Nel, Tomra and Scatec Solar are leading the green wave on the Oslo Stock Exchange, while stock values are crumbling in the oil suppliers. During the corona crisis, the value of green stocks has surpassed the crisis-hit supplier industry.
OPTURE: Scatec Solar has risen 25 percent on the Oslo Stock Exchange this year and 173 percent over the past two years. Here the company’s solar power project Dreunberg in South Africa.
– Scatec Solar
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The market capitalization of a selection of six green companies has now passed NOK 110 billion. In March, for the first time, they were worth more than the oil suppliers on the Oslo Stock Exchange.
The companies that have been part of a green wave in the financial markets suffered a major blow on the Oslo Stock Exchange when the coronauro raged worst, but has since recovered more than it lost.
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- Hydrogen company Nel is now up over 120 per cent since New Year, while the stock market values of sorting company Tomra and solar energy company Scatec Solar have climbed over 20 per cent.
- Ocean wind-dominated Bonheur is also good for the year. Quantafuel, which recycles plastic, is up over 40 percent. Ship equipment supplier Vow, on the other hand, is down over 20 per cent since the turn of the year.
For oil service, things have gone from bad to worse. The market value of 27 companies such as oil services, including drilling and seismic, has halved since New Year, from around 120 to 60 billion.
– Struggling to understand valuation
Investment economist Mads Johannesen in Nordnet believes scarcity of investment opportunities that meet sustainability criteria has helped push up the pricing of several of the shares with a green label.
Also among the online broker’s clients, mostly small savers, interest has been high for shares such as Nel, Tomra, Scatec Solar and Vow.
– We have seen a large turnover in these green shares over the past year. As the shares go, they automatically gain more interest among customers. People see that the stock is rising and pulling.
Johannesen points out that the upswing has given a high price for green shares.
– I struggle to understand the valuation in some of these companies. There are fierce expectations baked into the courses. Several of the companies do not make money, which makes valuing challenging. At the same time, some of the companies can become extremely large if they succeed.
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—MANAGER: Investment Director Robert Næs manages the Nordea Investment Management fund. He closely monitors the world’s stock exchanges.
–Eivind Senneset
Nordea Investment Director Robert Næs is skeptical of what he thinks is the high price of the Tomra share.
– The problem is not the development – it is a well-run, good company, but it is more of an industrial company that has had a decent development. There is nothing new and resilient about it.
Næs points out that the market value of Tomra is 76 times higher than expected earnings in 2020. This means that investors who buy the share pay NOK 76 for every krone Tomra earns.
“It’s difficult to understand the pricing we are seeing now,” he says.
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– Creepy cocktail for shareholders
The supply industry is severely affected by the fall in oil prices, just a few years after the previous crisis. The oil companies are cutting their budgets, which shaves demand on the supplier side.
Research firm Rystad Energy expects the world’s oil companies to reduce their purchases by a quarter this year, from $ 639 to $ 481 billion.
Rystad believes that purchases will then increase by 2021, but the 2023 estimate of $ 620 billion will still be lower than spending before the recent crisis.
– It will not be easier in the future with low oil prices. Even though the price has gone up, it is still at low levels. It is challenging for the sector and you should basically be careful in a sector with headwinds, says Ness.
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For Nordnet customers, the interest in oil service shares is small, according to Johannesen.
– We have seen some interest in the oil producers lately as the oil price has risen, but the interest in oil service has been low for quite some time, says Johannesen.
– Most oil service companies never quite recovered after the crisis after 2014 and 2015, and many have to this day struggled with a high debt ratio. It has created a narrative about the sector being broken, he says.
Johannesen points to the reduced willingness to invest in the oil companies as a result of low oil prices and reduced demand for suppliers’ services.
– Combined with a capital-intensive business, you have a scary cocktail for shareholders.
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