Siemens Energy Omterra rebrand equates to structural FCF margin upside sooner than expected – FAQ follow-up

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Siemens Energy Omterra rebrand equates to structural FCF margin upside sooner than expected – FAQ follow-up

W. In FY26, best

case, we would estimate c64GW of supply, in a market trending to 120GW. In 2027,

supply may approach 70GW in a market likely ordering 110-120GW. In FY28, c80GW

of supply in a market of 110-120GW, etc. Come FY30, there is a scenario of 90GW+ of

supply and, while supply and demand would be much closer to being in balance, we

foresee backlogs extending rather the contracting in FY27 and a still-strong pricing

environment. We reiterate our OW/AFL rating on ENR and see the recent volatility, in

part due to this topic, as overdone.

• Grid outlook debate: We appreciate that the current rate of growth and margin in grid

equipment is very different to the past. However, given the structural underinvestment in

this critical infrastructure for decades, the reinvestment cycle and margin outlook will and

should be different than the past, as it is at present. This is evident by the B2B ratio of e.g.

Siemens Energy which has been >2x for >5 years; meanwhile, the pressure and

complexity of the grid (globally) continues to increase. We understand that there is also

an argument being levelled that there is limited upside to consensus, whereas we would

fully assume a beat and raise alongside Q3 for ENR, and a medium-term upgrade with

the extended Q4 call/CMD on 11 November, driven by GT. Importantly, the grid outlook

is not primarily a function of data center, but a much broader topic underpinned by

electrification and energy transition. Again, this leads us to reiterate our OW ratings on

Siemens Energy and Prysmian.

• The News: Siemens Energy has announced that it is now beginning preparations for the

transition to an independent brand.