Free Issue No. 19 of 17.09.2020
On 9 April we raised our price target for the shares of Bern-based energy group BKW ENERGIE AG to CHF 95 (price at the time: CHF 76.60), and on 18 June the shares confirmed their upward trend with a market price of CHF 81.10. So much for the "history", and today? Following the half-year figures, our price target was reached or exceeded in a highly gratifying manner; even the "hundred mark" was cracked! We are not really surprised by this, as BKW is, as expected, very reliable and robust in all its business areas. There is also a high level of competence and agility with regard to future developments. To be fair, however, the euphoria must be tempered somewhat, as the sales growth of around +12% (compared with the previous year) is largely attributable to acquisition activities. At first glance, the decline of -44% in net income comes as a negative surprise. However, the performance of the decommissioning and waste disposal fund for the dismantling of the nuclear power plant had a full impact here; without this "external" effect, however, net profit would have increased by almost +20%. Overall, the energy supplier delivered a brilliant set of figures. However, it is the future that is of greater interest: Management is very confident in this regard, and the range for the operating result has even been raised. Among other things, digital technology (where isn't it?) and electric mobility, a very important argument in the current zeitgeist in our opinion, are of great importance. If this trend continues, and we can assume that it will, electricity consumption and prices are likely to rise further. Developments in the gas business will also remain exciting (Nord-Stream 2 is a sign of things to come).
In line with our recommendation from April 2017, a performance of +104.1% is calculated based on a share price of CHF 101 and including dividends. Truly a successful "buy and hold strategy", but what should we do next, "lock in" profits or "let it run"? We opt for the latter and raise the price target to CHF 120!
