Redeye makes minor estimate changes following Arise’s Q3 report, due Thursday last week. The report was in line with our estimates, apart from a EUR3m revenue recognition boosting the result, related to the future earn-out payment from project Kölvallen. Arise’s project portfolio grew 200MW sequentially during the quarter, including the late-stage portfolio, despite divesting a 40MW battery project in Q3. This bodes well for reaching its near-term financial target of divesting &gt;400MW during 2024-2025, and we, therefore, pencil in another project divestment in 2025.

Ependion

Formpipe Software

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G5 Entertainment

Bioinvent International

Bredband2

Arise

* Limited pricing power due to auction-based divestment prices and vulnerability to commodity price fluctuations, particularly in power prices and inflation impacts on CAPEX.
* Exposure to regulatory risks in the energy sector, which can affect policies and market dynamics.
* Cyclical dependencies on macroeconomic factors, impacting both revenue and capital expenditure.
* Lack of geographical market dominance, operating in a fragmented European energy market with increasing competition.
* Industry-wide challenges in achieving high returns on invested capital due to heavy investments in renewable energy and high leverage requirements.

* Strong recurring revenue from wind farms and asset-light project development business model, enabling efficient scaling and growth opportunities.
* Benefits from secular tailwinds in electrification and sustainability, with wind farms having long lifespans of around 30 years.
* Demonstrates competitive advantages through network effects, brand strength, and land exclusivity, securing desired projects without developing on risk.
* Well-established in core markets with a diversified project portfolio, meeting strong demand for cost-efficient power production.
* Proactively promotes environmental sustainability through renewable energy production and responsible project development practices.

* Lack of consistent earnings growth, with no evidence of EPS growth above 10% over the last five years or acceleration compared to historical averages.
* Stock price has not compounded by at least 10% since IPO, potentially indicating underperformance or overvaluation at listing.
* Revenue growth has not consistently outpaced industry average over the last five years, suggesting possible market share challenges.
* No consistent dividend increases over the past 10 years, and dividends per share have declined more than 10% during this period.

* Strong profitability with gross profit margin above 40% and operating margin exceeding 20%, indicating pricing power and operational efficiency.
* Solid financial health with current assets 1.5 times greater than current liabilities, low debt ratios, and strong interest coverage.
* Excellent earnings quality, with efficient inventory management, effective accounts receivable collection, and high operating and free cash flow conversion rates.
* Attractive dividend yield between 1-2.5 times market median, well-covered by cash flows, with recent dividend growth exceeding 7% annually.

* Limited management and board tenure, with most members joining in recent years, potentially impacting long-term stability and institutional knowledge.
* Lack of gender diversity in leadership, with no female representation on the board and only one female member in the management team.
* Weak commitment to sustainability-related performance metrics in executive compensation plans, potentially misaligning incentives with long-term ESG goals.
* Insufficient management ownership stakes, with only 50% of management team being shareholders and not meeting significant stake requirements.
* Overly generous stock-based compensation plans for the CEO, with more stock options than direct shares, potentially misaligning interests with long-term shareholders.

* Strong CEO leadership with deep industry knowledge and a clear long-term vision, driving innovation and growth through strategic initiatives like geographic expansion and M&A.
* Lean, decentralized organization promoting accountability and efficiency, with a well-defined strategic plan that consistently delivers on promises.
* Transparent and candid investor communication, focusing on long-term business value and sustainability reporting, fostering trust and credibility.
* Significant insider ownership (30%) through a controlling owner with long-term commitment, aligning management interests with shareholders.
* Business-savvy board of directors with diverse expertise aligned with the company's strategy, capable of providing effective oversight and guidance.

SEKm	2022	2023	2024e	2025e	2026e
Revenues	1,169.0	507.0	459.1	733.1	994.9
Revenue Growth	243%	-56.6%	-9.5%	59.7%	35.7%
EBITDA	851.0	286.0	242.0	473.0	696.2
EBIT	790.0	222.0	163.5	395.7	616.0
EBIT Margin	67.6%	43.8%	35.6%	54.0%	61.9%
Net Income	772.0	205.0	166.9	284.2	471.9
EV/Sales	1.8	4.4	4.6	1.7	0.8
EV/EBITDA	2.5	7.7	8.7	3.9	2.0

A quarter very much in line with our expectations

The early- and late-stage portfolios keep growing – we increase our estimates

2025 should be a record-breaking year in terms of divested capacity

Key financials

Q3 deviation table