Sever heard of Trent 60? Very few Germans are likely to do this. But for a few days now, the so-called Siemens Energy Turbine has been the center of attention. According to the Russian energy company Gazprom, a design flaw in one of the turbines used in the Russian pumping station Portovaya is responsible for the fact that no gas can currently be pumped through the Nord Stream 1 pipeline to Germany. The company faces headwinds Siemens Energy currently also in the wind energy sector. On the other hand, the (re) ascent to the top German stock exchange league, the Dax, which comprises 40 stocks, is to be rated as pleasing.
The farce surrounding the recent disruption of Russian gas supplies by Nord Stream 1 shows that Germany and the rest of Europe need to become more independent of Russian energy supplies quickly(er). At the same time, this would be an opportunity for renewable energies - after all, in addition to alternative energy sources to Russian natural gas, the topic of the energy transition could also be promoted more quickly. However, especially the Dax climber's own wind energy sector caused headaches recently.
Restructuring of business in Russia burdened
At Siemens Gamesa In the third quarter, the Renewable Energy (SGRE) group had to contend with a significant drop in sales of almost 14 percent compared to the previous year. Management blamed bottlenecks in the supply chains and ongoing operational problems. In the case of the latter, this means above all the high start-up costs for the new onshore turbine 5.X. In addition, the service business weakened compared to the previous year, while higher material and logistics costs also had a negative impact on the earnings side.
Group-wide there were additional burdens such as the restructuring of the Russian business. The operating profit adjusted for special effects (EBITA) was therefore negative at 131 million euros, after a plus of 54 million euros in the same period of the previous year. For the year as a whole, however, management still expects a positive margin for the adjusted EBITA. This should be at the lower end of the forecast range of 2 to 4 percent. On the other hand, the net loss should exceed the previous year's level by approximately the charges reported as a special effect in connection with the restructuring of the Russian business. In the third quarter, the minus was 533 million euros.
Analysts warn of share dilution
Despite the recent problems at Siemens Gamesa, the group believes that now is the right time for an integration. The remaining share certificates are therefore to be taken over, followed by a delisting. However, this financing may not appeal to all market participants. A mandatory convertible bond with a volume of EUR 960 million was recently issued for this purpose.
Bernstein Research analyst Nicholas Green said the dilution for existing shareholders would be worse than feared. Therefore, in the case of the Siemens Energy share, the “underperform” rating and the price target of EUR 9.00 were confirmed. It was also pointed out that this was not the end of the road. With the mandatory convertible bond, only part of the planned capital increase to finance the Siemens Gamesa purchase has been implemented. According to analysts, further capital increases with additional dilutive effects are likely to follow.
The analysts at Credit Suisse, on the other hand, identified a positive aspect: According to analyst Andre Kukhnin, the shares are valued very favorably. In addition, further savings would offer potential for increasing profitability in the gas and electricity business. The target price is 26 euros.
Share price is still on a downward trend
When Siemens Energy started trading on the Frankfurt Stock Exchange in September 2020 with an opening price of around EUR 22, the initial price development initially looked promising. Because by January 2021, the prices had increased by more than 50 percent to (at the top) 34.48 euros. After this record high, the stock went into a descent - which continues to this day. The price went down to 13.36 euros by July 2022. After a counter-movement in August to EUR 17, another correction to EUR 13.60 at times followed. In terms of the chart, the Siemens Energy share is clearly in a downward trend, which is also reflected in the large negative distance to the 200-day moving average of EUR 18.50.
While the chart technique is pointing downwards, a look at the average analyst estimates is somewhat more hopeful. Of the 13 analysts who monitor Siemens Energy, six recommend the share as a buy, one advises "to increase", five analysts recommend "hold" and only one industry expert advises to "reduce".
Up to the average price target of the analysts (21.80 euros), a price gain potential of currently 60 percent is calculated. Goldman Sachs is one of the biggest optimists. The American investment bank confirmed its buy recommendation at the beginning of August. The price target was lowered to EUR 25.70, but is still almost 90 percent above the current price.