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Magnora ASA’s Q1 2025 earnings call highlighted the company’s robust financial health and strategic growth in renewable energy, leading to a 4.63% increase in its stock price. According to InvestingPro data, the company maintains an impressive dividend yield of 21.12% and trades at an attractive P/E ratio of 5.36. Despite the absence of specific earnings and revenue figures, investors reacted positively to the company’s strong return on equity and expansion plans in renewable energy. InvestingPro analysis suggests the stock is currently trading above its Fair Value, with 12 additional exclusive insights available to subscribers.
Key Takeaways
- Magnora ASA’s stock rose by 4.63% following its Q1 2025 earnings call.
- The company reported a high return on equity of 49% for 2024.
- Significant growth in its renewable energy land bank, with plans to expand to 10 gigawatts by the end of 2025.
- Zero debt and an asset-light business model were emphasized.
Company Performance
Magnora ASA demonstrated a strong performance, underscored by a return on equity of 49% in 2024, outpacing the European independent power producers’ average of 2-10%. The company’s strategic focus on renewable energy development across solar PV, battery storage, and onshore wind positions it well in the growing market. The land bank expanded by 66% since Q1 2024, with a target of reaching 10 gigawatts by the end of 2025.
Financial Highlights
- EBITDA: NOK 41 million
- Net Profit: NOK 8.6 million
- Cash Balance: Approximately $230 million
- Credit Line: Additional NOK $380 million
- Dividend: Unchanged at 0.187
- Return on Equity: 49% in 2024
Market Reaction
The market reacted positively to Magnora ASA’s strategic initiatives and financial stability, with the stock price rising by 4.63% to 22.6. According to InvestingPro analysts’ consensus, the stock shows significant upside potential, with target prices ranging from 3.32 to 4.33 USD. This movement places the stock closer to its 52-week high of 35.75, indicating investor confidence in the company’s growth prospects. The company’s Financial Health Score stands at 2.28, rated as ’FAIR’ by InvestingPro’s comprehensive analysis system.
Outlook & Guidance
Magnora ASA is targeting sales of 600-720 megawatts, with an average sales price between 500,000-1,500,000 NOK per megawatt. The company is exploring new markets and accelerating development efforts in existing ones, aiming to capitalize on the increasing demand for renewable energy solutions.
Executive Commentary
"We feel we’re well on track for 10 gigawatts by the end of twenty twenty five," a company representative stated, reflecting confidence in the company’s growth trajectory. Additionally, the company noted an increase in power purchase agreements in Europe, up by 14% in 2024, which supports its strategic focus on renewable energy. For detailed analysis of Magnora’s growth potential and comprehensive peer comparison, access the full Pro Research Report available exclusively on InvestingPro.
Risks and Challenges
- Geopolitical shifts could impact local renewable energy production.
- The absence of specific earnings and revenue figures may create uncertainty.
- The emerging battery storage market presents both opportunities and competitive challenges.
Q&A
The earnings call did not include a Q&A session, leaving some investor questions potentially unanswered.
Full transcript - Magnora ASA (MGN) Q1 2025:
Company Representative/CEO, Magnolia: Welcome to another exciting quarter with a lot of geopolitical risk, and I’ll speak a little about how we have solved that in Magnolia. It’s our Q1 report 2025. So highlights from the quarter. We’ve had continued very high growth in our project portfolio. The numbers for 2024 was 15% global growth in all renewables due to the fact that they’re really cheap and outcompete any other power production technology.
We have had 66% growth in our land bank since Q1 twenty twenty four, ’19 percent growth during the quarter. Our land bank reached 7.5 gigawatt and the highest growth was our onshore project portfolio in South Africa. We have a low cost, we’re loyal towards our greenfield operating and business model. Our costs were moderately down during the quarter. What’s been really interesting is that interest from potential customers and partners have picked up significantly during the quarter due to scarcity of good projects and improved sentiment in Europe driving growth and inbound requests.
We have commercial discussions across all our regions and all our technologies, solar PV, wind, onshore wind and and offshore wind. We have a strong cash position allowing us to sell when the price is right. Our German subsidiary really picking up pace and good commercial discussions. More than 50 projects prospects for high grade potential and we ended five sites above 5,000 megawatts since our start last year. We had a pre marketing campaign in q one showing strong demand for both small and large best projects in Germany.
This has significantly changed since 2024. Magnolia Offshore Wind, reviewing details in the grid agreement. And we’re also working on the farm down. As of Q1 twenty twenty five, there are no environmental red flags and we observe an improved supply chain also on the development expenses. Magnolia Italy has partnered with a coal developer and secured two fifty megawatt of mid stage best projects, and we also initiated commercial discussions regarding that platform.
As you know, the Italian transmission company, Turner, have launched, fifteen year capacity contracts coming up later this year and ’26 and ’27. So we’re in the process of expanding the portfolio, the team and partnerships, same as in Germany. Magnolia South Africa surpassed the fifth five gigawatt mark and initiated project sales for our fully permitted 500 megawatt onshore wind and solar project, which could also combine BESS. And we’re running a structured process due to the high interest. We have multiple other commercial discussions around the projects and new type of portfolios.
In The UK, we have advanced 140 megawatt of solar PV and BES, and we’re reviewing the grid agreements or we were expecting to receive the grid agreements very soon based on the communication we have with the grid company. So they also be possible to sell those during 2025. We’re also pleased to announce our quarterly dividend unchanged at 0.187. So the highlights from the quarter, really, really pleased with interest and we’ve not really seen a strong interest for anything we’ve worked on over the last six years as battery storage in Europe for the time being. So this has been very happy and pleased by our investment decisions last year, and we really think this will be fruitful over the years to come.
So market observations, I mentioned the high growth in renewable energy in 2024, up from 2023. We see a general improvement in sentiment across Europe, some due to fundamentals happening in 2024, but also due to geopolitical. So we see increased PPA agreements in Europe, up by 14% in 2024. So due to The US campaign, we’ve seen the German government allocate 500,000,000,000 to new investments in infrastructure and the green party there required at hundred billion of those would go to energy and the climate fund, which is very positive for our whole German business venture. We also see that data centers and AI expect to fuel growth far beyond what most analysts have estimated so far.
Italy starting auctions later this year, as I mentioned, and offshore wind in UK has really strong public support and also strong policy support from both the Tories and the Labour Party. We also might see some improved terms for CFDs, longer extensions. And, the government is backing the supply chain by the establishment of GB Energy, a state owned, investment company supporting the projects and the supply chain for offshore wind and tidal turbines and similar. We see shifting interest towards early phase projects, especially within battery storage, but also onshore wind, which is becoming much more scarce in many areas. South Africa, a few days ago, outlined very ambitious targets for grid expansion and renewable energy integration.
And I would also like to highlight that onshore wind projects in South Africa gained premiums of three to four times higher than best battery store storage and solar PV. And this is very supportive for our growth happening over the last year on onshore wind in South Africa. We’re still a pure play asset light, profitable, renewable developer. We have a land bank of 7.5 gigawatt, and our goal is to grow this to 10 gigawatt by the end of the year. Zero debt, low cash burn and near term cash flow.
This is on the main board of Oslo Stock Exchange. A little bit about our dividend policy. I mentioned our dividend, 12,000,000, down from NOK 12,500,000,000.0 since we own our own shares. We returned NOK 1,000,000,000 to shareholders since 2018. And in the continuation with a weak stock market, we might be more likely that we do more buybacks than increase the dividends if we have excess cash flow coming in.
But this will be on the board’s discretion based on market circumstances when we receive the cash. Some highlights. Pareto had a slide we saw recently where the our return on equity is forty nine percent twenty twenty four as opposed to the average return for European IPPs to be between 2% to 10%. So we think our business model is quite successful. We have around $230,000,000 in cash, and we renewed our credit facility with a leading tier Nordic bank at NIBOR plus 185 basis points, showing the support we get from the finance banking community on the cost of that credit line.
We have some cost reduction compared to Q1 driven by management discipline, but also we have the demerger of Herman, the first half last year. Landbank, it’s growing healthily and here you can see it quarter over quarter since 2023. We try to spread across various technologies and we have a high focus on battery storage, onshore wind and solar PV. Our business model: start up new companies in countries such as Germany, Italy, initial business plan of NOK 2,000,000 to NOK 20,000,000. Our return requirement is minimum five times return on our investment.
We’re strong across the value chain, but where we really have a high focus is greenfields, start stuff from scratch, identify sites, identify all the risks associated with the environment, with neighbors, with the municipality, with the county, and with the national government and the grid company. Then we package these projects and sell them to engine companies or IPPs. We could also help in the construction phase with construction management or in the operational phase with technical management services. We have simple rules we apply to. We keep a war chest for instance, so we have a strong negotiating position towards big customers.
Always when we enter a new market, we try to sell early. We would sell at maybe some discount to secure that the local team has a paying customer and that we understand the local risk. So, we’re not gonna own any of the assets in the operational phase. It’s really expensive and we don’t have that type of money. Our business model works.
We’ve shown that it works for years And we have other competitors in other markets that have done this successfully for many years. Little bit about the risk and where we hand over the projects and then you see typical clients or hybrid competitors down the middle. We have, really good clients who have, a lot of equity and they’re not that dependent on project finance, which is, very good at financial close leaving a few open items at the financial close. Here you see our technologies across geographies. So our focus really on solar PV and storage and then onshore wind in South Africa.
And in South Africa, onshore wind is really scarce and it pays really well. So we would do onshore wind in other markets too, but in many markets it’s too expensive or it’s really not possible, at least in the areas where we operate today. So a little about the portfolio update. We have, projects ready for sale in Norway. We are working on a farm down in Scotland.
We have 40 megawatts of solar PV and best projects ready for sale very soon in England. We have a portfolio of above 500 megawatts if you add also the best possibility in a very exciting wind project in South Africa, and we’re working on multiple other sales opportunities in South Africa as well. In Germany, we have a lot of interesting dialogue with potential partners and customers for our portfolio, but also for our projects. In Italy, there are very exciting auction coming up and we have a good local team and a good local co developer and looking for more new projects. We think basically in all these markets, it’s gonna be possible to sell this year.
In Kustwin, we have slow progress due to legislation in Sweden. We see steady progress with the grid in Sweden, and the Helios portfolio, and we expect, earn outs both from Evolar and Helios in the future, and these earn outs can be valid up to 2029. So this will be very exciting as well. So there is a lot of geopolitical uncertainty, but we think that in the markets we are, it, to some extent benefit our business because we will see more demand for locally produced power. So Europe will import less LNG, we believe, from The US and other markets, and there will be very little Russian natural gas coming into Europe.
So the only real option short to midterm is solar PV, onshore wind and battery. And we have a healthy position here and we see big interest as I mentioned in q one due to lack of good projects and projects with grid connection. I would like to just highlight, another risk is the risk of lack of energy. And recently, Eric Schmidt, the former CEO of Google, in a hearing before the House Energy Committee in the US Congress asserted that that artificial intelligence will consume 99% of world’s electricity in the future. This, seems maybe a little exaggerated, but I think the future demand from data centers and AI will be very, big and will be much higher than the supply of new energy coming into the market.
And as you know, times are very, very long. We have a huge land bank, and we’re gonna increase this land bank. So we think this land bank will have great value in the future, and we will just keep on building on this land bank. We have a strong German best market emerging, and due to the fact that they’re moving away from natural gas, Russian, and more renewable power into the system means more periods where you also have, on a total basis, less wind and and little sun. So this drives volatility in the market and really drives the growth for battery storage.
There’s also a streamlined legal framework and some benefits operating in German market today. There is a broad consensus now in Germany to spend much, much more money, 500,000,000,000 on infrastructure and 100,000,000,000 on energy and climate investments, as I mentioned previously. A little over to the highlights. EBITDA of NOK 41,000,000, mainly driven by the revenues from Penguins, Shell that money is flowing through and paid to Hermana as a result of the demerger last year. Operating costs have come a little bit down and also development and M and A expenses due to the fact that we’re even more focused on spending as little money as possible for the highest quality in our projects.
Loss from associate companies was negative 4,000,000,000 as opposed to a gain of SEK 9,300,000,000.0 in Q1 twenty four billion. I’d like to remind you of our tax loss carry forward 3,000,000,000, meaning we don’t pay tax on on our profits, most of profits at least. Paid in capital of 6,900,000,000.0, leaving us ample room to return capital instead of returning money as dividend, which is a huge tax benefit for many type of shareholders. So net profit at 30 by 8.6. Operating activities negative 15.4, investment activities 6.5 mainly as a result of an option sale for a project where we expect to receive a significant payment if our client is awarded that, project in an auction.
We have returned NOK 12,000,000 and we did some buyback as well in Q1. We ended the quarter with cash balance around NOK $230,000,000. Together with the credit line, we have approximately NOK $380,000,000. Our fixed cost base is around 40,000,000 per year. A little bit about the consolidation, so if you own a company more than 50%, we consolidate the whole company and if it’s less, we between twenty and fifty, we we only account for a percentage of that we own.
Management and board members own shares in the company, so we’re well vested and interested in that the company develops in the right direction. The outlook, sales accelerating in growing markets combined with good capital discipline. We work on farm down and sales in all markets and expect many, many interesting events during the year. We also expect and hope for earn outs and revenue sharing and milestone payments from divested companies and previous option sales and look forward to financial close on the also the Red Sands project, the largest battery storage project in Africa, which was a sale in 2023. We are looking at new countries, and we also see growth potential for colocation with data centers on some of our energy projects.
So we’ve been working a little bit on that over the quarter as well. We feel we’re well on track for 10 gigawatts by the end of twenty twenty five, and we’re accelerating development efforts in all markets where we already have establishments like in Germany and and Italy, South Africa, Norway, we believe we have a sustainable and recurring recurring project development bank for many, many years ahead. Quarterly dividend, more active on buybacks going forward with the weak stock market. So some guiding. An update, 10 gigawatt by the end of twenty twenty five.
Our sales target for the year, we believe will be with between six hundred and seven twenty five megawatts. We have a lot lot of large projects, so two large projects will make us beat the estimates. Our average sales price per region from 500,000 NOK to 1,500,000.0 NOK per megawatt. So in South Africa, solar PV and Bess is on the soft side. But as I mentioned, the onshore wind is beyond the midpoint of this range.
With that, I would like to end our presentation and thank you for your patience. We wish all our listeners a really good day and if you have any questions, just send us an email. Thank you very much, and have a good day.
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