That the wind subsidiary Siemens Gamesa will still cost its parent company a lot of money has been the case for a while. Too great are the problems with some wind turbine types (onshore), and integration also costs money until synergies properly take effect and cost reduction potentials can be leveraged. Siemens Energy itself still see financial risks with this in the area of 1.5 to 1.7 billion EUR. It could, at the end of the day, as well be two billion. Provisions amounting to 1.6 billion EUR have already been set aside for this purpose, which will come into use in the coming two years. The second quarter brought an overall loss of 2.9 billion EUR (minus of 4.5 billion EUR for the entire year is expected). That’s as far as the negative news.
The good news: Siemens Energy will well be able to cover these losses (liquidity at over 4 billion EUR), even if this will have a very negative impact on the overall result for the current fiscal year and it could take one to two years to return to positive figures. Look at the bigger picture: The order intake worth tens of billions is reason to celebrate. In addition, the risk has now been named, so the stock market will be able to include this in its investment decisions. Investors with time to allow should profit from the turnaround through again rising share prices.
The stock market adage “buy on bad news” is the perfect as a basis for the invest in Siemens Energy. Because Siemens Energy with an order volume of over 110 billion EUR is virtually flooded with orders relating to energy security, hydrogen and the like, but there are not many companies in the world that as a one-stop shopping partner are able to offer everything from a single source. Many of the business units are doing very well and are highly profitable.
If the share price weakens further, 13 or even 12 EUR would be the perfect entry price as well as usable for the price reduction of old stocks. In two years, I expect prices of over 30 EUR.
Each investor must always be aware of their own risk when investing in shares and should consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid cap, i.e. they are not standard stocks and their volatility is also much higher. This report is not meant to be viewed as purchase recommendations, and the author holds no liability for your actions. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on medium- and long-term valuation and not on short-term profit. The author may be in possession of the shares presented here.
Author: Sven Jösting