onsdag 5 september 2007

The Value of Young Cleantech Investment Companies?

While the blog Investeringar i vindmöllor och förnyelsebar energi" (in Swedish) recommends Borevind as an investment, considering it's rather low value, it would not be an investment free of risk. The price/equity ratio is 225%, which is lower to other Swedish cleantech companies. But should Borevind be compared to technology companies such as Morpic or generation asset owner Elous Vind? They have a rather different focus (Morpic develop technology solutions and Elous own wind power projects). No doubt about Borevind having chosen an interesting market niche. Metainvestments in the renewable energy field, if conducted wisely, could be more profitable than focusing on a few specific technologies or one kind of power projects. The Borevind portfolio is not very diverse however, focusing mainly on wind power. The tiny investment in Rindi Energi may be a step in the right direction, considering the stable conditions and increasing demand for this type of bioenergy solutions.

placera.nu (in Swedish) confirms that the Borevind investments need to be quite successful to meet the high expectations. Investors, often institutional ones, may create a hype in the cleantech area when pumping in money into the market without proper previous research, because a general political and public interest in renewable energy. The valuation of companies like Borevind may be a sign of this hype.

Further on, the price-to-equity ratio should be used with care when analyzing young cleantech companies. There is little historical data available and thus difficult to make a comparative analysis. Thus, other factors should be considered to estimate the value and assess the investment opportunity. Price-to-earnings is of one them.

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