Plug Power already announced weeks ago that the target turnover for this year will be five to ten percent lower than the originally projected 900 to 925 million USD for 2022. The third quarter led to a turnover of 188.6 million USD (plus of 31.1 percent from the year before), which however was about 55.6 million USD less than analysts on average had expected. The loss, a minus of 170 million USD, lay in line with expectations. In 2023 should then be a turnover of 1.4 billion USD. Plug still has a healthy cash basis, composed of 1.5 billion USD in liquid assets and around 1 billion USD in marketable securities.
The company is working to be able to produce its own hydrogen and offer it at one-third the price of what industrial gas producers have. By the end of 2022, a production capacity of 50 tonnes per day is to be reached (it was previously to be 70 tonnes per day), and 200 tonnes per day by the end of 2023. Only recently was reported that it will hold off from building production facilities in Pennsylvania and Canada and there would be setbacks at a facility in New York. In the less than informative press conference on the accounting for the third quarter, the large-scale cooperation with Australian company Fortescue Future Industries of billionaire Andrew Forrest – they’re jointly building large electrolysis capacities – was not mentioned, to our surprise. In any case, we have not read, but also not overlooked, this.
Cooperation with Lidl – Projects all over
Of projects and cooperations, there is no lack. Recently, Plug Power was able to gain the German supermarket chain Lidl as a customer, who plans to use hydrogen in transport vehicles as well as forklifts. We’re missing here, however, concrete figures (order values), but which Plug will certainly provide in due course. A respectable success – no question about it.
Sealhyfe project starting – First floating electrolyzer
Together with the French hydrogen project operator Lhyfe, Plug has installed the first floating electrolyzer in a wind park at sea. Off the French coast, 400 kg of hydrogen is to be produced daily, and after six months the floating electrolyzer is to be tried out at two further sites for six months each. It has an output capacity of 1 MW. Lhyfe – we reported – has given Plug orders for electrolyzers in a total capacity of 50 MW.
In an investor symposium held online, it was said that Plug is positioning itself in various hydrogen markets, building a variety of production sites for, among other things, electrolyzers (2.5 GW annual capacity), and investing heavily in the production of hydrogen (liquid, as it is cheaper to transport). Much sounds ambitious. The North American company sees itself developing into a market leader. The Inflation Reduction Act has particular importance in this, as it could enable green hydrogen to have a price advantage over gray (natural gas-based) hydrogen in the US and therefore very good growth prospects.
Plug is on its way, but will still need a great deal of capital before moving into the profit zone, so time needs to be given for these investments. The latest forecast from the company itself, that the envisioned turnover for this year is ending up around five to ten percent lower than planned, does not bode for the time being good quarterly figures nor impute high ongoing, albeit logical, losses (from the invest in production facilities). Thanks to good IR (investor relations), the share price will rise again when the entire industry regains its footing on the stock market.
Our cautious assessment of Plug Power is proving more and more true. The company has too many construction projects going at the same time, which allows liquidity to shrink quickly. With the planned investments totaling 1.5 billion USD, the liquid base will fall to 1 billion USD by the end of 2023, which will maybe have further capital raisings (issuance of shares) as a consequence. With the around 9 billion USD valuation, the stock market has shown its new view of things. Plug is going along its way in the area of hydrogen, fuel cells and electrolysis, and will itself produce hydrogen here very economic-efficiently via scaling effects and be able to earn money this way. We’re assuming that sometime in the next two years, the valuation of Bloom Energy can be topped or matched by Plug Power. Since Plug is represented in all major H2 stock funds, the share will certainly benefit from the overall H2 megatrend.
Each investor must always be aware of their own risk when investing in shares and should consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid cap, i.e. they are not standard stocks and their volatility is also much higher. This report is not meant to be viewed as purchase recommendations, and the author holds no liability for your actions. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on medium- and long-term valuation and not on short-term profit. The author may be in possession of the shares presented here. Author: written by Sven Jösting December 12th, 2022
Author: written by Sven Jösting December 12th, 2022