Scatec – pushes renewable energy in emerging markets
At a Glance
The desk posits that Scatec's expansion in renewable energy within emerging markets represents a significant long-term opportunity for investors, particularly with support from Nordea, highlighted by their 15-year partnership. Per the full note from Nordea, Scatec currently holds 4.6 gigawatts of renewable capacity across multiple continents and is well-positioned to benefit from the global shift towards cleaner energy. With a robust EBITDA of NOK 2.3 billion, the company's growth trajectory suggests compelling investment prospects, particularly as emerging economies integrate more sustainable practices into their infrastructures. In light of this momentum, we emphasize the potential for currency volatility impacting sector financing, especially in regions where Scatec is active.
Key Takeaways
- 01Scatec is positioned as a major player in renewable energy in emerging markets, with 4.6 gigawatts of capacity.
- 02Nordea's support has been critical in Scatec's growth, facilitating a USD 1.1 billion acquisition.
- 03The emphasis on sustainable energy aligns with broader market trends favoring green investments.
- 04Volatility in emerging market currencies may influence the financing landscape for renewables.
Full Analysis
What the desk is arguing
The desk argues that Scatec's leadership in renewable power development indicates a strong growth market in emerging economies. With its evolving business model focused on traditional renewables and green hydrogen, Scatec is set to capitalize on increasing global demand for clean energy solutions.
Supporting this view, Scatec's impressive operational capacity of 4.6 gigawatts, alongside an EBITDA of NOK 2.3 billion, underscores its financial and operational strength. Their partnership with Nordea has been instrumental in facilitating significant growth, as seen in the USD 1.1 billion acquisition of SN Power in 2021, demonstrating Scatec's ambition in expanding its renewable energy footprint.
Where it sits in our coverage
Currently, our consensus target for the NOK exchange rate is 1.075, with estimates ranging between 1.04 to 1.12. Notable firms with respective targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
The desk's optimistic view aligns closely with jpmorgan, who also highlights potential for upward adjustments within the upper range of our spread. That said, we find ourselves closer to the top of the range, suggesting a bullish outlook amidst Scatec's growth narrative.
How other firms see it
Firms aligned with this perspective, such as jpmorgan, underscore Scatec's ability to harness investments from emerging market renewables, suggesting the viability of future projects. Conversely, bofa presents a more cautious stance on renewable energy growth trajectories in these markets.
The trends observed in the EUR/USD and emerging market equities might reflect the sentiment towards sustainable investments, particularly as they relate to central banking policies favoring green financing initiatives. Monitoring the euro against the dollar will be pivotal, especially as global governments aim to reach climate targets.
Market Implications
Investors should closely monitor the NOK exchange rate, particularly near the 1.075 target, as fluctuations could affect Scatec's financing and investment capabilities in emerging markets. The narrative of sustainability is likely to influence trading behaviors, and positioning in NOK/USD pairs could reveal sentiment shifts towards renewable investments.
From the original
Short reads Scatec – pushes renewable energy in emerging markets 11-04-2023 With Nordea by its side for the past 15 years, Scatec has been at the forefront of renewable power development in emerging markets. Today, it is a leading provider of solar, wind and hydropower, with 4.6
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