Arise reported Q3 2024 sales of SEK105m (SEK96m in Q3 2023), relative to our estimate of SEK67m. EBITDA amounted to SEK55m (SEK59m in Q3 2023) relative to our estimate of SEK21m. The reason behind the significant beat is a EUR3m revenue recognition related to the earn-out in Kölvallen, as it will see lower CAPEX for the project (hence improving the budget) due to the recently divested BESS project Pajkölen utilising the same substation. Adjusted for this effect, Arise’s Q3 EBITDA amounted to SEK21m vs our estimate of SEK21m. Overall, we consider the report to be in line with our expectations, and we find it positive that the final earn-out for Kölvallen is set to increase by EUR3m.

The highlight in Q3 was the divestment of the 40MW BESS project Pajkölen, although the financial impact will come from Q4 onwards (as the transaction closed on 4 Nov.). Arise’s project portfolio grew by 200MW sequentially, and fiven the rapid timelines of BESS projects (less than 1 year from start to divestment for Pajkölen), we now expect Arise to increase its pace of divestments (as the total portfolio consists of 650MW BESS). As a result, we pencil in a 25MW transaction in Q2 2025 – bringing the total expected divested capacity in 2025 to 395MW (which would be a record year for Arise).

We make minor estimate revisions following the Q3 report, primarily with regard to updated electricity prices, increased divested capacity in 2025, and updated FX (EUR/SEK). Our fair value range remains largely intact of SEK22(22)-SEK112(111) with a base case of SEK78(79) per share. We think that 2025 has the potential to be a record-breaking year for Arise in terms of divested capacity, and we also see improving market fundamentals (which we explain in this report). With solid cash flows from its production segment, project divestments, and a strong balance sheet, we hope to see some value accretive M&A and/or further share buybacks (given where the shares are trading relative to our base case).