First Berlin – ABO Invest AG Research Update (08/06/2018)

First Berlin Equity Research has published a research update on ABO Invest AG (ISIN: DE000A1EWXA4). Analyst Dr. Karsten von Blumenthal reiterated his BUY rating and decreased the price target from EUR 2.40 to EUR 2.20.

As expected, ABO Invest's sales and earnings declined in FY 2017. Despite the weak wind year the company generated a high operating cash flow of €17.2m. Net cash flow was also positive at €3.8m despite high net debt repayments (€10.7m) and interest payments of €5.3m. Based on the assumption of average wind conditions, ABO Invest expects sales of approximately €36m, EBITDA of approximately €27m and EBT of just under €1.6m for 2018. As power production in the first five months of the current year was about 7% below forecasts, we assume slightly below average revenues in our full-year forecast. Following the large acquistion last year (Finnish wind farm with 23.1 MW) and in view of the high prices for wind farms, we assume that the pace of expansion will slow in 2018. In addition to the already completed acquisition of the remaining German Weilrod wind farm shares, we now assume the purchase of only 3.6 MW in the wind sector (previously: a total of 15 MW). We have adjusted our estimates accordingly. An updated DCF model results in a slightly lower price target of €2.20 (previously: €2.40). We confirm our Buy recommendation.