Stock Analysis & Valuation Scatec ASA (0R3I.L)

• Previous Close: £115.85
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	2.60	-98
Intrinsic value (DCF)	31.24	-73
Graham-Dodd Method	5.10	-96
Graham Formula	5.00	-96

Strategic Investment Analysis

Company Overview

Scatec ASA is a leading global renewable power producer headquartered in Oslo, Norway, specializing in solar, wind, and hydro power plants, as well as energy storage solutions. Operating across three key segments—Power Production, Services, and Development & Construction—Scatec develops, builds, owns, and operates renewable energy projects worldwide. With 15 GW of capacity in operation or under construction, the company plays a pivotal role in the transition to sustainable energy. Scatec also provides comprehensive services, including engineering, procurement, construction, operation, maintenance, and asset management for power plants. Formerly known as Scatec Solar ASA, the company rebranded in 2020 to reflect its expanded focus beyond solar energy. As a key player in the renewable utilities sector, Scatec is well-positioned to capitalize on the growing global demand for clean energy solutions.

Investment Summary

Scatec ASA presents an attractive investment opportunity in the rapidly expanding renewable energy sector, supported by its diversified portfolio of solar, wind, and hydro projects. The company's strong revenue (NOK 3.4 billion) and net income (NOK 628 million) reflect its operational efficiency and growth potential. However, investors should note the high beta (1.658), indicating significant volatility relative to the market, and substantial total debt (NOK 28.2 billion), which could pose risks in a rising interest rate environment. The lack of dividends may deter income-focused investors, but Scatec's robust operating cash flow (NOK 3.1 billion) and large-scale projects underscore its long-term growth prospects in the renewable utilities space.

Competitive Analysis

Scatec ASA competes in the global renewable energy market by leveraging its integrated business model, which spans development, construction, ownership, and operation of renewable power plants. The company's competitive advantage lies in its diversified technology portfolio (solar, wind, hydro) and geographic presence across emerging and developed markets. Scatec's ability to offer end-to-end solutions—from project development to long-term operations—differentiates it from pure-play developers or operators. The company's 15 GW pipeline demonstrates strong execution capabilities, though its relatively high debt load compared to some peers could limit financial flexibility. Scatec's focus on emerging markets provides growth opportunities but also exposes it to higher political and regulatory risks. The company's scale and operational expertise position it well to benefit from the global energy transition, though competition from larger utilities and specialized renewable players remains intense.

Major Competitors

• Neoen SA (NEOEN.PA): Neoen is a French independent power producer specializing in renewable energy with a strong focus on solar, wind, and storage. While smaller than Scatec in terms of operational capacity, Neoen has demonstrated strong growth in developed markets and boasts a high-quality asset portfolio. Unlike Scatec, Neoen has less exposure to emerging markets, reducing its risk profile but potentially limiting growth opportunities.
• Ormat Technologies Inc. (ORA): Ormat specializes in geothermal, recovered energy, and solar energy solutions. While Scatec has broader technology diversification, Ormat's focus on geothermal gives it a niche advantage in baseload renewable power. Ormat's strong presence in the U.S. market contrasts with Scatec's more international footprint. Both companies share similar business models combining development, ownership and operation of power plants.
• Enel SpA (ENEL.MI): Enel is a global energy giant with massive scale advantages over Scatec, particularly in European markets. While Enel has significant renewable operations, its diversified utility model (including conventional generation and distribution) makes it less pure-play than Scatec. Enel's stronger balance sheet allows for larger investments, but Scatec may be more nimble in emerging market opportunities.
• First Solar Inc. (FSLR): First Solar is primarily a solar panel manufacturer and project developer, contrasting with Scatec's focus on project ownership and operation. While First Solar has superior technology in thin-film solar panels, Scatec's diversified renewable portfolio and operational assets provide more stable cash flows. Both companies are exposed to solar market dynamics but have different business models.
• Iberdrola SA (IBE.MC): Iberdrola is one of the world's largest renewable energy companies with extensive operations in wind power. Its massive scale and vertical integration give it advantages in financing and operations, though Scatec's focused approach may allow for more specialized emerging market expertise. Iberdrola's broader utility operations provide diversification but less pure-play renewable exposure than Scatec.