Tuesday 23 July 2013

Analysis of Nordex

A German wind power company

Company: Nordex

Business: A German wind power company that at least not very clearly either on the homepage or in the annual report divided the company into: Wind turbines (single sale of units), Project services (planning and selling entire wind power parks) & Service... but I still decided to make this division. Their focus is more towards the overall operational sub-strategy then to make separated divisions.

Active: They have today more than 5300 wind turbines with an output of more than 8.5 Giga watts and are present in 34 countries of the world. They have offices and subsidiaries in 19 countries. So they are much smaller than Vestas.

P/E: -4.6

containing values of P/E, P/B as well as dividend

The P/E for Nordex, due to losses last year, is negative with -4.6. The P/B is slightly better than Vestas with 1.5 but still it is a no buy for Graham. The earnings to sales is -9% so bad but better than Vestas last year. The book to debt is also there slightly better than Vestas but not by much with its 0.35. The growth in the last five years has however been much, much worse than Vestas and is -2% yearly. This would maybe motivated a P/E around 8 to 10. They do not claim to make any R&D at least they do not separate that as a post in the financial statement but let us hope that they are still active there otherwise Vestas will run them over even more. They pay no dividends.

Conclusion: I would not buy Nordex today. They need to show some really good results before it would even be of interest to step into this field of companies including Vestas. The question one have to ask is will these companies survive? Or will the big energy companies: Vattenfall, Fortum, E.On. EDF, RWE, Iberdrola etc. eat up these small wind power companies when they need to show some more green energy being produced by them? Will the same happen with the solar industry? Are they just waiting for all of them to go insolvent and then they buy up the solar and wind parks on the cheap? I do not know... future will tell but until then I will keep my fingers off from the wind energy business.


Falk said...

Thank you Fredrik for your interesting analysis of the german wind energy business. Perhaps you should also have a look at PNE WIND AG (DE000A0JBPG2). At least the company is earning some money :)

Fredrik von Oberhausen said...

Good suggestion Falk! I will analyse it for tomorrow. I am still certain though that I will not step into that industry even if one of them are making some money but it will be good to have also them in the database!

Did you start buying K+S or are you holding on the investment?

Falk said...

Yes, I started buying last week. K+S is a clear buy from my point of view, and so I put 8 percent of my portfolio in it. If it is getting even cheaper I will increase the position to 10 percent.

I also will not step into the wind energy industry, there are a lot of uncertainties and regulations. Instead I put some money in RWE last month because you get old but also new energy production by that...

Fredrik von Oberhausen said...

Yeah K+S is good. RWE is also good. Today I would probably have gone for RWE instead of E.On because RWE seems to be better run by the management. Still it is not too late to invest also in RWE for me and it is on the analysis list since a long time back... So many companies to own... so many companies.