AMSYF - Vestas: Time To Invest?
2024-01-23 11:12:05 ET
Summary
- Vestas Wind Systems (and the rest of the wind industry) is widely ignored.
- Two major influential global meetings in late 2023 (G20 and COP28) both announced trebling of renewable energy by 2030. This is a very big deal.
- The G20 and COP28 announcements both covered in detail what has to happen to achieve the massive changes proposed.
- Expansion of renewables in 2023 produced amazing growth, which if continued would lead to 2.5x increases in renewables by 2030. This makes trebling renewables by 2030 less outrageous.
- This is a good time to consider investment in Vestas Wind Systems.
It has been a difficult time for industries that have substantial capital needs to grow. Concerning the energy transition as the world embarks on exit from fossil fuels, the emerging areas of SMR (Small Modular Reactors) nuclear power and offshore wind have struggled with rising interest costs and supply chain disruption. It has been a tough time since COVID and some have concluded that this will continue. I last wrote about Vestas Wind Systems A/S ( OTCPK:VWDRY ) (VWSYF) at the end of August 2023 and considered in some detail the issues confronting Vestas. They still apply to a significant extent, but I think the context is changing dramatically. Here I consider Vestas, the world’s biggest wind turbine maker, whose share price performance over the past 12 months has been mixed (down 5.4% year on year), although there are signs of recovery in recent months. A low of $6.23 was reached in October 2023 and today the share price is $9.30. My take is that the negative results during the year have been about short-term pricing and supply issues, while the signs of recovery come from remarkable plans for trebling of renewable energy by 2030. If that happens Vestas will be a big beneficiary....
Vestas: Time To Invest?