Buy SGRE SM – Adding to our Renewable picks ahead of Results

*Both our DCF and our peer valuation show a +25-30% upside from here with a pt of EUR 27-28 which makes it a great name to add to our sector exposure – we would initiate half of our position ahead of results tomorrow

*SGRE has been punished over the last few months and is now trading close to the low of EUR 20 since we saw the renewable rally from mid last year

*The sell-off over the last months is partly caused by delivery constraints and partly due to the rising commodity costs

*Today the stock is weak again due to the read across from Vestas having cut its outlook

*We see all the negativity already being priced in and we the current level as a great entry opportunity

*Analysts have adjusted their expectations into results, expecting a relatively flat revenues for the year – with only 3 buys, 14 holds and 9 sells on ANR <GO>  it gives an indication that expectations into results are low

*The company is in the right sector with a very bright future – the structural offshore growth prospects remains strong – Onshore has been challenging for the company has been factored in with low expectations for 2022 as banks have been trimming their margin projections, all too bearish in our opinion

*We also potential catalysts such as COP26 conclusions and potential US tax credit extension for US wind energy production

*The analysts’ main focus for SGRE has not been that they expect weaker earnings but just that they lack near term catalyst – us on the other hand see the more potential for re-rating here, especially given that expectations are so low and we like the sector in general and see SGRE as a cheap way to play it

*We expect the guidance for 2022 to be a mess but we already know that.

*Initiating half a position into numbers and if want to hedge the risk we think it makes sense to short VWS vs SGRE

BUY PT 28