Key Morningstar Metrics for Orsted
- Fair Value Estimate: DKK 283
- Morningstar Rating: ★★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: Medium
Orsted’s board of directors will call for an extraordinary general meeting on September 5 to approve a DKK 60 billion or EUR 8.1 billion rights issue. The Danish state pledged to subscribe to 50.1% of it, in line with its current stake in the company.
Why it matters: The targeted rights issue equals 46% of the market capitalization of the group. It is driven by the group’s incremental funding needs of DKK 40 billion following the discontinuation of the US Sunrise Wind offshore wind farm sale down because of adverse developments since the Trump election.
- Assuming that the new shares will be issued with a 45% discount imply a preferential subscription rights value of DKK 64 or 21% of the share price before the announcement and the issuance of 353 million new shares, an 84% increase. This will drive a 37% reduction of our EPS estimates over 2026-29.
- The firm raised its 2025-27 investment guidance from DKK 130 to DKK 145 billion as it will have to fully fund the Sunrise Wind construction and because of US tariffs.
The bottom line: Our assumption of a 45% discount for new shares and the incorporation of the tariff impact entails a 29% reduction in our fair value estimate to DKK 283. This leaves a good upside to the share price of DKK 213, at time of writing.
- The latter implies that the new shares will be issued with a 60% discount, which seems too bearish. With shares 77% off their peak of early 2022, this rights issue is very ill-timed. Other big renewables developers like RWE or EDPR have tapped the market in much better conditions.
- Still, the new CEO appointed last February cannot be blamed for not acting earlier. Although painful, the rights issue removes uncertainty, materially improving the risk/reward profile.
Big picture: A rights issue has been speculated since U.S. offshore wind problems emerged in 2023. To avoid it, the group suspended its dividend and launched a large disposal plan, which was ultimately derailed by the Trump administration.
Orsted trimmed its 2026 EBITDA guidance from DKK 29-33 billion to above EUR 32 billion because of no construction agreement earnings from the sale down of Sunrise Wind and an earlier closing of the sale down of Greater Changhua 2. The new guidance is not far from our DKK 29 billion.
The company set its 2027 EBITDA guidance above DKK 32 billion, in line with the company-compiled consensus’ DKK 32.6 billion but above our DKK 29 billion excluding investment tax credits.
Finally, it released second-quarter earnings above the company-compiled consensus and confirmed its 2025 guidance.
