Siemens Energy – still an interesting entry-level stock

Silyzer 200 PEM electrolyzer, © Siemens Energy
Silyzer 200 PEM electrolyzer in Werlte, Germany, © Siemens Energy

If you read about any of the major hydrogen projects underway, you will be unable to avoid Siemens Energy. Orders like the recent ones worth EUR 700 million should be on the agenda. Even the problems with its wind power subsidiary Gamesa seem solvable because – regardless of short-term problems (price increases in raw materials and component shortages) – the market is growing strongly. Here, I would venture to suggest to the company that it integrates wind farms into existing projects and offerings via Power Purchase Agreements, or PPAs, from the outset. Then you would be able to view a wind farm from a different return perspective and margin.

Siemens Energy is already, in my opinion, regarded as a major, experienced player that will win many a large order given the enormous plans by countries in the Middle East. The same goes for the USA where the corporation is represented strongly too.

The loss for the financial year ended September 2021 of EUR 500 million (EUR 673 million loss as a nonrecurring item) does, however, indicate the general trend if you compare these figures with the same period last year and the loss of EUR 1.9 billion (with large nonrecurring expenditure). Siemens Energy is building on a sustainable, achievable operating profit margin of 3 to 5 percent and can therefore feel pleased that its “H2ready” power plant concept has been certified by TÜV Süd – the first project of its kind and a blueprint for more of the same.

Conclusion: The company, as a one-stop shop partner offering relevant solutions as far as clean energy and production and processing/use is concerned, will benefit from the enormous growth in all hydrogen economy and renewable energy segments. Just by themselves, the multi-100-billion investment plans of Middle Eastern countries, such as Saudi Arabia, the United Arab Emirates and Qatar, are playing into the hands of Siemens Energy. Classified as a buy. Investment horizon: medium-term – two to three years with the aim of exceeding the current peak price for this stock.

Risk warning

Share trading can result in a total loss of your investment. Consider spreading the risk as a sensible precaution. The fuel cell companies mentioned in this article are small- and mid-cap businesses, which means their stocks may experience high volatility. The information in this article is based on publicly available sources, and the views and opinions expressed herein are those of the author only. They are not to be taken as a suggestion of what stocks to buy or sell and come without any explicit or implicit guarantee or warranty. The author focuses on mid-term and long-term prospects, not short-term gains, and may own shares in the company or the companies being analyzed.

Written by Sven Jösting December 7, 2021

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