Heixcon: Good risk
Divestments important to demonstrate value
The financing solutions announced during the summer enable Hexicon to continue business development according to plan and to initiate divestments after important project milestones have been passed. This is significant as a large part of the company’s value consists of the projects, and the value increases substantially when decisive permits are obtained. Analysguiden believes that the divestments will begin in the first half of 2024 and provide a positive cash flow from then on.
Continued tough external environment negatively affects valuations
We believe too much is discounted, although many projects suffer from higher interest costs and high inflation that have driven up costs throughout the value chain. In order to complete projects, there is a clear political will, notably in the EU, to invest in offshore wind power. For example, the EU has a target of 60 GW of offshore wind power by 2030. In connection with this, an initiative (European Wind Power Action Plan) has been launched to facilitate financing through the EU Innovation Fund. Clear frameworks and support systems will also be introduced to benefit companies in the industry.
Project portfolio exceeds market capitalization
We assess that the company’s project portfolio has a value well above the current market capitalization, and among the most valuable projects is the 1 100 MW MunmuBaram project in South Korea. The Swedish Freja Offshore amounts to 4 500 MW in the project phase and another >2 000 MW in the prospect phase. Italy has a gross capacity of 7 100 MW in the project phase and another >2 000 MW in the prospect phase. Out of these, we believe that the South Korean project may be subject to divestment.
The target rate is slightly adjusted down due to external factors such as increased interest rates and high inflation, which negatively affect the project market. We estimate that the project portfolio, including the company’s technology part, has an indicated value of SEK 1.9 per share. An obvious trigger would be for the company to divest all or part of a project at an attractive value. Another important signal will be the partner financing of TwinHub, the first project to use the proprietary technology.