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Power ahead with Vestas

The leading wind turbine supplier is benefiting from a favourable policy environment and a push into higher-margin services
Power ahead with Vestas

If you’ve ever passed a wind turbine during your travels, there’s a good chance it was made by Danish company Vestas (DK:VWS). With 118 gigawatts (GW) of installed capacity across 81 countries, this represents almost a fifth of the global total. Excluding China – where domestic companies dominate – Vestas is the world’s leading supplier of onshore wind turbines and its 50:50 joint venture with Mitsubishi (JP:7011) is the number two offshore wind player behind Siemens Gamesa (ES:SGRE).

IC TIP: Buy at 942.6kr
Tip style
Growth
Risk rating
Medium
Timescale
Long Term
Bull points

Global shift towards renewable energy

Market-leading positions

Record order backlog

Long-term service revenue

Bear points

Margin pressure

Premium valuation

That’s a handy position given wind power will be key to the renewable energy transition. China aside, investment bank Pareto Securities predicts around 40GW of onshore wind capacity will be added annually over the next five years. This comes as larger, more powerful and more efficient turbines have lowered the cost of producing one megawatt hour (MWh) of electricity. There are also regulatory tailwinds as governments target green fiscal stimuli to tackle both climate change and the Covid-19-induced economic slump. Following the ‘Green Deal’ unveiled in December, the European Union has approved a €750bn (£671bn) recovery fund and €1.1 trillion budget through to 2027, of which 30 per cent must be spent on “supporting climate objectives”. In the US, Democratic presidential candidate Joe Biden is advocating a $2 trillion clean energy plan, promising “tens of thousands of wind turbines”.

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