The new strategy, with project development and management as the main growth area, has been executed with great success so far. The communication regarding business and financials has improved and our view is that Arise is transparent and balanced in its communication. Management has relevant experience and credibility and some also have significant amounts of Arise-shares. The company culture appears to be dynamic and strong. A few large institutional owners give stability and through Johan Claesson and CA Fastigheter, Arise has a long-term committed and active owner.  

Arise has two business segments: Operation of own wind farms and project development & management. The business conditions for these two are different in many respects. In the own wind farms, there is overall limited possibilities to impact revenues or costs. On a positive note, revenues are repetitive and operations are not dependent on key individuals. However, product differentiation is virtually impossible as electricity is a commodity. Project development is different in these respects. So far Arise has a very good track record with most of its project deals coming out in line with budget. The outlook for both segments is still favorable, with structurally high electricity prices and good profit margins on projects, although electricity prices is a variable that is very difficult to predict.    

Arise has generated good cash flows but depreciations and amortizations have weighed on earnings. Hence our rating is burdened by historically reported losses. Since 2018 underlying profitability has clearly picked up and key metrics are gradually improving. The balance sheet is now robust as net debt has decreased significantly thanks to strong cash flow generation. Our Financials rating will certainly improve further if Arise delivers approximately in line with our forecasts.