2016 – The Year After Break-Even

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The fuel-cell companies quoted on the stock exchange have used 2015 perfectly to strengthen their market positions. These efforts have resulted in more orders, improved balance sheets, increased capital and some very important strategic collaborations as well trendsetting product developments. This lets us conclude for 2016 that probably most of these companies – if not all – will be able to become cash-flow positive or even generate sustainable profits after many years of preparing for this moment.

First time that fuel-cell businesses could turn profitable
Because of the current combination of expectedly good to even very good news from the fuel cell industry, I feel the need to again stress my expectation that the fuel cell and its many markets can trigger a new megatrend – especially in light of the necessity to produce more clean energy around the globe. A change in the oil price trend – should Saudi Arabia leave behind its chosen policies with a reduced oil production – could at a purely psychological level present the fuel-cell share prices quoted here with an advantage. One will often here the argument that fuel-cell companies aren’t able to grab as much the attention of the stock market because of a lower oil price; currently, we are at a turning point. Stay tuned!

Hydrogenics: China Says Hello
Various truly positive news were coming in from Hydrogenics – some of them from China – the stock price of the company began to stabilize at above US$ 10 after dropping to a low of around US$ 7. The most recent price drop is related to a gross capital increase by US$ 17 million (net: approx. US$ 15 million), which is of course implemented at a certain discount. Still: Growth needs capital and this capital is what Hydrogenics is about to gain, resulting in a temporary lapse but a leap forward in the end.

From a stock exchange point of view, Hydrogenics shares look the healthiest of all fuel-cell shares, even if it is the fuel-cell company with the lowest stock exchange capitalization and the smallest number of shares. Hydrogenics was able to obtain big long-term orders last year, established further collaborations, for example, in China, and complemented its product portfolio, which now ranges from electrolysis systems to the installation of H2 filling stations to fuel-cell module development for trucks and buses.

Noteworthy: A framework agreement concluded with different partners in China is said to be worth US$ 10 million of turnover in fiscal year 2016 and to have an overall potential of US$ 100 million. The agreement is about the technology for fuel-cell filling stations as well as electrolysis systems and fuel-cell kits for heavy-load trucks – and the parties to the agreement include Yutong, the biggest bus OEM in China, as well as other “electric vehicle integrators.” Treated as a “certainty” within the next three to five years is the production of 2,000 vehicles driven by fuel cells and H2. This should – as far as my optimistic attitude is concerned – only mark the beginning: China has understood what H2 and fuel cells can do for the country.

Risk warning

Investors must understand that buying and selling shares is done at their own risk. Consider spreading the risk as a sensible precaution. The fuel cell companies mentioned in this article are small and mid-cap ones, i.e., they do not represent stakes in big companies and the volatility is significantly higher. This article is not to be taken as a recommendation of what shares to buy or sell – it comes without any explicit or implicit guarantee or warranty. All information is based on publicly available sources and the assessments put forth in this article represent exclusively the author’s own opinion. This article focuses on mid-term and long-term perspectives and not short-term profit. The author may own shares in any of the companies mentioned in this article.

Author: Sven Jösting

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