The 27th UN Climate Change Conference (COP27) is history. In the end, the event in Sharm el-Sheikh, Egypt, produced a rather meager result. In essence, the roughly 200 participating countries were only able to agree on the establishment of a fund to support poorer countries that are particularly hard hit by global warming. Although the final declaration was quite criticized: The expansion of renewable energy sources, which is crucial in the fight against climate change, will continue - the COP27 left no doubt about that. Several countries had already stepped up their ambitions before the conference. The USA in particular caused a stir: On August 6, 2022, President Joe Biden signed the Inflation Reduction Act. Among other things, this legislative initiative provides financial support for manufacturers of photovoltaic modules. In this respect, it is not surprising that the Meyer Burger Technology share climbed to its highest level since mid-2018 two days after Biden's signature.
The company with a history of almost 70 years is currently reinventing itself: in 2020, Meyer Burger initiated the transformation from a supplier to the photovoltaic industry to a manufacturer of solar cells and modules. The company has been supplying the US market since Q2 2022. In mid-August, Meyer Burger was able to secure a lucrative contract in the States. D. E. Shaw Renewable Investments (DESRI) will purchase solar modules with a capacity of at least 3.75 GW from the manufacturer over a five-year period starting in 2024. The developer, owner and operator of renewable energy projects can increase the order up to 5 GW. "DESRI will make a substantial annual down payment to enable Meyer Burger to procure and finance materials and raw materials for solar module production," the company said. The modules will be produced at the U.S. site in Goodyear, Arizona.
With demand already outstripping supply, Meyer Burger is investing in manufacturing. "The company plans to expand its production capacities in the immediate future to reach a nominal capacity of around 3 GW by mid-2024," explain the Thun-based company. This would smoothly triple the manufacturing potential compared to the level planned for the current year (see chart). Expansion costs money. Meyer Burger has just raised a gross CHF 250 million from investors via a capital increase. A total of 927 million new shares were placed, mainly through the exercise of subscription rights. This step was also necessary because the business itself is not generating any funds. In fact, the operating cash flow in the first half of 2022 was clearly negative at just under CHF 46 million. Inventories built up in the wake of strained supply chains also played a role. Nevertheless, Meyer Burger was able to reduce the operating loss (Ebidta level) by almost CHF 6.5 million to CHF 24.4 million.
The direction is also right on the stock market, although the small cap was unable to hold the top outlined at the beginning. In the year to date, Meyer Burger has gained more than one fifth. This makes the share one of the top 15 performers in the Swiss Performance Index, which comprises more than 200 stocks. Barrier Reverse Convertibles (BRCs) offer an interesting alternative to direct investment in the volatile specialty stock. Leonteq has launched two variants of the yield enhancement structure on Meyer Burger Technology. As a single underlying, the photovoltaic specialist offers a coupon of 14% p.a. in the product currency CHF. This opportunity is partially protected by a barrier of 49% of the initial fixing. The protection threshold for a multi-BRC based on Meyer Burger and its US competitor First Solar is at the same level. Here, the coupon is 17% p.a.. Both variants generally expire after one year. However, due to the soft callable feature, early termination and redemption is possible. Please also note: As soon as there is a barrier breach, the partial protection expires. The redemption is then linked to the Meyer Burger share or - in case of the Multi-BRC - the weaker of the two underlyings.
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