricity prices. Since the cost pools are kept quite stable, this will massively increase profits. Since Energiekontor is currently securing these high electricity prices beyond 2022 by concluding PPAs, this effect is likely to last longer. Another possible trigger would be another sale of a project pipeline, as happened in 2020 Nordex was the case. I assume that the multiples here are now significantly higher and that the capital market would recognize the hidden reserves at Energiekontor.

risks

Both rising interest rates and rising steel prices have a negative impact on profitability. As long as the electricity prices and thus the project prices are very high, as is currently the case, this is not a problem - but should there be a turnaround here, such as in 2020, when electricity prices were sometimes even negative, this would then have a double negative effect have profitability. In addition, there are the supply chain problems, which are only temporary and have not slowed down the company so far. Possible market interventions, as is currently the case in Italy, Belgium or Great Britain, represent a political risk - but I consider such a scenario to be very unlikely for Germany.

sustainability

As a provider of sustainable electricity and project developer of wind and solar parks, the company makes a direct contribution to stopping climate change. The company's vision since it was founded has therefore also been to secure the entire power supply from 100% renewable energies - and that without state subsidies.

Fair Value Determination - Approach: SOTP Analysis

Since Energiekontor has high hidden reserves (until the sale of a wind farm there are high costs for project development, which are offset by almost no income and the wind farms are accounted for in their own portfolio at acquisition and production costs), the SOTP approach is correct in my view.Here's how I did it:

1. Determine the value of the project pipeline:
Transactions in which a pipeline of unfinished projects has changed hands rather than finished projects are rare. Nordex's deal gives a value of around 0.15m/MW, Baywa's latest transaction gives a value of 0.16m/MW. However, little is known about the quality of the pipeline (i.e. what phase the projects were in when they were sold). At Energiekontor, numerous projects are now in the lucrative phases 3-5, which is why I could definitely imagine a higher multiple. The transactions mentioned were also before the sharp increase in electricity prices and the changes in the approval procedures. For reasons of caution, however, I simply assume 0.16 million/MW. For the growth of the project pipeline, I orient myself on the historical growth rates.
Deadline Pipeline value
31.12.2021 7,7 GW 1,23 Mrd.
31.12.2022 9,2 GW 1,47 Mrd.
31.12.2023 10,3 GW 1,65 Mrd.
31.12.2024 11,5 GW 1,84 Mrd.

2. Determine the value of your own stock:

There are better comparative values that vary between 0.8 and 1 million /MW. Again, for reasons of caution, I'll use the bottom edge. However, due to the sharp rise in electricity prices, I am increasing this value by 10% (which, with an average remaining term of almost 14 years at Energiekontor, would correspond to an electricity price increase of 140% - however, prices have risen significantly more since 2021 and Energiekontor has partially compensated for this high price level already secured for longer periods of time, so I'm quite "cautious" here as well). For the growth of my own portfolio, I use historical growth rates as a guide.

Deadline own stock value
31.12.2021 0,33 GW 0,3 Mrd.
31.12.2022 0,4 GW 0,36 Mrd.
31.12.2023 0,5 GW 0,45 Mrd.
31.12.2024 0,6 GW 0,54 Mrd.

3. value management:

This area is negligible in the overall analysis, so I set the value at 0 (although you could also use 5, 10 or 15 million).

4.SOTP vs Enterprise Value:

I then compare the sum of the project pipeline and my own stock with the enterprise value (market capitalization interest-bearing debt capital - liquid funds) and can thus derive a "fair value" for the share.

Deadline value price target
31.12.2021 1,28 Mrd. 91 Euro
31.12.2022 1,54 Mrd. 110 Euro
31.12.2023 1,77 Mrd. 126 Euro
31.12.2024 2,05 Mrd. 146 Euro

business model

Energiekontor's core business extends from the planning and construction to the operational management of wind farms in Germany, France, Great Britain, Portugal and the USA. Since 2010 they have also been active in the field of solar energy. There are 3 business areas:
  1. Project development: This includes the entire value chainfrom acquisition to commissioningand the sale of the projects including repowering - for both wind and solar farms.
  2. Electricity production: Energiekontor currently operates wind and solar parks with a nominal output of around 330 megawatts and the number is set to increase to 500 megawatts by 2023.
  3. Operational development: This includes all activities after the plants have been commissioned, such asoperational management or efficiency gains

Investmentcase

Only with a massive expansion of renewable energies will Germany achieve its goals of stopping climate change and making itself independent of Russian gas. However, this expansion is only possible via the project planners and here Energiekontor is excellently positioned with a pipeline >7.7 GW. While the lengthy approval procedures were the main problem up to now, the "wind turned" in the truest sense of the word with the traffic light government and at the latest with the Ukraine war.The pipeline, which is already valuable, has gained even more value thanks to the federal government's goal of accelerating the approval process and adapting distance rules. But there is also political "tailwind" for Energiekontor in Great Britain and the USA. Own stock benefits from the currently high electricity prices and since one only invests in projects what one earns with one's own stock, this temporary phenomenon improves the long-term perspectives significantly.

Trigger

The federal government's summer package should provide further impetus with further simplifications in the approval process. However, the figures for the first half of the year will be the biggest trigger, since according to my analyzes the wind yield is at a high level and this then meets with high electricity prices. Since the cost pools are kept quite stable, this will massively increase profits. Since Energiekontor is currently securing these high electricity prices beyond 2022 by concluding PPAs, this effect is likely to last longer. Another possible trigger would be another sale of a project pipeline, as happened in 2020 Nordex was the case. I assume that the multiples here are now significantly higher and that the capital market would recognize the hidden reserves at Energiekontor.

risks

Both rising interest rates and rising steel prices have a negative impact on profitability. As long as the electricity prices and thus the project prices are very high, as is currently the case, this is not a problem - but should there be a turnaround here, such as in 2020, when electricity prices were sometimes even negative, this would then have a double negative effect have profitability. In addition, there are the supply chain problems, which are only temporary and have not slowed down the company so far. Possible market interventions, as is currently the case in Italy, Belgium or Great Britain, represent a political risk - but I consider such a scenario to be very unlikely for Germany.

sustainability

As a provider of sustainable electricity and project developer of wind and solar parks, the company makes a direct contribution to stopping climate change. The company's vision since it was founded has therefore also been to secure the entire power supply from 100% renewable energies - and that without state subsidies.

Fair Value Determination - Approach: SOTP Analysis

Since Energiekontor has high hidden reserves (until the sale of a wind farm there are high costs for project development, which are offset by almost no income and the wind farms are accounted for in their own portfolio at acquisition and production costs), the SOTP approach is correct in my view.Here's how I did it:

1. Determine the value of the project pipeline:
Transactions in which a pipeline of unfinished projects has changed hands rather than finished projects are rare. Nordex's deal gives a value of around 0.15m/MW, Baywa's latest transaction gives a value of 0.16m/MW. However, little is known about the quality of the pipeline (i.e. what phase the projects were in when they were sold). At Energiekontor, numerous projects are now in the lucrative phases 3-5, which is why I could certainly imagine a higher multiple. The transactions mentioned were also before the sharp increase in electricity prices and the changes in the approval procedures. For reasons of caution, however, I simply assume 0.16 million/MW. For the growth of the project pipeline, I orient myself on the historical growth rates.
Deadline Pipeline value
31.12.2021 7,7 GW 1,23 Mrd.
31.12.2022 9,2 GW 1,47 Mrd.
31.12.2023 10,3 GW 1,65 Mrd.
31.12.2024 11,5 GW 1,84 Mrd.

2. Determine the value of your own stock:

There are better comparative values that vary between 0.8 and 1 million /MW. Again, for reasons of caution, I'll use the bottom edge. However, due to the sharp rise in electricity prices, I am increasing this value by 10% (which, with an average remaining term of almost 14 years at Energiekontor, would correspond to an electricity price increase of 140% - however, prices have risen significantly more since 2021 and Energiekontor has partially compensated for this high price level already secured for longer periods of time, so I'm quite "cautious" here as well). For the growth of my own portfolio, I use historical growth rates as a guide.

Deadline own stock value
31.12.2021 0,33 GW 0,3 Mrd.
31.12.2022 0,4 GW 0,36 Mrd.
31.12.2023 0,5 GW 0,45 Mrd.
31.12.2024 0,6 GW 0,54 Mrd.

3. value management:

This area is negligible in the overall analysis, so I set the value at 0 (although you could also use 5, 10 or 15 million).

4.SOTP vs Enterprise Value:

I then compare the sum of the project pipeline and my own stock with the enterprise value (market capitalization interest-bearing debt capital - liquid funds) and can thus derive a "fair value" for the share.

Deadline value price target
31.12.2021 1,28 Mrd. 91 Euro
31.12.2022 1,54 Mrd. 110 Euro
31.12.2023 1,77 Mrd. 126 Euro
31.12.2024 2,05 Mrd. 146 Euro
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