Meriaura Group: Significant solar thermal plant delivery to Germany

Translation: Original comment published in Finnish on 6/28/2023 at 8:59 am.

The delivery contract for the solar thermal collector field is the largest in the company's history and enables the revenue we expect for 2023-24 to be realized almost alone.

Solar heating system supplies heat to the district heating network

Meriaura Group announced on Tuesday that its subsidiary, Meriaura Energy (Savosolar), has signed a contract with Bauer Holzenergie on the delivery of a turn-key solar thermal plant. The contract size is estimated to be around EUR 9 million. The system delivery is planned to start in 2023 and commissioning will take place in 2024. The supplied solar thermal system generates heat to an extended district heating network. The signed contract is conditional on a building permit, which will be confirmed during summer 2023.

The area of the system is larger than the company's previous deliveries

The announced order is the largest single entity to be delivered by the company to date, both in terms of the solar thermal collector field area and measured by revenue. The 29,000 square meters of the announced field is clearly larger than the previous record of the nearly 21,000 square meter solar thermal field delivered to Denmark in 2018-19. Germany is an interesting delivery country, as so far, the company’s largest system deliveries have been exported either to Denmark or France. We find it positive that the company receives a significant deal from a new large market.

The order corresponds to expected revenue of nearly two years

We have estimated the total revenue of Meriaura Group’s Renewable Energy in 2023-24 to be EUR 10.5 million, which has so far been a very uncertain estimate, as the company had hardly any orders in its books before the now announced order. The announced EUR 9 million delivery thus clearly strengthens the growth outlook and almost enables the expected revenue for 2023-24 to be materialized by itself. Exceeding our current 2023-24 revenue estimate would require a relatively small additional order on top of the EUR 9 million now announced. On the other hand, the company's revenue has in the past mainly consisted of a few large projects, and one should not jump to any major conclusions concerning the future based on winning one large project. We will review our estimates in connection with the Q2 result.

Solar thermal energy only represents a small part of the Group's revenue

We point out that renewable energy accounts for a small share of Meriaura Group's revenue (2022: 5%, 2024e: 9%) and business profitability has not yet been proven. The green transition and the expansion of the EU’s emissions trading support the growth conditions in the solar thermal business, but in addition to revenue growth, the company must also succeed in strengthening production efficiency and margins to turn profitability positive in the medium term.