DNB Asset Management S.A.

DNB Renewable Energy – Monthly report

Fund and sector off to a good start
A strong start for the fund in January, outperforming the MSCI World, while slightly lagging the NEX index. Best performer for the month was China Longyuan as it looks to secure A-share listing (where rene trades wable asset at significant premium) through a reasonable share and asset swap deal. It also announced strong subsidy receivables of RMB5bn (vs expected 3.5) for 2020. Lastly, there were also rumours that the Chinese Government will further tackle the subsidy receivables in 2021. Cadeler was the second-best performer this month as brokers initiated coverage with positive reports highlighting the stock’s deep value, despite the strong growth outlook for offshore wind.
Largest additions month to date where Amphenol and Wartsila:

  • Amphenol – Consolidator of niche markets of connectors.  Unique entrepreneurial culture with strong position in the electrification wave which is at its early innings. It offers broad exposure to innovation throughout the electronics market being a technology leader and enabler across a diverse set of secular growth opportunities, including electrification of vehicles and increasing electronic content in industrial applications.
  • Wartsila is a global leader in sustainable solutions for the marine sector, while also offering storage and other balancing solutions for the energy sector. Wartsila delivers the most efficient engines for the marine sector which is highly tolerant for different fuels (including hydrogen). This will be key as the industry starts to order the next generation vessels. New builds are at unsustainable multi years low and stock trades at rock bottom EV/Sales multiples with estimates bottoming. Attractive value play, in our opinion.

Aggregated estimates continue to show positive trends in January. Earnings based valuation expanded, although to a lesser extent than the NEX Index. See page 11-13 for details.
Please find here 25-page PDF for details: