Orsted: Ditches Two U.S. Offshore Wind Projects, Books Hefty Impairments; Fair Value Cut to DKK 540

We cut our fair value estimate for no-moat Orsted by 10% to DKK 540 after it booked DKK 28 billion of impairments on its U.S. projects, the bulk of which was for the cancellation of Ocean Wind 1 and 2 in New Jersey. Orsted highlights that its capital structure is significantly challenged. This could imply a future rights issue that explains the bulk of the Nov. 1 share price fall in our view. We view shares as materially undervalued and the likelihood of a rights issue below 50%, but pending more clarity on measures to shore up its balance sheet, shares will not rebound.