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14 Oct 2020
A closer look at the EU renovation wave
Compagnie de Saint-Gobain SA (COD:LON), 7,220 | Wienerberger AG (WIE:WBO), 0 | Sika AG (0Z4C:LON), 0 | Travis Perkins plc (TPK:LON), 729 | Kingspan Group Plc (0KGP:LON), 0 | ROCKWOOL A/S Class B (ROCK.B:CSE), 0 | Owens Corning (O5Q:BER), 0 | Ibstock Plc (IBST:LON), 151 | Forterra Plc (FORT:LON), 173
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A closer look at the EU renovation wave
Compagnie de Saint-Gobain SA (COD:LON), 7,220 | Wienerberger AG (WIE:WBO), 0 | Sika AG (0Z4C:LON), 0 | Travis Perkins plc (TPK:LON), 729 | Kingspan Group Plc (0KGP:LON), 0 | ROCKWOOL A/S Class B (ROCK.B:CSE), 0 | Owens Corning (O5Q:BER), 0 | Ibstock Plc (IBST:LON), 151 | Forterra Plc (FORT:LON), 173
- Published:
14 Oct 2020 -
Author:
Yves Bromehead -
Pages:
15
Once a faint rumour, the EU renovation wave finally hit the shore on 14 October 2020, with the announcement of the aim of doubling the energy-saving renovation run-rate by 2030. But despite the ambitious target, both the necessary funding and a clear and tangible roadmap are missing. Can the funding and legislative provisions that are proposed at least turn the tide?
An ambitious doubling of the energy-saving renovation rate to 2030...
The EU renovation wave programme has set out the ambitious target of doubling the renovation run-rate by 2030, underpinned by a EUR250bn programme and a plethora of initiatives.
... but with no credible funding in place or even a near-term roadmap
The programme is full of legislative proposals but lacks a credible and ambitious funding strategy, increasing the risk of poor execution, at least in the near term. The EU will only commit EUR250bn in the next 7 years vs. around EUR300bn per annum required to meet its targets.
Still, there are reasons to stay positive medium-term
We believe the current funding structure should at least kick-start the EU energy-saving renovation market, helping it to grow by around +35% in the next decade. We also see the minimum building performance and renewable energy targets as a strong medium-term catalyst.
Riding the renovation wave to podium positions
Rockwool, Travis Perkins (assuming UK alignment) and Saint-Gobain stand out, with EBIT boosts of +77%, 55% and 50% respectively to 2030 vs. 2021 levels. Our assumptions don''t take into account a likely increase in energy-solutions pricing as some industries will tighten.
Closing the gap to expectactions
Kingspan, Sika and Wienerberger are closing the gap to expectations for double-digit EBIT boosts to 2030 vs. 2021 levels. The near-term renovation priority being on public and private non-residential buildings could lead to higher and faster earnings growth for Kingspan.