Neoen Earnings: Turnover Declined in Q3 on High Comps, 2023 Guidance Confirmed, Shares Fairly Valued

We confirm our EUR 26.5 fair value estimate after no-moat Neoen NEOEN released its nine-month turnover and confirmed its 2023 EBITDA guidance. Shares appear fairly valued.

Nine-months turnover grew by 12% and by 16% at constant exchange rate. Electricity output rose by 32% year on year thanks to new capacity, but this was offset by a 33% decline in storage revenue that benefited from high arbitrage opportunities in Australia last year thanks to a very high volatility. In the third quarter, turnover decreased by 8% due to a high comparison basis as the year-ago quarter was boosted by high storage revenue and very high spot electricity prices. The latter inflated young projects whose purchase power agreements had not yet started.

The group installed 0.7 gigawatts of new capacity since the beginning of the year but nothing during the third quarter. Capacity in operation amounted to 4.8 GW at the end of September. We forecast 5 GW at the end of the year, which should be reached given the plants under construction due to be commissioned in the fourth quarter. Since the beginning of the year, Neoen was awarded 0.9 GW of new projects of which 0.35 GW was awarded in the third quarter.

Neoen confirms its 2023 adjusted EBITDA guidance of EUR 460 million-EUR 490 million, specifying that it should reach the midpoint of it, bang in line with our estimate. The group also reiterates its guidance of a 2025 adjusted EBITDA above EUR 0.7 billion, in line with our EUR 0.75 billion estimate.