Hexicon receives important approval for its MunmuBaram project

Hexicon has announced that one of its key projects, MunmuBaram, has received approval of its Environmental Impact Assessment (EIA) from the South Korean authorities. We believe this news marks an important milestone for the MunmuBaram project, as approval is required to participate in South Korea's new wind power auction system. While we view the news positively as it supports our view that the project will continue to make positive progress towards FID, we are not making any changes to our estimates or valuation at this time. 

The MunmuBaram project is the most significant for Hexicon. Located off the coast of South Korea, the project is on track to become one of the world's first commercial GW-scale floating offshore wind projects, with a total capacity of 1,125 MW. The project received its first electricity business license in late 2021 and now the project has also received approval for its EIA, which involved a comprehensive examination of potential environmental impacts on both offshore and onshore ecosystems, as well as socioeconomic factors. With the successful completion of the EIA, which is required to participate in the new wind power auction system in South Korea, the company is poised to move forward with the next phase of the MunmuBaram project.

Developing towards FID

We view this news positively, as it suggests that the project is progressing towards FID, which the company has previously indicated is expected by 2026. Hexicon is still working on establishing a long-term ownership structure for the MunmuBaram project, and we believe that reaching this significant milestone will help the company attract suitable partners, as this approval should be seen as a valuable asset by potential partners. Additionally, obtaining approval for its EIA, which has been a significant investment for the company, could enhance the value of the project for a potential divestment. However, it is important to note that Hexicon is still in the process of securing final regulatory approvals for the ownership change of the MunmuBaram project, which we still expect to occur in Q3/Q4’24. Consequently, we still anticipate that any divestments will take place in early 2025.