Europe is getting plenty of sunshine this summer. There is also no lack of wind, so that the natural energy sources for power generation are achieving consistently good results. 117.04 billion kWh has been supplied by solar energy alone since the beginning of the year in Europe, which is around 17% more than last year. In contrast, solar and wind farm operator Encavis seems to be stuck in the summer slump, at least as far as its stock is concerned. The stock, which is listed on Germany's MDAX, has been stuck for months.
However, the company, which is perhaps less well-known in this country, is not a no-name in the industry. On the contrary: Encavis is even part of the renowned FuW Eco Portfolio Index. Only companies that meet ecological and financial criteria make it into the barometer. These include not only a low debt-equity ratio and attractive profitability, but also an attractive valuation. The ETP+ (Valor 117179725) allows 1:1 participation in FuW's "green" selection.
But back to Encavis: In contrast to the stock market, the Hamburg-based company is doing very well operationally. In the past fiscal year, installed capacity from renewable energy sources increased to 1.4 gigawatts (GW). "This success is based on commissioning of wind and solar farms in Ireland, Germany and the Netherlands," Encavis announced. At the same time, electricity production climbed by about 17% to just over 2.1 million KWh, setting a new record.
In general, green energy sources are on the rise. According to estimates by the International Energy Agency (IEA), investments in clean energy will increase by 24% to a total of USD 1.7 trillion in 2023 compared to 2021. And for the first time ever, more capital will be invested in solar energy this year than in oil production.
Encavis is also riding this green wave full of beans. For example, the Group wants to noticeably expand its business with sun and wind in the coming years. For this reason, Encavis is not paying a dividend for the past year. In order to achieve the capacity and sales forecasts targeted up to 2027 under its own steam, the full amount of last year's profit is to be kept in-house. The targets sound ambitious: By 2027, power capacity is to increase to 5.6 GW, sales by 80% to EUR 800 million and Ebitda to EUR 520 million. Consequently, Encavis would report an operating margin of 65% in 2027.
However, this growth will not be achieved entirely by the company's own efforts. Therefore, the business is also to be expanded through targeted acquisitions. "Our most important growth driver is the planned capacity expansion of our wind and solar park portfolio. Here, with the acquisition of the two Italian solar park projects in Montalto di Castro and Montefiascone and the successful issuance of the EUR 210 million Green Schuldschein loan in the first quarter, we have taken two important steps towards achieving our goals for the current fiscal year," explains Encavis CEO Christoph Husmann.
The year also got off to a successful start, even if growth slowed somewhat. Due to falling electricity prices and less wind, Group sales increased by only 9% to EUR 98.8 million, but the company still managed to keep the operating result at the previous year's level of EUR 64.3 million. The full-year target of revenues of slightly more than EUR 460 million and an operating profit of over EUR 310 million was also confirmed by the Management Board.
Speaking of the Executive Board, there have been repeated insider purchases at Encavis this year. Most recently, Abacon Capital, which is close to board member Albert Düll, reported the purchase of treasury shares worth EUR 140,000. Shortly before, board member Christoph Husmann also bought at prices around EUR 14. Whether these purchases signal a positive news flow can of course only be speculated, but they certainly create confidence. This mystery will be solved by August 14 at the latest, when the Germans present their half-year results.
The majority of analysts currently recommend Encavis shares as a buy. However, due to the rather difficult chart situation, a yield-optimizing product seems to be the wiser choice. With the new Softcallable Barrier Reverse Convertible on the German mid-cap, a "sunny" yield of 11% p.a. can be achieved without the need for a tailwind on the stock. The product, which is denominated in Swiss francs, has a correspondingly high coupon. The profit opportunity is hedged by a risk buffer of 41%. The EUR-denominated counterpart also has an identical barrier distance. The coupon level for this BRC is as high as 13% p.a. If the MDAX member leaves the barrier intact during the maximum term of 18 months, the maximum yield will be achieved in both cases.
We look forward to answering all of your questions about our products and how they are traded. Please don't hesitate to get in touch! Phone: 058 800 11 11, email info@leonteq.com or contact us here.