MPCES and HAV – Norway Green stocks beating expectations

Last year brought too many IPOs. As a result many good companies underperformed and this created an attractive opportunity.

I like and I am long the below two IPOs from last year that are still trading below their IPO prices. Both reported today. I copy the summary of the Fearnley research on those. Both had their webacsts today. I recommend to listen.


HAV (Buy, TP NOK25/sh)

2q21 results in – yet another beat

 HAV group released its 2q21 results today, posting impressive revenues of NOK304m (vs. FSest NOK162m), driven in large by outperformance in all three major segments (NES, Greentech and most significantly Design), whilst EBITDA came in at NOK41m, EBIT NOK37m and net income NOK131m (vs. FSest NOK9m). At the end of the quarter, the company held an external order backlog of NOK468m, with NES and Greentech increasing their order books through the quarter however an overall slight decrease due to trading deliveries from HAV Design. Cash position remains healthy, coming in at NOK334m at the end of the quarter.

Once again, a strong report from HAV. All primary business lines are (out)performing (as evidenced by the numbers here), whilst we note continued progress in the hydrogen segment – with regards to this segment, the company notes official start-up in the fourth quarter of this year, with additional resources on board during this quarter to speed up the process.

As a reminder, HAV group is able to offer a suite of services to a maritime industry that will no doubt be evolving, driven in large by the increased scrutiny around sustainability – going forward, we continue to see HAV as best positioned to be the maritime cleantech play you must own. We strongly re-iterate our Buy recommendation on HAV, with a target price of NOK 25/sh. For a more in-depth breakdown of the company, please click here for our initiation of coverage report.


Attractive Entry Point
MPCES has provided an update for 2q21 with an EBITDA of USD -1.4m (EUR -0.4m in 1q21) related to a ramp-up of the organization, due diligence and advisory fees. Notably, the organization grew from 2 to 13 full-time employees in Amsterdam, Panama City and Bogotá. The cash position is USD 81.0m (vs. USD 82.7m in 1q21).   On the operational side, MPCES highlights that the Neol CHP in Puerto Rico (3.4 MWp) is currently under construction and is expected to begin operations in Oct-21. In addition, the Planeta Rica solar plant (27 MWp) started construction in Aug-21 with expected COD in 2022. We expect the plant to produce an annual c. USD 2.5-3m in revenue once operational – see our report here. Further, the Los Girasoles (Colombia) and Santa Rosa & Villa Sol (El Salvador) achieved ready-to-build(RTB) status during the quarter and is also preparing for construction start.  

MPCES reports that several projects are under construction or will commence construction shortly which will add more short-term triggers in the share going forward, we believe. The company expects to have 63 MW of operational assets by mid-22 though additional capacity might be added through acquiring operational assets. On the negative side, travel restrictions and delays caused by the C-19 pandemic has impacted some of the key markets (e.g. Bahamas) which has caused delays. In addition, the company highlights disruption of the supply chain which it expects to remain for the next 12 to 18 months. However, despite these challenges MPCES remains on track to achieve 63 MW of operational assets by mid-22.  

In our opinion, MPCES comes across as a highly appealing way of playing the Renewable space citing 1) an initial portfolio and priority backlog with funding secured for 115 MW 2) attractive projects with equity IRRs of 10-18% 3) a further backlog consisting of 687 MW of projects and 4) an attractive entry point (cash is c. 1.1x current market cap).  

In the report MPCES highlights that the 115 MW of project with secured funding will generate c. USD 25m in annual revenues once operational. Assuming a 75% EBITDA margins would leave an annualized EBITDA of c. USD 19m. Though pricing in the space has come down recently, we continue to see covered names trading around 9x 24-month fwd. EV/EBITDA multiples. In such a scenario, MPCES would be priced around USD 170m (c. 2.3x current m. Cap). In sum, we continue to believe that the current price offers an attractive entry point.   The company will hold a webcast at 09:00 CEST today. Link to registration here.  


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