Grodno: Renewable energy provider for the green Poland
Grodno in 30s
Grodno S.A. is a family business that operates in Poland since 1990. Grodno offer consulting, design and execution of the project concerning electrical, lighting and RES for recipients which are both households, small and medium-sized enterprises, budgetary units of local governments or industrial plants. Being well know player on the electrotechnical market in recent years company put more focus on the renewable energy source. Till now the company proved this shift by generating income form RES which has already been growing 80 % y/y and now generates approximately 30 % of the total income, when compared to 6 % in 2019. With Europe focus more on green energy we find this company interesting.
Grodno-company active on many fields
Grodno S.A. is a family business that operates on the electrotechnical market in Poland since 1990. Grodno debuted on the polish stock market in 2015 (GPW). For now the Grodno Group operates in 92 electrical outlets and has more than 650 employees.
The company is active in six areas:
– distribution of electrical materials
– lightening audit and engineering
– solutions for industries
– photovoltaics
– air-conditioning (HVAC)
– security and low current.
Grodno is focusing more on renewable energy source
Grodno has been increasing its income consecutively through the years thanks to increase distribution of electrical materials and RES. However for us the most important are recent announcement concerning the RES.
Grodno offer consulting, design and execution of the project concerning RES for recipients which are both households, small and medium-sized enterprises, budgetary units of local governments or industrial plant. In October 2020 Grodno announced new strategy where company focus more on photovoltaics and renewable energies within 2024 Horizon [1]. In the new strategy company estimates that energy delivered through photovoltaic will quadruple from 2.5MW till 12.9MW. Additionally other renewable energy source as the heat pump are also growing. According to Grodno estimations we should see threefold increase of share of heat pumps in home from 3 % to 10 %.
The company has already proven track record in this area, for example photovoltaic power plant was built by Grodno SA, acting as the general contractor in this project, on the premises of the Malow company in Suwałki. The photovoltaic installation made by Grodno in Suwałki consists of 6 thousand of Winaico photovoltaic modules.
When we analyse the financial report we have already observed that the income from RES has already been growing 80% y/y and now generates approximately 30 % of the income. We find Grodno an interesting opportunity in the time where renewable energy will be replacing the old carbon source of energy.
Other 70% and the latest financial report
In their core business segment (70% is electrical equipment, lighting, cables, etc.), company see also very dynamic increase in sales related to delayed demand from companies, shopping malls, hotels, etc., where due to COVID there were no investments last year. This year the market has grown by around 40% they have grown up to 70%. This was precised during the last conference call. CEO stipulated that sales was amounted to 300.5 million PLN , which means an increase of 60.7%. y / y. The company said that the market grew 43 % in the first half of the year. This in turn means that Grodno is developing faster than its competitors and is gaining market share.
In the recent conference call they estimate that the increases in electricity for companies will make renewable energy installations much more attractive.
The company clearly communicates that it intends to develop in the omni-channel model. This, on the one hand, means using online channels, but also building relationships with customers through close presence, appropriate relationships, service or consulting. They estimate that the increases in electricity for companies will make renewable energy installations much more attractive.
Point on subventions which Grodno could benefit
–Moj prad 4.0 The subvention for the PV installation as well as heat pump, this program want to encourage Poles to self-consume what they produce. Program cofinance chargers for electric cars, but also heat and cold storage or intelligent energy management systems at home. Grodno operates in this area. From 04/01/2021 program is less favourable for prosuments, due to this fact Grodno expect temporarily decrease of income in the PV segment. This renewable energy act was very beneficial for household till march 2022 where household could sell their current surplus. However as mentioned by Grodno this legislation plan is not a problem as they will shift to bigger consumers. Additional installing PV in household is easy where many new companies emerged. Grodno predict that these companies will suffer from this legislation change. For Grodno is only the shift to bigger companies, since the energy prices are higher they see a lot of opportunities in this area.
-European green deal, the EU is aiming to be first continent with zero emission till 2050.
Main head winds
- In Europe we have many support programs in renewable energy
- Increasing price of energy
- Grodno has one of the most extensive networks sales of independent distributors of electrotechnical materials, the market in which Grodno operates raise 40% y/y Grodno increase 70% y/y
- A wide range of clients; recipients are both households, small and medium-sized enterprises, budgetary units of local governments or industrial plants
- Company intervenes at extensive levels in project at consulting, design and execution level
Main tail winds
· Increase in manufacturing costs at suppliers due to rising raw material prices and the lack of opportunities passing this growth on to the customer
· Elimination of support programs for investors in RES
· The risk related to COVID-19; occurrence of shortages of components for production or shortages in goods due to the disruption of supply chains
· The risk of acquisition in this case we dilute the shares, company is know for the likelihood of acquisition in the past years
Grodno main company information
Market Cap: 1.8 billions PLN (02-05-2022)
Share Price: 14.4 PLN(02-05-2022)
Business area: vehicles spare parts
