ABO Energy - Profitable since 1996

Rudolf Stenar Saluoks - 10.10.2024

The German-based renewable developer ABO Energy has delivered profit every single year since its foundation in 1996—nearly three decades. Even though “You’ll never make money with that” was one of the most frequent phrases the founder, Jochen Ahn recalled, before starting the business. We had the opportunity to ask some key questions from its management and took a closer look into what makes this renewable energy developer unique.

While most renewable energy developers focus on specific geographical markets, ABO Energy has done the opposite and succeeded. Today, the company operates in 16 countries across four continents. What started with onshore wind has expanded to include solar (2017), batteries (2020), and hydrogen in 2023.

ABO Energy differentiates itself by focusing on project development rather than owning the assets it builds. “One of the greatest differentiation factors is that we are a pure-play developer and not an Independent Power Producer. Our focus is solely on project development, where we have gained substantial experience. It is also the riskiest part in the development of renewable energies where we have built an edge against our competitors,” explained André Hassinger, Investor Relations Manager at ABO Energy.

The company’s core activities include site acquisition, project development, financing, construction, sales, and operations and maintenance (O&M).

When asked about the key factors investors should consider when assessing ABO Energy, Hassinger emphasized, “Our pipeline growth and net profit development are metrics that stand out in our opinion.”

Targeting profit doubling by 2027

For 2024, the management expects earnings between €25 million and €31 million, a modest increase compared to €27.2 million in 2023. With a market cap of €440 million, the forward P/E ratio based on the guidance midpoint is around 16.

ABO Energy has ambitious mid-term targets, aiming to nearly double its profit in the next three years. “We try to drive our net profit to €50m in 2027 in a challenging market. We have inflation, high interest rates, regulatory challenges, and grid connections as bottlenecks.” Hassinger noted.

According to MarketScreener analyst consensus estimates, net profit is expected to grow to €31 million in 2025 and €38 million in 2026.

In addition to its long history of profitability, ABO Energy has maintained a steady dividend payout. With the current share price, the dividend yield stands at 1.3%.

Furthermore, ABO Energy’s average ROE since 2017 is 14.4%, with the last two years slightly exceeding 15%. According to analyst consensus, the company’s price-to-book (P/B) ratio is estimated at 2.05 by the end of 2024.

Project pipeline growth

ABO Energy’s current development pipeline stands at 24.8 gigawatts. Around 60% of this pipeline consists of wind projects, with 30% solar and 10% battery storage. Additionally, the company has a separate hydrogen project pipeline totaling 20 gigawatts, which is reported independently due to its risk profile.

Source: Company

Geographically, two-thirds of ABO’s pipeline is located in Europe, with the remainder spread across the Americas and Africa. Managing such a global operation comes with its challenges, as Hassinger explained: “This is indeed a big challenge to work across many time zones and different cultures. Our strategy to tackle that has always been to act local with a lot of communication.”

The company’s decentralized approach has proven to be an advantage in managing projects across diverse regions. “ABO Energy is a company with flat hierarchies and a lot of flexibility. That is why we usually react fast to changes in the market,“ Hassinger said.

Founders in control

One unique aspect of ABO Energy is its founder-led ownership structure. “As the founding families still own more than 50% of the shares we do not underlie the often short term time frames of the capital markets. This is also matching with our business model, as renewable development takes a lot of time,” Hassinger said.

Source: Company

ABO Energy’s share price has risen 18% year-to-date.