Previous analyses for Ormat Technologies Inc. (NYSE: ORA) in the past year mainly focused on expected huge projects in Nevada, one of which has already been approved, but it turns out that Ormat Industries Ltd. (TASE: ORMT), its parent company, can also expect handsome revenue from Asia.
Merrill Lynch analyst Haim Israel directs his attention to these Asian projects. He said MedcoEnergy, a joint venture of Ormat and Itochu Ltd. of Japan will probably build and operate the 200-megawatt (MW) Sarulla geothermal power station in northern Sumatra, Indonesia. Ormat will provide the equipment and Itochu will sell the electricity from the power station. Merrill Lynch writes that MedocEnergy offered a price of 4.555 cents per KWh, less than 4.642 cents per KWh offered by its competitor in the tender, and significantly lower than Ormat’s average price.
Merrill Lynch believes that revenue from the Sarulla project could reach $150-200 million over four years, if Ormat’s role is limited to supplying equipment and operations.
Since neither Ormat nor the Indonesian authorities have made any official announcement, Merrill Lynch is not factoring in any additional revenue into its model for Ormat at this time. Haim Israel has kept his “Buy” recommendation for Ormat Industries at a target price of NIS 50 per share, 17% above its current market price of NIS 42.84.
Next week, Ormat Industries will join the Tel Aviv 25 index.
Published by Globes [online], Israel business news - www.globes.co.il - on June 25, 2006
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