Trade view /
29 January 2016 at 15:31 GMT
Rumours that German conglomerate Siemens is interested in acquiring Spanish wind turbine maker Gamesa to create the world’s largest wind turbine manufacturer, which would surpass Denmark's Vestas Wind Systems, drove Gamesa shares up 21%.
A takeover of Gamesa could spark consolidation, with General Electric, currently the third largest wind turbine manufacturer, looking at acquiring the current world market leader Vestas. This combined entity would have annual installations above 11,000 MW. Industry consolidation would create a more favourable pricing environment and higher margins
Vestas is also benefiting from energy policy trends, with major countries committed to increase renewable energy. In November, Vestas announced record order books for the third quarter and cashflow generation is strong
Vestas Wind Systems weekly share price since 2011
Source: Bloomberg, Saxo Bank
Management and risk description
The key risks to this trade are: weak macroeconomic developments, price war on wind turbines from Chinese producers, a stronger euro.
Buy VWS:xcse at market with trailing stop
Trailing stop at DKK 394.31, with steps of 5.04
— Edited by John Acher
Non-independent investment research disclaimer applies. Read more