Morningstar

Orsted: Massive Rights Issue Comes With a Huge Discount

We cut our fair value estimate by 40%.

The Orsted logo is seen displayed on a smartphone screen.
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Securities in This Article
Orsted AS
(D2G)

Key Morningstar Metrics for Ørsted

Orsted ORSTED released the prospectus of its DKK 60 billion rights issue announced on Aug. 11. The firm will issue 900.8 million new shares at a price of DKK 66.6 per share, implying a 67% discount to the last closing share price and a preferential subscription right of DKK 91.

Why it matters: The price of new shares implies a 78% discount to the share price of Aug. 8, the day before the rights issue announcement, much higher than the 45% to Aug. 8 that we expected.

  • Key to that is the stop-work order issued by President Donald Trump’s administration against the Revolution Wind US project on Aug. 22.
  • The number of shares will increase by 115% driving an EPS dilution of 63%.

The bottom line: We cut our fair value estimate by 40% to DKK 170 and view the shares as overvalued at the time of writing. The subdued share price reaction suggests that the market may have anticipated a larger discount.

  • That said, uncertainties persist regarding Revolution Wind and the farm-down of Hornsea 3.

Coming up: The last trading day with rights is Sept. 16. The subscription period starts on Sept. 19 and will close on Oct. 2.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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