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 maintained his EUR 118.00 price target.
ABO Wind is guiding towards a net result of well over €20m in 2023 and further increases in the following years, as the acceleration of the energy transition in Germany and other countries will boost business development. If ABO Wind succeeds in significantly improving its equity base, the board believes that a doubling of the net result to around €50m is achievable by 2027 (2022: just under €25m). Since the company’s founders Ahn and Bockholt, who currently hold 52% of the shares, do not want to relinquish control over the company even in the event of further dilution and want to continue the tradition of a family-run company with a corresponding corporate culture, they are considering a change of legal form. The stock corporation (Aktiengesellschaft (AG)) could become a partnership limited by shares (Kommanditgesellschaft auf Aktien (KGaA)), which would allow the founders to determine the management and thus the course of the company even with a smaller share of the votes. The initial reaction of investors was negative, however, and the share price lost about 10% during the day after the ad hoc announcement. Overall, the share price has fallen by almost 40% since reaching its all-time high of just under €97 – despite steadily improving prospects. The founders‘ desire to retain control is understandable, but there is a danger that the change of legal form will not be to the taste of many investors who may not only want to participate in the positive business development, but also influence the business policy with their votes. In our view, this is more difficult in the legal form of a KGaA than in an AG. This could make access to equity more difficult and more expensive for ABO Wind. Thus, it will be crucial for ABO Wind to convince enough (potential) investors that an investment in an ABO Wind KGaA is also a very attractive. An updated DCF model still yields a €118 price target. We confirm our Buy recommendation.