💥💥---𝐀𝐤𝐭𝐢𝐞𝐧𝐛𝐚𝐭𝐭𝐥𝐞---💥💥
𝙄𝙣𝙫𝙚𝙨𝙩𝙢𝙚𝙣𝙩𝙩𝙝𝙚𝙨𝙚: "𝙁𝙧𝙚𝙞𝙝𝙚𝙞𝙩𝙨𝙚𝙣𝙚𝙧𝙜𝙞𝙚𝙣" 𝙖𝙪𝙛 𝙙𝙚𝙢 𝙑𝙤𝙧𝙢𝙖𝙧𝙨𝙘𝙝. 𝙒𝙖𝙘𝙝𝙨𝙩𝙪𝙢 𝙙𝙪𝙧𝙘𝙝 𝙐𝙣𝙖𝙗𝙝ä𝙣𝙜𝙞𝙜𝙠𝙚𝙞𝙩 𝙫𝙤𝙣 𝙂𝙖𝙨 𝙪𝙣𝙙 Ö𝙡!
--- 7c Solarparken --- Energiekontor --- Solaredge ---
For the next stock presentation, I am deviating a bit from my previous way of stock analysis. Since all three stocks were requested by the community and belong to the "Green Energy" sector, especially PV and wind farms, I would like to focus here on the fundamental quality and compare the stocks somewhat in this respect. If you want to get something in the field of green energy in your portfolio, you certainly can not avoid to compare the values. Feel free to give me feedback for this kind of analysis and vote which value appeals to you the most :)
𝗜𝗻𝗵𝗮𝗹𝘁𝘀𝘃𝗲𝗿𝘇𝗲𝗶𝗰𝗵𝗻𝗶𝘀:
I. Short stock presentation
II. key figures
III. relative company valuation
IV. Intrinsic company valuation
V. Conclusion
In chapter II to IV I will create rankings. There are points per category, in the form of "+".
+++ = best rating
+ = worst rating
In Chapter V (Conclusion) I will summarize the ratings and choose a winner.
𝗜. 𝗞𝘂𝗿𝘇𝗲 𝗔𝗸𝘁𝗶𝗲𝗻𝘃𝗼𝗿𝘀𝘁𝗲𝗹𝗹𝘂𝗻𝗴
-7c Solarparken:
Solar power plant operator headquartered in Bayreuth, Germany, focus on German solar market as well as expansion of the Belgian market as a second mainstay (according to the 2021 AR, they are starting intensive expansion there).[7]
Revenues: Revenues are mainly generated from the operation, maintenance and management services of the own IPP portfolio (solar parks), as well as own solar plants and PV estate (leasing and development of own land). According to the Annual Report 2021, 7C Solarparken operates more than 180 solar parks with a total capacity of 333 Mwp. The Group's wind energy portfolio consists of two wind power plants acquired and operated in 2019. Both plants are located in a windy region in Rhineland-Palatinate.
Revenue segments:
-Electricity sales (97.6% of total sales).
-Revenues from services
-Other
-Energy Office:
Planning, construction to operational management of wind farms in Germany and abroad (mainly EU). The company is headquartered in Bremen. Business segment was expanded in 2010 to include solar energy.[6] Energiekontor has 17 locations worldwide (acc. to AR 2021).
DE: 30 wind and solar farms; UK: 3 wind farms; Portugal: 4 wind farms.
Revenue segments:
-Power generation (stable, growing revenue, dependent on electricity price).
-Operations management (stable sales for commercial and technical management of plants)
-Projecting (volatile but growth driver, as revenue only comes from sale of turbines - but 50% of turbines are retained and used in the power generation segment. Project pipeline but growing)
Shareholder structure: Energiekontor advertises in the annual reports with a shareholder structure where the founders own 50.35% of the shares directly (free float at 36.18%). -->positive!
-Solaredge:
Leading global provider of smart energy technology, especially PV inverters, energy storage systems or EV chargers. Headquarter is located in Israel. Compared to Energiekontor and 7c Solarparken more active in the e-mobility sector. One could say that Solaredge offers solutions that make PV systems, which are built by 7c Solarparken or Energiekontor, more efficient. Their technology is designed to make PV systems work more efficiently, even in dirt, snow or shade. About 50% of their sales are still in the US (Europe about 25%). [5]
-Comparison:
-->The business areas are very similar. Nevertheless, the companies have partly different strategies. For example, Solaredge has EV Chargers in its portfolio. Energiekontor also keeps only about 50% of the built plants in their fixed assets for power supply, while the rest is sold directly at a profit. There is thus overlap (especially in the PV business), as well as different orientations. All are to some extent dependent on the price of electricity or even wind speeds for the wind farms. Depending on the electricity production and price, the revenue can be different. A good example is an interim announcement from Solarparken. Thus, the following was communicated [13]:
"Revenues for the first three months of 2022 were EUR 14.1 million, a stellar increase of 70% compared to the same period last year (EUR 8.3 million). The increase was entirely due to electricity sales, which rose by 73%, and was based on the following three factors: (I) portfolio growth contributed EUR 2.1 million to the increase in revenues, while (II) improved weather conditions contributed EUR 1.6 million. (III) Finally, electricity prices impacted electricity sales by EUR 2.2 million."
𝗜𝗜. 𝗞𝗲𝗻𝗻𝘇𝗮𝗵𝗹𝗲𝗻
Abnormalities in the balance sheet, income statement, and statement of cash flows (Sorted per category by placement):
-Net margin:
1. Energiekontor: 23.1% (No R&D and thus better margin than Solaredge) +++
2. 7c Solarparken: 18.8% (No R&D and therefore better margin than Solaredge) ++
3. solaredge: 8.6% +
-Gross margin:
1. 7c Solarparken: 92.68% (hardly any intensive margin business available) +++
2. Energiekontor: 70.73% ++
3. Solaredge: 32.04% (R&D 11% of sales) +
-Observations in the income statement (P&L) with an impact on the margin:
7c Solarparken: Higher depreciation, amortization and impairment at 7c Solarparken, resulting in 2nd place net margin and 1st place gross margin. Gem. AR 2021 came out:
"The Group's goodwill review regarding the feasibility of the project pipeline concluded that there are no solar projects in the Amatec business operation that are expected to be realized in the next 3 years. Therefore, this business operation was fully impaired in the fiscal year (EUR 104 thousand)."
-->This reduces the net margin at 7c Solarparken once!
Solaredge: Higher expenses in research and development and marketing. Solaredge is said to have a technology advantage over the competition, which is to be maintained through research and development (R&D). -->R&D = 11.18% of total revenue
-->Ratio of short-term debt to short-term assets (should be <1 sein):
1. Solaredge: 0,3 +++
2. 7c Solarparken: 0,49 ++ **
-->7c Solarparken has mostly long-term debt (positive). However, these are quite high (53.49% of total assets), so debt is higher than 4x EBIT (negative)
3. Energiekontor: 0.6 +
-->Energiekontor has mainly long term debt (positive). However, these are quite high (53.18% of total assets), which makes the debt higher than 4x EBIT (negative).
**7c Solarparken declares according to AR 2021 that solar and wind parks of the company are basically financed in a ratio of 25% equity and 75% debt.
-Goodwill:
Energiekontor: n/a
Solaredge: not relevant (4.5% of total assets)
7c Solarparken: not relevant
-->No valuation, as goodwill does not play a role in any of them.
-Ratio of interest expenses to EBIT (important key figure due to high debt!):
1. Solaredge: 9.6% +++
2. Energiekontor: 27.28% ++
3. 7c Solarparken: 38.9% +
--> Especially 7c Solarparken worsens the net margin due to high interest charges, which they can however cushion by a generally good margin (see above).
-Share buybacks:
1. Energiekontor: Yes! +++
2. Solaredge: Yes, but very small and irregular (last time March 2022) ++
3. 7c Solarparken: No! +
-Piotroski F-Score [9] [11] [12]:
1. 7c Solarparken: 7/9 +++
2. Energiekontor: 6/9 ++
3. solaredge: 6/9 ++
-Traderfox Quality and Growth Check [9] [11] [12]:
1st Solaredge: 14/15 (quality); 12/15 (growth) +++
2. Energiekontor: 9/15 (quality); 7/15 (growth) ++
3. 7c Solarparken: 8/15 (quality) ; 7/15 (growth) +
-Rule of 40 (>40 = positive):
Revenue growth + EBITDA margin (alternatively FCF margin).
1. 7c Solarparken: 10% + 86.5% = 96.5% +++
2. solaredge: 25% + 21.5% = 46.5% ++
3. Energiekontor: 15% + 30.6% = 45.6% +++ 2.
𝗜𝗜𝗜. 𝗥𝗲𝗹𝗮𝘁𝗶𝘃𝗲 𝗨𝗻𝘁𝗲𝗿𝗻𝗲𝗵𝗺𝗲𝗻𝘀𝗯𝗲𝘄𝗲𝗿𝘁𝘂𝗻𝗴
Market Averages Green and Renewable Energy [1]:
KGV: 36.54 (EU).
PEG: 0.90 (eu) -->40.4% growth! [1]
KGV: 69.30 (USA)
PEG: 4.78 (USA) -->14.49% growth! [1]
Market Average Europe general [8]:
Euro Stoxx 50 P/E as of 05/14/2022: 14.34
7c Solarparken [2]:
KGV (2022): 25.2
KGV (2023): 28.0
KGV (2024): 38.1
PEG 2022: 2.52 (growth assumptions according to chapter IV - intrinsic valuation)
Median P/E ratio (historical): 23,48 [14]
Energiekontor [3]:
KGV (2022): 31.0
KGV (2023): 27.3
KGV (2024): 21.9
PEG 2022: 1.55 (growth assumptions according to chapter IV - intrinsic assessment)
Solaredge [4]:
KGV (2022): 65.9
KGV (2023): 39.6
KGV (2024): 31.8
PEG 2022: 2.64 (growth assumptions according to chapter IV - intrinsic valuation)
Median P/E ratio (historical): 49,06 [15]
Placement relative valuation:
1. Energiekontor +++
2.. 7c Solarparken ++
3. solaredge +
𝗜𝗩. 𝗜𝗻𝘁𝗿𝗶𝗻𝘀𝗶𝘀𝗰𝗵𝗲 𝗨𝗻𝘁𝗲𝗿𝗻𝗲𝗵𝗺𝗲𝗻𝘀𝗯𝗲𝘄𝗲𝗿𝘁𝘂𝗻𝗴
General market data regarding growth and WACC:
-Historical growth rates Green Energy for the last 5 years [1]:
Profit (EU): 29.54%
Sales (EU): 21.24%
Profit (USA): -6.45%
Sales (USA): -24.64%
--Expected growth rates Green Energy [1]:
EPS (EU): 40.40% -->next 5 years.
Sales (EU): 54.11% -->next 2 years
EPS (USA): 14.50% -->next 5 years
Sales (USA): 22.70% -->next 2 years
--Determination of WACC
-WACC Industrial Production [10]
6,2%-8,1%
-WACC Green & Renewable Energy - self-determined
6,5%
--> conservative assumption at >7%
1) Energiekontor
-Growth rate assumption:
Growth assumptions net result future [3]:
Growth 2022 to 2023: 13.1%; growth 2023 to 2024: 24.78%.
Historical EBIT growth (10 yrs): 10.95% [9].
According to Annual Report 2021 planning EBIT to €55-60 million by 2023.
Economic growth according to Annual Report 2021 across all countries (DE, GB, Port, FR, USA): 5.48%.
-->Growth rate: 15-20% (based on company level and industry).
Classification according to Peter Lynch: Medium Growth - Fast Grower
The GB 2020 also assumes a growth path of 15-20%, which again confirms my assumption. Due to the good project pipeline, whereby many plants can be completed (and sold), this is quite realistic in my opinion.
-->DCF calculation results in a fair price in the range of 85-90€.
Current price: 89.5€ (04.06.2022)
2) 7c Solarparken
--Determination of growth rate:
Growth assumptions net income future [2]:
2022 to 2023 growth: -22%; growth 2023 to 2024: 5.66%.
Historical EBIT growth (10 yr): 12.34% [11]
EBITDA forecast according to AR 2021 for 2022: approx. 3%.
Growth rate for 7c Solarparken: 5-10% (based on company level and industry)
Classification according to Peter Lynch: Medium growth (Stalwart)
-->DCF calculation due to high debt in the pennystock sector! -->DCF is hardly applicable/gives no valid results. Not applicable!
3) Solaredge
--Determination of growth rate:
Historical EBIT growth (10 yrs): 1n/a, as positive EBIT only from 2015 [12].
EBIT growth (2 yrs): 32.4% in 2021; 10.16% in 2020.
Growth assumptions net income future [4]:
2022 to 2023 growth: 69%; 2023 to 2024 growth: 23%.
Solaredge growth rate: 20-25%.
Classification according to Peter Lynch: Fast Grower
-->DCF calculation not possible! FCF was negative the last 2 years! No application! Alternatives do not bring valid values. Valuation is basically too high.
Placement intrinsic valuation:
1. Energiekontor +++
2. 7c Solarparken + (negative - high debt)
3. Solaredge + (negative - negative FCF)
𝗩. 𝗙𝗮𝘇𝗶𝘁
Total ratings (+):
1st Energiekontor : 22
2. solaregde: 19
2. 7c Solarparken: 19
🚀🚀Winner ENERGIEKONTOR!!!! 🚀🚀
Conclusion:
I find all 3 companies very exciting and well positioned. Energiekontor still seems to me the most favorably valued for an entry. However, the bottom line is very close. In addition, my analysis is not conclusive and qualitative factors such as management and business model only very briefly.
If you like this kind of analysis, I can go into other stocks on request and evaluate them purely from a fundamental point of view. This will make the analyses shorter. However, you should always not ignore the qualitative aspects (competitive advantage, market, management, etc.)! But that is up to you.
Suggestion:
Feel free to write in the comments if you would like to see a fundamental evaluation on a specific value. The analyses should then be short and crisp with the key findings. Feel free to link me on other posts with a request for an analysis. Please forgive me that I will only analyze values that convince me myself and find exciting :) As so often applies but also here... "who does not ask, who does not win" :)
As usual, you can also find my collected analyses under the following link:
https://app.getquin.com/activity/YyIXcpDduz?lang=de&utm_source=sharing
As always, no investment advice!
Sources:
[1] https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datacurrent.html
[2] https://ch.marketscreener.com/kurs/aktie/7C-SOLARPARKEN-AG-16783954/fundamentals/
[3] https://ch.marketscreener.com/kurs/aktie/ENERGIEKONTOR-AG-435840/fundamentals/
[4] https://ch.marketscreener.com/kurs/aktie/SOLAREDGE-TECHNOLOGIES-I-21452890/fundamentals/
[5] https://www.solaredge.com/de/corporate/about-us
[6] https://www.energiekontor.de/unternehmen/kurzportrait.html
[7] http://www.solarparken.com/index.php
[8] https://www.boerse.de/kgvs/KGV-Euro-Stoxx-50
[9] https://aktie.traderfox.com/visualizations/DE0005313506/EI/energiekontor-ag
[10] https://pwc-tools.de/kapitalkosten/
[11] https://aktie.traderfox.com/visualizations/DE000A11QW68/ETR/7c-solarparken-ag
[12] https://aktie.traderfox.com/visualizations/US83417M1045/DI/solaredge-technologies-inc
[13] http://www.solarparken.com/Finanzberichte/20220331%20Bericht%20Deutsch%20.pdf
[14] https://eulerpool.com/aktie/DE000A11QW68/A11QW6/HRPK.DE/7C-Solarparken-Aktie
[15] https://eulerpool.com/aktie/US83417M1045/A14QVM/SEDG/Solaredge-Technologies-Aktie
Graphs Source: https://www.hurriyetdailynews.com/legislation-to-promote-use-of-renewable-energy-172057
Company homepage:
https://www.energiekontor.de/index.html
Share presentation on request:
@Jh -->Solaredge
@Wellenreiter -->7c Solarparken
@Koenigmidas -->Energiekontor
