First Berlin – ABO Wind AG Research Update (03/02/2020)

First Berlin Equity Research has published a research update on ABO Wind AG (ISIN: DE0005760029). Analyst Dr. Karsten von Blumenthal reiterated his BUY rating and increased the price target from EUR 22.50 to EUR 27.00.

ABO Wind has carried out a small capital increase and plans to include the share in Xetra trading. This should raise the liquidity of the share and thus the attractiveness of the stock. The company has issued 400.000 shares at €17.10 resulting in a cash inflow of €6.8m. The funds will be used to finance its international expansion, which should contribute to growth this year. An international project pipeline of over 10 GW suggests continued growth in the medium term too. Even the battered German market is beginning to show signs of life. The German onshore wind tender in December 2019 was the first tender to be oversubscribed since August 2018. We interpret this as a first indication that permit congestion is slowly abating. After the catastrophically low new installations of ca. 1.1 GW in 2019, the German wind market should revive again in 2020. However, in view of the long turbine delivery times (>12 months) and projects of almost 1.4 GW awarded in the period May-December 2019, we expect that the recovery will only really pick up steam in 2021. For 2020E, we forecast an almost 40% increase in net profit at ABO Wind to €14m. We have updated our DCF model and raise our price target from €22.50 to €27.00. Despite the 25% price increase in 2019, the share remains attractively valued (2020E P/E ratio: 11x). We confirm our Buy recommendation.