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Vestas - bekymring om rights issue i udlandet

33964 mrBlack 26/9 2010 13:29

Lidt klip fra udenlandsk analyse på vestas i september. Bemærk fokus på om de skal ud og hente penge igen - det holder vel en del long-only fonde væk fra aktien selvom de kan lide valuation. Kan vi få reduceret bekymringen omkring et rights issue i Q3 kan det give pæn medvind.

BofA/Merrill Lynch tp 250->230 underper
Near term, we believe the company could burn €100mn of cash in Q3 due to
inventory building ahead of Q4 and heavy capex to finish some expansion
projects. This is likely to intensify balance sheet concerns and will bring net debt
to around €1bn or close to 2x 2010 EBITDA. We believe the company has around
€400mn of credit lines to draw down, based on previous statements, although
management is not willing to update the market on its liquidity position.

Vestas is beginning to look inexpensive at 10x 2012 earnings (0.8x sales), but we
prefer to remain cautious in the near term, due to (1) utilities cutting capex
guidance is unlikely to help the shares and (2) seeing the cash flow of the Q3
results to better assess the risk of a rights issue.

Nomura tp 390->300 buy

Short term risk
Over the short term, we see few catalysts: An order recovery
had been reflected in the share price before the share price
correction from the Q2 earnings miss. It is now less likely that
order momentum alone will drive the share price strongly. There
is little in sight for a US market recovery over the short term. The
size of the pick-up of activity is the main risk for Q3, but based
on our stress test analysis for Q3 we think that margins have
troughed already. The same applies to Q4, which leaves some
risk to the current guidance. Meanwhile, rising working capital
could fuel concerns over equity issuance, even though
according to our estimate, the balance sheet will remain sound.

We reduce our share price target, but large upside remains
We have revised our 2010 forecast on the back of lower
shipments, revenues and margins, along with higher working
capital. Our 2010 EPS declines from € 2.14 to € 0.85. As a
result, our DCF share price target decreases to DKK 300 (from
DKK 390). This is a material downgrade as the 2010 market
weakness has hit cash flows more than expected, but our new
target still implies close to 45% upside.

Sanford/Bernstein tp 220-180 underperf

Vestas gets «« in our 5-Star Framework. Vestas is a leading pure-play wind turbine manufacturing company exposed to a growth market that we expect will grow 3-4x GDP this decade from the 2010 level. Despite this exposure to secular clean energy growth, we are negative on the short- and mid-term prospects for Vestas. In particular, we are concerned about the impact of under-utilization of its rapidly expanded production capacity on profits and FCF given (i) market share sustainability in key growth markets (U.S.
and China), (ii) weak growth in the established European wind turbine market, (iii) a new level of fixed cost, and (iv) potential pricing issues that will depress earnings. We estimate that it will only get back to its 2009 EPS peak of €2.93 after 2013. We are also negative on the name due to management's unusually poor level of disclosure regarding current operations, key financials items and future strategic plans. We believe a
continued lack of transparency will keep potential investors away from the stock.
In the long-term, we are more neutral on Vestas' prospects. Vestas is currently the leader among the major wind turbine suppliers, but we believe its lead is shrinking. It is arguably the control systems and services technology leader in the industry, is expanding capacity in the U.S. and China, and has introduced a new
3MW low wind speed turbine in 2010. It also has the best geographic diversification among its peers and its focus on increasing availability and reliability of turbines rather than turbine size is the right approach, in our view. However, Vestas' global share is being challenged by the growing Asian competitors (Sinovel, Goldwind, Dongfang) as well as conglomerates (Siemens, GE). It may become an acquisition target on further de-rating.

Barclay tp 220 hold
We stay at Hold and leave our estimates unchanged, pending 2011 guidance
There is margin upside to our forecasts if all the pieces fall into place (ie orders are
sustained, variable costs fall, V112 commands a rising share) in 2011 in the US, but we
leave our estimates unchanged ahead of 3Q10 results when Vestas will release its 2011
guidance. Despite the positive product news, we remain concerned about Vestas. ability to
meet the new 2010 guidance, the quality of earnings given under-depreciation, a potential
liquidity crunch in mid-2011, and the lack of transparency on credit facilities and fixed costs, as per our report of 24 August, Liquidity concerns for 2011. We maintain our Hold rating.

26/9 2010 21:08 nethinde 033980

Fint at du posterer dette. Analytikerne er lunkne på Vestas, og aktien er ikke undervurderet med de usikkerhedsmomenter, der er. Vestas' resultater eller markedssituationen skal overraske positivt før den vil stige.