It would indeed be interesting to hear what caused the delay. It’s a completely different matter if it was due to a shortage of some component than if it’s a problem with Merus’s own product.
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Here are Pauli’s comments regarding the recent announcement. 
Expanding into larger projects with broader responsibilities is a growth opportunity for Merus Power, but the company must be able to improve operational efficiency for future projects. The completion of the project delivered to Taaleri Energia was behind the original schedule, but this was already known and therefore does not necessitate forecast changes.
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It’s about the design and implementation difficulties of a new type of project for the company. To my understanding, there has been no problem with the electricity storage technology itself, but with the surrounding structures. Correcting the design error and acquiring new components also delayed other phases of the project. Repeating similar types of projects will hopefully help streamline implementation in the future.
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What’s causing Meru to drop? No new information has really come to my attention, at least.
I wonder if the lack of news has been more of bad news for this kiosk. Now there’s a small boost as it announced a new warehouse project.
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Merus Rising, New 4M EUR Deal Secured
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Here are Pauli’s comments on this recent order.
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Here I’m trying to figure out the range for Merus’s revenue in 2025. Could someone give even a rough estimate of how valuable service agreements are and what impact they have on revenue?
Currently, Merus has new orders totaling 39.7 million, according to the annual review published on August 22, 2024, to which new orders received after the review must still be added.
- 2 compensators to Estonia, and the value of the deal was not published.
- Compensators for green steel production, value 4.5-6.5 million.
- Deal for energy storage systems to Enertia, value approximately 4 million.
I assume that the reported order book includes the following projects:
- Compensator to Saudi Arabia, value just under 4 million.
- Energy storage system to Alpiq, Vaajakoski, value 20 million.
- Energy storage order from eNordic Oy and Lappeenrannan Energia + service agreement, value 15 million.
Based on these figures, the value of orders and revenue should exceed 50 million for 2025. Inderes’s analyst estimates 2025 revenue at 39.2 million.
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Changes in the management team.
The release does not clarify whether the three individuals who left the management team will continue to be employed by the company.
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The list of largest owners was updated again, and the trend has continued where the number of owners decreases, and those who own shares increase their share count. Friis had already sold his shares, but the top 100 owners had mainly increased their holdings quite nicely.
Awaiting new trade announcements.
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I can elaborate on the thinking behind our forecasts:
Our 2025 revenue forecast is EUR 39.3 million (30% growth)
Electricity storage: EUR 24.4 million (+30%)
Power quality solutions: EUR 13.5 million (+31%)
Services: EUR 1.3 million (+25%)
Electricity Storage
Before the latest announced EUR 4 million order, we estimated that approximately EUR 14 million of the EUR 24.4 million revenue would come from Alpiq, EUR 9 million from Lappeenranta, and EUR 2 million from Herrfors. We estimate that approximately one-third of the aforementioned projects will be recognized as revenue already during 2024 (mainly H2). A small portion of the revenue may also shift to 2026, although, to my understanding, the goal is to complete the projects during 2025. If we assume no significant delays, there could be upward pressure on the forecast, especially with the latest EUR 4 million Enertia order.
Power Quality Solutions
2024 has been difficult due to cyclical headwinds. The order outlook for 2025 is stronger. Of our EUR 13.5 million forecast, EUR 6.6 million is related to product sales (+10%) and EUR 6.9 million to projects (+60%). Project orders worth approximately EUR 10 million have been received in 2024, but a portion of this will already be recognized as revenue in H2 2024.
Service sales are growing, for example, due to the commissioning of electricity storage systems, but their share of total revenue is small.
I emphasize that these estimates are very indicative, as the company itself does not report different revenue categories. A revenue of over EUR 40 million is likely a realistic possibility, but I do not believe in over EUR 50 million without new large electricity storage orders that would need to be secured already in the first half of 2025.
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Pauli has prepared a comprehensive report on Merus Power, which is naturally available for everyone to read, like all extensive reports.
In particular, the growth strategy based on scaling the energy storage business has recently progressed in the form of a strong order backlog. We also expect profitability to improve during 2025-26. However, in our view, the expected return at the current valuation does not become attractive enough unless the company can exceed the industry’s general profitability level or accelerate its growth beyond our current assumptions.
Quoted from the report:
Alongside growth, we consider it important for the investment story that the company can strengthen its profitability. Determining the long-term profitability level is challenging for now, and future evidence in this area is, in our assessment, a key driver from a valuation perspective. In our view, it is challenging to achieve a high double-digit operating profit margin in the energy storage sector due to the thin margin levels of projects.
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I finally read the report and it was very informative! It’s a feast or famine situation with Merus, but we don’t need many big electricity storage orders this year, as we are already on an optimistic path. So, hopeful!
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Tomi and Pauli discussed Merus Power based on a comprehensive report.
Merus Power, riding the wave of megatrends, has plenty of growth drivers as renewable energy, data centers, and the electrification of society demand solutions for electricity storage and power quality stabilization. With a significantly expanded order book, the forecasts predict a year of scaling. Analyst Pauli Lohi comments.
The comprehensive report is freely available here.
Topics:
00:00 Introduction
00:15 Business Operations
02:21 Power Quality Solutions
04:16 Energy Storage
06:02 Strategy Progress After Listing
08:24 Future Growth Drivers
10:54 Merus Power: A Small Fish in a Big Pond
11:41 Strong Growth in Forecasts
16:12 Risks
19:09 Return Expectation Remains Modest
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Our friend Pauli’s preliminary comments as Merus publishes its H2 report on Thursday.
We expect strong growth and profitability figures from the company for H2, even though the situation for the full year 2024 is weaker due to a difficult and also seasonally smaller H1. The starting points for 2025 are strong in terms of order backlog. In our view, the company now has an opportunity to demonstrate the attractiveness of its energy storage business and significantly improve profitability, for which the guidance provided in connection with the report should offer direction.
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CEO Kari Tuomala was interviewed by Mr. Lohi.
Topics:
00:00 Introduction
00:26 Key drivers behind revenue growth
01:42 Profitability development
03:04 Diversity of the order book
04:58 Expanding electricity storage deliveries outside Finland
06:32 Electricity storage market
08:19 Drivers for power quality solutions
Let’s also add Robo’s comments on the morning’s results here.
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Pauli has already produced a new company report.
Merus Power concluded 2024 strongly in terms of revenue and order intake. We anticipate continued growth and significant progress in the profitability turnaround during the current year. However, in our view, the company’s rather high valuation does not leave significant upside potential or room for disappointments. We reiterate our Reduce recommendation and raise the target price to 4.8 euros (previously 4.3).
Quoted from the report:
The gross margin calculated after materials and service costs was 30%, which decreased compared to H1 (39%) and was also clearly lower than our preliminary estimate of 39%. This partly explains why the result was close to our forecast, even though revenue grew significantly more than we expected. Fixed costs (personnel expenses and other operating expenses) totaled 6.2 MEUR, thus lower than our forecast of 6.8 MEUR. Depreciation and financing costs were roughly in line with our forecasts.
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Merus Power has signed an agreement with Skip Wind 5 Oy (a Finnish holding company of Ardian Clean Energy Evergreen Fund (ACEEF)) for the delivery of a large electricity storage facility to Riihimäki. This is an electricity storage facility with a capacity of 30 megawatts and 30 megawatt-hours, which, once completed, will strengthen the operational capability of Finland’s electricity grid. The total project delivery value for Merus Power is approximately 13 million euros, and the electricity storage facility is planned to be completed during spring 2026.
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This single project accounts for approx. 36% of last year’s revenue. I’d guess that if payments are received during this year (and the entire deal is not recognized as revenue in 2026), as is customary with larger deliveries, then this will likely push this year’s revenue well over 40 MEUR. 
P.S. As a not-so-happy owner of Nokian Tyres and Neste, I haven’t given up hope of finding something good from my home country, and Merus is to thank for that. 
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From Pauli latest comments on the follow-up order received by the company.
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