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Analysis Hexicon: Milestone reached in Q2

Detta är en betald analys på uppdrag av Hexicon utförd av Analysguiden

Win in England’s first floating wind auction
On July 7, UK authorities confirmed that Hexicon had won the first floating wind technology auction regarding a guaranteed inflationadjusted price level over 15 years for its 32 MW Twinhub project. This milestone is extremely important, as it will be Hexicon's first commercial project with its own technology.

The value of the project portfolio increases
Since the reporting period, Hexicon has increased its ownership in the large MunmuBaram project to 20% (previously 9.8% indirectly). Hexicon's partner in South Korea, Coens, which owns 51% of Hexicon Korea, works with the entire oil and gas sector, and it has become a disadvantage to co-own a large project with one of the players in the industry. Shell owns 80% of MunmuBaram, which is well-known. Hexicon strongly believes in the project, and is positive about increasing its interest at this stage. MunmuBaram is nearing new milestones, and based on price references from bottom-fixed projects, the interest could be worth over SEK 1 billion before a final investment decision is made (preliminarily 2024). Income from divestment has not been taken into account in the forecast table as the timing is uncertain, but the project value is an important part of our valuation of Hexicon. Hexicon Korea has also divested its 40 percent stake in Yeonggwang (1200 MW gross in the early phase) on terms that the company believes are favourable. Overall, the company has increased the net capacity of the project portfolio, and also replenished with prospects. With incremental progress in the projects, higher electricity prices, and increased interest in floating offshore wind power, this contributes to an increased value.

Various possibilities for financing
Hexicon had net cash of MSEK 195 at the end of June. Favorable business opportunities have resulted in the company increasing the pace compared to the plan, in conjunction with the IPO, including a venture in the USA and larger project ownership. In the short term, this leads to increased negative cash flow, which, during the first half of the year, amounted to MSEK -86. The company will likely need additional capital in 2023, and this could come, for example, via the divestment of the large MunmuBaram project, partners in the first construction of full-scale platforms, development grants from the EU's Horizon programme or the Swedish Energy Agency, loans, or a new share issue. A combination of several of these sources is most likely. Considering the low share price, it is advantageous that there are several possibilities, and divestments from the project portfolio are a great opportunity.

Price target: SEK 4.00 (3.60).

Note: A Swedish version of this report was published on August 22th.

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