Topic: Cloudberry reported solid Q1 results with strong topline growth. The resource rent tax is not seen to become effective until 2024e.

Q1 revenues more than doubled to NOK 68m yoy, slightly ahead of our estimates (eNuW: NOK 63m). The growth is mostly explained by the contribution of the Odal and Han wind farms, which were not connected in Q1’22. Accordingly, power production rose to 90 GWh in Q1’23 vs 29 GWh in Q1’22. On top, Cloudberry realized a decent average price of NOK 1,180/MWh (eNuW: NOK 1,101/MWh) vs. NOK 1,020/MWh in Q1’22.

EBITDA grew by c. 67% yoy to NOK 20m as a result of the before mentioned reasons but below our estimates (eNuW: NOK 33m). The gap is mostly explained by a potential NOK 11m impact of the so-called “resource rent tax” for wind farms in Norway. Cloudberry conservatively included it in its Q1 figures but it is not reflected in our numbers, as it is currently being discussed but not official yet. The implementation of the initially planned tax would burden our fair value by c. NOK 2 per share.

Very good news regarding the resource rent tax was announced last week by the Norwegian government. It is planned to put forward a Parliamentary Bill for resource rent tax on onshore wind energy during the fall session in 2023. As a result, the tax would become effective from 2024 onwards instead of 2023, as initially planned. During the conference call, management made clear that the NOK 11m deducted in Q1’23 will flow directly into net income in Q2’23. The decision of the government to postpone its decision on the resource rent tax, should give the Norwegian renewable sector more time to bring strong arguments on the table, to mitigate the impact on existing wind farms in Norway. It shows also the willingness of the government to hear the industry out before implementing a tax, which has the potential to kill urgently needed investment in renewable energy.

With the closing of the Danish 106 MW Odin wind portfolio, expected by the end of Q2’23, Cloudberry will reach a production capacity of 254 MW. The technological and geographical diversified portfolio, will allow them to sign mid- to long-term PPA’s, providing better visibility on future cashflows. Cloudberry is executing its projects like a clockwork and the positive regulatory news should support the share price. The stock remains a BUY with an unchanged PT of NOK 20.00 based on a SOTP.