Aeris (AERI3) rises sharply after extending the contract with Vestas, but the stock is still below BRL 1

Aeris (AERI3) shares are on the rise after the company announced on Monday night (8) the extension of its wind blade supply contract with Vestas until the end of 2028, which could generate additional revenues of up to R$ 7.6 billion over the course of the year. a contract. AERI3 assets increased by 5.88% to R$0.90. However, it is worth highlighting the low nominal value of the shares, which trade for less than 1 Brazilian Real, resulting in changes in cents that turn into large percentage differences. At the highest level of the day, the stock reached 1.02 Brazilian reais, but it quickly returned to trading at the cent level.

The adjustment anticipates an increase in the potential demand for the supply of wind blades of multiple models, the company said, with a capacity equivalent to 8.8 GW – already taking into account the renegotiation of contracted quantities for this year. “If implemented, (the amendment) could lead to a net increase in revenues of up to R$7.6 billion until the end of the supply contract term,” the company stated.

The partnership between the two companies began in 2015 and has already provided more than 8.5 GW of energy in the form of wind blades, both for the domestic market and for export, according to Aeris.

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BTG Pactual notes that Vestas has become the main supplier of wind turbines in the country, especially after GE’s decision to stop production in Brazil and quality problems with Siemens Gamesa. “With this contractual change, Aeris ensures a significant backlog and extends the contract term, which should be well received by the market, given the current stock valuation levels,” the bank’s analysts point out.

From the analysis team’s point of view, this announcement is positive for Aeris, as it helps long-term growth, increases the duration of contracts and improves backlog visibility.

“Importantly, given Aeris’ undervalued valuation, we believe investors are not giving the company the benefit of the doubt regarding its ability to extend the duration and capabilities of its backlog. We attribute this decline in share value to investor frustration with reported margins (mainly due to… Production mix), increase in wind energy costs during Covid and increased risk aversion (as stocks lost liquidity).”

For the team, as energy prices start to normalize post-Covid, the wind energy industry is expected to return to normal contracted volumes in the future. “With improved leverage following the recent capital raise, we believe Aeris is well positioned to benefit from the resumption of Brazil’s wind energy industry,” says the bank, which has a neutral recommendation on the stock, with a price target of 2018. 4 Brazilian Real.

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