The outlook that CEO K. R. Sridhar gave at the press conference on the figures for the third quarter of 2022 sparkled with optimism for the company. The total output capacity in SOFC fuel cell stacks would reach 600 MW within the year. The capacity of the electrolyzers would lie at 1.3 GW that year. Both figures should experience a doubling in 2023, after the new factory in Fremont, California commences production in the third quarter of 2022. There, Bloom has a highly efficient setup regarding the manufacture of both of its stack types (SOFC and SOEC), as the new production facilities can produce these simultaneously or in alternation. I imagine the stacks that will be produced are those that will give the highest margin according to the market environment and demand.

The profit margin in the fourth quarter of 2022 could even exceed 30 percent, as the effects of the Inflation Reduction Act with its many incentive programs are now revealing themselves in the USA. Additionally, Bloom is fulfilling the major order from SK Ecoplant in South Korea according to plan, which has a worth of over 4 billion USD. The stacks and energy servers are being paid according to a take-and-pay arrangement. Bloom is fully on track with deliveries and can increasingly turn to US customers as well.

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One sign of how well this cooperation is going is the announcement that SK Ecoplant has paid the second outstanding installment in the amount of 311 million USD for the intended stake in the company (that’s 23.11 USD per share, cash inflow expected in the first quarter of 2023). SK Ecoplant is getting Bloom shares in the equivalent amount. The already held convertible preferred stock from Bloom is simultaneously being converted into common stock. After completion of the transaction, SK Ecoplant should hold an over eight percent share in the company.

A big shareholder like SK Ecoplant can only be wished for, because it not only brings capital but also enables increased orders and customer relationships. (Perhaps GDS Holdings in China?) With over 670 million USD in the bank (after the most recent capital increase to 26 USD per share) and the 311 million USD from SK Ecoplant, Bloom has enough liquidity to support its growth with its own means, it was mentioned by the management board at the annual press conference.

Boom SOFC systems in ship transport

In the area of ships of various types (cruise, container, bulk carrier), Bloom expects a new, robust field of activity. Working with MSC (Mediterranean Shipping Company) means concrete business with cruise ships, in which the SOFC systems from Bloom are all-rounders, meaning they can use LNG as well as green ammonia, green methanol and hydrogen as propulsion energy for the ship. This makes the system from Bloom extremely interesting for many maritime transport companies. This is a major competitive advantage that should not be underestimated. Substantial orders are expected as early as 2023.

Order from Taylor Farms

Recently, an order was obtained from the leading US food producer Taylor Farms in relation to a vegetable production facility in California. The company would like to make itself un-dependent on the public grid through an FC power plant (microgrid) and become more environmentally friendly in terms of energy. For this, 6 MW in FC output will be combined with 2 MW in solar power and 2 to 4 MW in battery output. With this, they can be energy autonomous and on the way to low costs and environmental-friendliness. From the associated press release can be read that Taylor does not want to stop at one FC power plant, but wants to eventually expand this to other production facilities.

Power outages fill order books

Not least in California should the energy networks become more reliable and natural disasters (forest fires, etc.) be better withstood. Here alone, the grid-independent FC power stations from Bloom have an enormous growth potential, as weather conditions there are responsible for power outages of 1,700 to 5,000 MW per year and cause major damage. Energy security is a societal good for which Bloom can provide the right answers and technologies.

The turnover increase in the third quarter of 41 percent compared to the previous quarter, to 292 million USD, is remarkable. That was expected, since 70 percent of the revenue was coming in the second half of the year. What’s new is that Bloom sees even 40 percent of turnover for the year coming in the fourth quarter. By our calculation, that would make a plus of 400 million USD. Wow! That would then be a total turnover of 1.1 billion USD for 2022 – everything along the line of expectations and a little more.

Summary

With this guidance, it only makes sense to buy more than once. Maybe Bloom Energy will one day have a higher worth than competitors like Plug Power. An exciting 2023 is just around the corner, and the unfolding fourth quarter will serve as fertile ground. The numbers will come in during the first week of February 2023.

Disclaimer

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 12^th, 2022