Earlier this month Good Energy Group (LON:GOOD), the 100% renewable electricity supplier and leading innovator in clean energy services, announced that it was paying up to £6m for the acquisition of Amelio Enterprises.
Trading as Amelio Solar, it is a Lincolnshire-based solar installation company with a strong presence in the commercial solar sector and extensive experience in education and public sector projects.
This deal looks like a strategic fit into Good Energy, which has a vision of powering a cleaner, greener future by making it simple to generate, use and share clean energy, as it looks to expand its capability in decentralised energy services by significantly widening its geographical presence in the solar installation market.
In its year to end-December 2023, Amelio Solar reported revenue of £7.1m and a pre-tax profit of £1.4m.
On making the Amelio acquisition CEO Nigel Pocklington stated that:
"Amelio Solar is a perfect fit for Good Energy as we continue to grow our clean energy service offerings, especially in the commercial and public sectors where demand for solar installations remains strong and less susceptible to the cyclical fluctuations seen in the domestic market.
Amelio Solar's proven ability to deliver large, complex solar projects will enable us to better support businesses and public sector bodies in cutting their carbon emissions, while positioning Good Energy as a leader in commercial solar solutions."
Management Comment
In mid-September, when announcing the group’s unaudited results for the six months to end-June, Pocklington stated that:
"As the energy supply market has normalised, we have shown strong profitability in the first half of the year, whilst our expansion into energy services is showing promise as we consolidate our offer to customers.
Having completed three acquisitions in the clean energy installation services space we are now offering solar, storage, heat pumps and EV charging across the South - a trusted, truly green brand offering whole greener home and business solutions.
Good Energy is established as the microgeneration specialist, with a significant market share of rooftop solar customers, leading export tariff rates and premium installation services.
In a favourable policy environment promising an imminent 'rooftop revolution' as the new government accelerates the clean energy transition, Good Energy is well placed for growth."
Analyst’s Views
At Canaccord Genuity Capital Markets, analyst Alex Brooks likes the Amelio acquisition and rates the group’s shares as a Buy, with a 500p ‘sum of the parts’ Price Objective.
His current year estimates to end-December are for revenues of £203.5m (£254.7m) but with pre-tax profits of £6.7m (£5.7m), lifting earnings to 26.1p (17.0p) and upping its dividend to 3.6p (3.3p) per share.
For 2025 Brooks goes for £213.3m sales, £10.8m profits, and 45.8p earnings, with just a 3.9p dividend per share.
At Panmure Liberum, analyst Joe Brent has estimates for current year sales of £197m, £6.3m profits, 25.8p earnings and paying a 3.4p dividend.
For 2025, he looks for £197m in sales, £10.1m in profits, 41.1p earnings, and a dividend of 3.8p per share.
He rates the Amelio deal as attractive and consistent with Good Energy’s strategy for its Energy-as-a-Service (EaaS) policy.
Panmure’s Price objective is 550p a share.
In My View
Based upon the broker’s estimates, this group’s shares, at just 264p, look to be a cracking one-year investment, which could well see them put on 50% in price and, even then, still look cheap.
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