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Third party research

Arise: Q2 report below expectations - ABG

Arise

This is a third party research report and does not necessarily reflect our views or values

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Key takeaways from Q2’21 report
Sales came in below our expectations at SEK 36m (-16% vs. ABGSCe at SEK 43m), up 20% y-o-y. EBIT of SEK -6m (vs. ABGSCe at SEK 7m), for a margin of negative margin of 16.7% (-41.3% in Q1’20 and vs. ABGSCe at 15.3%). Net profit of SEK -6m (vs. ABGSCe at SEK -4m). Deviation on sales comes from lower than expected revenues across all divisions. Sales from own production came in -14% vs. ABGSCe while sales from Development & Management came in -12% vs. ABGSCe. Skaftåsen was the only project under development and the remaining revenue was recognised at a relatively modest pace.

Comments and outlook
Management highlight that they are seeing rising freight and raw material prices as well as turbine delivery delays, which may impact the size of the final project payments, but foremost the timing. On the positive side, Arise has started its market development in UK and signed an exclusively agreement with landowners on solar power development in UK, where they are in an initial phase of conducting studies for a 30 MW project.

Final thoughts and conf call details
The stock has been weak recently (-30% L3M) and is currently trading at 15.3x ‘21e EV/EBIT, which comes down to 1.5x ‘23e EV/EBIT due to extraordinary revenue recognition that year. More information is expected at Arise’s conference call at 11:00 CET today. Dial-in details: SE: +46850558353; UK: +443333009267. A live stream can be followed at: https://tv.streamfabriken.com/arise-q2-2021
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