Denmark

Denmark

Confidence grows in financial market

Denmark's BG bank voted Vestas shares as the best buy among wind companies in August. Vestas' "high stable income and the reduced risk in relation to NEG Micon" is the reason for BG's favouritism of the firm in a recent evaluation of the world's two largest wind companies.

Denmark's BG bank has voted Vestas shares as the best buy among wind companies right now. Vestas' "high stable income and the reduced risk in relation to NEG Micon" is the reason for BG's favouritism of the firm in a recent evaluation of the world's two largest wind companies. According their half yearly reports, Vestas and NEG Micon expect a combined 1998 turnover in excess of DKK 5 billion.

Vestas' own production of towers and blades, in contrast to NEG Micon's reliance on component suppliers, plus the fact that Vestas has not invested in wind plants to the same extent at its rival, are the reasons behind BG's view that there is less risk attached to Vestas. It says Vestas shares should trade at a 5-10% premium compared with NEG Micon's shares, which in late August were trading at DKK 710 for a DKK 20 share.

On July 1, BG announced that within a year Vestas' share price -- for a DKK 10 share -- would rise from 270 to 330, a prediction that was almost immediately realised as the shares shot up in reaction to the bank's pronouncement. The sudden increase prompted other finance houses to adjust their evaluations of Vestas too. Spar Nord valued them at 330-340, Aros Securities, which launched Vestas on the stock exchange, increased this to 385-400 and Credit Lyonais predicted 330. In mid June the shares peaked at around 323, before diving to 265, possibly a result of adebate surrounding proposed new siting regulations for turbines in Denmark.

In their July reports, Vestas and NEG Micon both describe the year's results so far as "satisfactory." Vestas expects a 1998 profit of DKK 220 million on a turnover of DKK 2.7 billion, while NEG Micon also predicts a profit, but warns it will be negatively influenced by the acquisition of new companies. It estimates a profit of DKK 125 million for the year on a turnover of DKK 2.4 billion. The profit of both firms is set to be better than 1997.

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