Vestas Q2 preview and model update - focus on guidance and cash returns, lifting PT to Dkr251

Research evidence excerpt

Vestas Q2 preview and model update - focus on guidance and cash returns, lifting PT to Dkr251

Ram S Mehta

both wind and solar are significantly cheaper than other sources of power gen, (91-22) 6157-3233

ram.mehta@jpmchase.com

boosting the appeal for renewables. While the political risks still persist, the J.P. Morgan India Private Limited

economics for wind energy haven't been this good in a number of years.

Specialist Sales contact details:

• Q2 preview: Vestas made good progress on ramping up offshore installations

in the quarter after a weak Q1 due to bad weather. We expect the company to Sam Edmunds - Specialist Sales -

European Industrials

complete installations in the first two projects by the H1 results. The company

(44-20) 7742-8733

recently showed in a presentation that takt times have come down significantly sam.edmunds@jpmorgan.com

in offshore, which should bode well for profitability. Power Solutions onshore

Key Changes (FYE Dec) could also see some benefits from the timely completion of the SunZia project,

Prev Cur Δ

Vestas’ largest project in the US. For Q2 we forecast revenues of €4,722mn, up Adj. EPS - 26E (€) 1.09 1.14 5.1%

26% y/y and 7% above consensus, and Adj EBIT of €232mn, 4.9% margin vs. Adj. EPS - 27E (€) 1.38 1.52 9.6%

1.5% year ago and compares to consensus of 4.3%. Table 1 in the note

summarises our Q2 estimates. Style Exposure

• Feedback from JPM European Industrial conference: We hosted Vestas

CFO Jacob Larsen at our Industrial conference and came away reassured on our

investment case. There are several positives in the story. First, onshore demand

is strong and the pipeline in the US, including conditional orders, is at all-time

high levels despite political uncertainty, while Europe is developing well.