Key Morningstar Metrics for Orsted
- Fair Value Estimate: DKK 170
- Morningstar Rating: ★★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: High
Orsted ORSTED released the prospectus of its DKK 60 billion rights issue announced on Aug. 11. The firm will issue 900.8 million new shares at a price of DKK 66.6 per share, implying a 67% discount to the last closing share price and a preferential subscription right of DKK 91.
Why it matters: The price of new shares implies a 78% discount to the share price of Aug. 8, the day before the rights issue announcement, much higher than the 45% to Aug. 8 that we expected.
- Key to that is the stop-work order issued by President Donald Trump’s administration against the Revolution Wind US project on Aug. 22.
- The number of shares will increase by 115% driving an EPS dilution of 63%.
The bottom line: We cut our fair value estimate by 40% to DKK 170 and view the shares as overvalued at the time of writing. The subdued share price reaction suggests that the market may have anticipated a larger discount.
- That said, uncertainties persist regarding Revolution Wind and the farm-down of Hornsea 3.
Coming up: The last trading day with rights is Sept. 16. The subscription period starts on Sept. 19 and will close on Oct. 2.
