Thursday, 24 October 2019

Vestas Wind - Portfolio Addition


Following on from my acquisition of Orsted earlier this year, I have decided to add another Danish-based renewable energy company to my green portfolio.

Vestas is one of the world's leading players in wind turbines - it designs, makes, installs and services both onshore and offshore turbines and holds the record of providing more turbines throughout 80 countries than any other company. The core of the business is providing sustainable, clean and affordable energy to people all around the world.

They are the global leader in onshore wind - over 100 GW installed and also onshore servicing. They are #2 in offshore wind (behind Orsted) with 5 GW installed and plans to double this by 2022.

The Drivers

Demand for renewable energy solutions is growing rapidly and according to a recent report from the International Energy Agency, could expand by a further 50% by 2024 due to the rapid electrification of transport, industry, heating and cooling. During the coming decade, around 1,500 GW of power from coal, oil and gas will be retired. Renewables are expected to increase capacity to fill the gap and grow from around 10% today to at least 30% of global energy by 2035.

As a global leader in wind power solutions, Vestas should be well placed to capture a fair share of this growing renewables demand.


Results

According to the recent half year results, high demand for their product has led to a record-high order intake and a 15% growth in service revenues. The order backlog stands at an all-time high of EUR 31bn. However profits and margins are down so a bit mixed.

3 Yr Share Price

As can be seen from the chart, the share price can be volatile and of course there are FX considerations as the shares are listed on the Copenhagen stock exchange.
The shares have been added to my Halifax ISA and the purchase price was 535 DKK (approx. £63.00).

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation. Holding individual shares always carries more risk than collective investments - always DYOR!

3 comments:

  1. Nice to see these posts continuing. Vestas has really come back from the doldrums when I was looking at it 5-6 years ago (sadly didn't pull the trigger). I haven't actually followed the turnaround, should take another look.

    With that said as we've discussed before (or I've opined before, perhaps :) ) if you really want to directly help the green economy get off the ground, IMHO you have to be investing money into the companies.

    Like this you are just buying shares off another investor. S/he's now an investor in fewer green companies, you're now an investor in more green companies. The world hasn't changed. :)

    Obviously it's up to you how you invest your money, but personally I think it would be intellectually coherent to do some seed/VC style investing.

    The trouble is of course very high risk. Still, opportunities do come up.

    E.g. Right now I've been looking at two who are crowdfunding:

    https://www.seedrs.com/nova-innovation

    https://www.crowdcube.com/companies/gravitricity-ltd/pitches/b0ejvq

    I think one has to assume one will lose all their money in things like this in most cases (the second looks a super long shot, the first at least has proven technology and partnerships) but then again if you find the next Tesla. :)

    Obviously not advice or whatever, just food for though. :)

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    Replies
    1. Thanks TI.

      Looks like you could have acquired the shares for under 50 DKK back in 2013/14 and by 2017 they had risen to over 600 DKK ...if only!

      As you say, the new start-ups are very risky - the failure rate is high so it's not for me but good luck with finding the elusive 'winner'.

      I am content with my low impact lifestyle. Removing my money (divesting) out of fossil fuel companies and into more climate-friendly alternatives merely alignes my investments with my values and lifestyle. I accept you are not convinced it makes a difference but we shall agree to differ on this...as with Brexit!

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    2. Fair enough -- it certainly seems to be working out for you anyway! :)

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