Max Deml’s stock analysis
In the past, hydrogen was usually isolated from fossil fuels such as natural gas using steam reforming and stored. Ecologically more sensible is hydrogen generation through the electrolysis of water using green electricity, for example for later electricity generation in fuel cells – but this reduces the efficiency compared to other storage media and the economic efficiency suffers. Hydrogen – itself not a primary energy source – serves primarily as a secondary energy source, so as a storage medium, and can be an ideal buffer to absorb excess capacity in electricity generation (e.g. from wind and solar) and then provide it when needed.
Although most listed companies involved in hydrogen research, production or infrastructure have only been making losses for years, the demand from investors, not least from many sustainably oriented investment funds, has driven share prices to sky high levels. Now, the highs of the hyped stocks are over. Investors who bought three years ago at the highest prices at the time are sobered to discover that the prices are now not seldom 90 percent or even lower. Because sales developments have fallen far short of expectations. Nevertheless, these stocks can still fall further: the market capitalizations are, even at the current price level, usually at a multiple of the last annual turnover – and most of these companies continue to report heavy losses.
Fig. 1: 5-year share price development of Linde plc
https://www.comdirect.de/inf/aktien/detail/chart.html?timeSpan=5Y&ID_NOTATION=233986641
Source: www.comdirect.de
Exceptions are large companies like Linde plc (the former DAX Group, founded in 1879, is based in Ireland after merging with Praxair), who with currently 66,000 employees and at nearly 33 billion USD turnover made a profit of 6.2 billion USD – but only a fraction of sales coming from hydrogen. Also here the market value, with around 207 billion USD, lies far over the annual turnover.
Similar is the situation with the second major industrial gas producer Air Liquide SA from France, who in 2023 with nearly 68,000 employees and around 27.6 billion EUR turnover made a profit of 3.1 billion EUR. At a share price of around 180 EUR, the market value with around 94 billion EUR is far higher than the turnover.
Fig. 2: 5-year share price development of Ballard Power Systems
https://www.comdirect.de/inf/aktien/detail/chart.html?timeSpan=5Y&ID_NOTATION=26810831
Source: www.comdirect.de
The Canadian company active in the field of fuel cells for over three decades, Ballard Power Systems, even today still makes losses and has only survived because it has repeatedly been able to finance these through capital increases worth billions. Year 2023 saw, at a turnover of 138 million CAD, a loss of 240 million CAD. The FC pioneer with almost 1,200 employees is still valued at around nine times the annual turnover – and the price development of the last five years (including the over 90 percent loss since the high at the beginning of 2021) is typical of many smaller H2 stocks.
Some of the companies that focused on hydrogen early on no longer exist, for example the Canadian pressure vessel manufacturer Dynetek Industries, the Berlin-based Heliocentris Fuel Cells AG or Syngas International. Even the unlisted Hydrogen eMobility AG (based in Schloss Schönbrunn, Vienna) was liquidated in mid-2023. As chairman of the supervisory board acted here the financial economist Wolfgang Meilinger, the short-term husband (2018 to 2020) of the former Austrian foreign minister Dr. Karin Kneissl, who danced with Vladimir Putin at her wedding and now – as a highly paid supervisory board member of the Moscow oil company Rosneft – has found her new home in Russia.
Energy experts like Dr. Fritz Binder-Krieglstein (www.renewable.at) from Austria are not only skeptical about the economic viability and cited studies years ago according to which the “price of green hydrogen is incalculable” because, for example, “production and transport costs do not yield a market price.” In addition, hydrogen is “currently being promoted intensively in the media and politically primarily by large fossil-nuclear corporations. And they have always cared nothing about end consumer prices, see nuclear power and fossil climate destruction.”
PowerTap Hydrogen Capital Corp.
There are relatively few “pure player” stocks in the area of greenhouse gas-neutral hydrogen producers. It is therefore not surprising that due to the high demand for “hydrogen stocks” – years ago it was one of the most discussed topics among stock market traders, but also in science, politics and many media outlets – many securities have risen by more than 1,000 percent in a short period of time, such as the share of PowerTap Hydrogen Capital Corp.
The Canadian company (www.powertapcapital.com) was still called until November 2020 Organice Flower and presented itself as a cannabis startup at the time. After that, it became Clean Power Capital and after the majority takeover of the PowerTap Hydrogen Fueling Corp. was renamed PowerTap Hydrogen Capital Corp. Since then, their aim is to build an H2 refueling station network in the USA and Canada within a few years. But the last two years (2022/23) did not bring any turnover, but probably losses of over 240 million CAD and negative equity. The price fell from over 50 USD (2021) to only 0.15 USD, with the market value correspondingly below 4 million USD.
Similar renamings (HyperSolar is now called SunHydrogen) and quick IPOs of companies that still had no sales revenue occurred frequently in 2020. And there were also some warnings at this time, such as at the Vienna-based stock exchange letter Öko-Invest or at the Dortmund-based Ecoreporter magazine in the article „Deutsches Wasserstoff-Start-up: Enapter und die 100.000 Elektrolyseure“ (German hydrogen startup: Enapter and the 100,000 electrolyzers): Here you should “exercise caution,” because “many hydrogen stocks are still more a bet than an investment.”
Enapter AG
Enapter AG, with headquarters in Germany and a research and production site in Italy, has developed electrolyzers in single-core and multi-core systems and now sold to over 340 customers in over 50 countries, from energy and transport to heating and telecommunications companies. In 2023, with around 200 employees, they were able to raise turnover by 115 percent to over 31.6 million EUR, but still had to report a loss of 7.2 million EUR (previous year: 13.0 million EUR), so that the equity ratio fell from over 80 percent to under 57 percent. The price fell from just under 50 EUR (end of 2020) by over 90 percent to under 4.50 EUR (May 2024), which corresponds to a market value of around 121 million EUR.
Fig. 3: 5-year share price development of Enapter AG
https://www.comdirect.de/inf/aktien/detail/chart.html?timeSpan=5Y&ID_NOTATION=310462784
Source: www.comdirect.de
Also expected for 2024 are – with a turnover of 34 million EUR – further losses of at least 8 million EUR. In March 2024, Enapter received its largest order to date in Europe: The shipping company CFFT SpA has ordered three electrolyzers with 1 MW output each, which are to be used for H2 refueling systems in a port near Rome.
Via the Enapter subsidiary Clean H2 Inc. (www.cleanh2.energy) in the USA, which provides electrolyzers, and the exclusive sales partner Solar Invest International SE, orders with a volume of 5.4 million USD were received by the end of May 2024, especially from the truck and air transport sectors. Enapter promises advantages on the US market, among other things due to the Inflation Reduction Act, which also includes the subsidization of hydrogen applications, and due to the anion exchange membrane (AEM) technology, which does not require the rare element iridium.
Thyssenkrupp Nucera AG & Co. KGaA
The electrolysis division spun off from the Group was able to increase turnover by 70 percent to 653 million EUR in 2022/23 and in terms of earnings after taxes of 22.5 million euros – after only 6.0 million EUR in 2022 – they are back in line with the years before (21.3 million and 21.7 million EUR in 2020 and 2021). The equity ratio rose from 33.2 to 64.5 percent in 2023 through the IPO.
In the first quarter of 2024 (corresponds to Q2 in the current financial year), order influx fell by 42 percent to 75.3 million EUR, which division leader Dr. Christoph Noeres attributed to project delays by customers, slow funding commitments and other “investment obstacles” in the hydrogen business. At a quarterly turnover of 168 million euros (+11 percent), the result fell from +3.6 million euros (in Q1/2023) to ‑7.2 million euros.
Since March 2024, Fraunhofer IKTS has been a strategic partner in “highly innovative high-temperature electrolysis technology” (SOEC) – and the US Department of Energy has “selected [Thyssenkrupp Nucera] to advance the mass production of water electrolysis cells and the establishment of an automated assembly line of these cells”.
Thyssenkrupp Nucera AG & Co. KGaA (with now over 850 employees) expects sales of between 820 and 900 million EUR (status September 30, 2024) in the 2023/24 financial year (of which 500 to 550 million EUR are in the area of alkaline water electrolysis), but due, among other things, to “start-up costs for the implementation of the growth strategy” a loss in the two-digit million range. Not until 2024/25 do they want to “approach” the profit threshold.
At a price of around 11.50 EUR (end of May 2024), the market value of 1.45 billion EUR corresponds to approximately twice the sales of the last four quarters.
Plug Power
The US company (www.plugpower.com) is one of the world’s largest buyers of liquid hydrogen, even though since the takeover (2021) of United Hydrogen they can also produce it themselves. In mid-May 2024, the US Department of Energy (DOE) via the Loan Programs Office (LPO) gave – according to CEO Andy Marsh after an intensive due diligence process – a “conditional commitment to a loan guarantee of up to 1.66 billion USD to finance the development, construction and ownership of up to six green hydrogen production facilities,” which is in line with the Biden administration’s “Justice 40” initiative.
Fig. 4: 5-year share price development of Plug Power
https://www.comdirect.de/inf/aktien/detail/chart.html?timeSpan=5Y&ID_NOTATION=94174931
Source: www.comdirect.de
Plug Power put into operation at the start of 2024 in Woodbine, Georgia the first commercial system of this type, thereby increasing the daily production capacity for liquid hydrogen to around 25 tonnes. In 2023, with over 3,800 employees, turnover was able to be increased by 27 percent to over 891 billion USD, but the loss also increased by 89 percent to over 1,368 million USD, or 2.30 USD per share. The equity ratio fell slightly from 70.4 to 59.1 percent. At a price of around 3.20 USD (end of May 2024), the market value of around 2.4 billion USD corresponds to approximately three times the sales of the last four quarters.
Nel ASA
The Norwegian company that was founded in 1927 and now has almost 700 employees is one of the pioneers in the field of electrolysis to generate hydrogen (nelhydrogen.com). The second area (“Hydrogen Fueling”) deals with infrastructure (construction of hydrogen refueling stations and refueling pumps, mainly for the transport sector). Already in 2017, Nel founded with Hexagon Composite and PowerCell Sweden the joint venture Hyon for the area of watercraft with fuel cell drives. Nel Hydrogen is also part of the PosHYdon consortium (and is to supply the electrolyzer), which plans to install an offshore hydrogen production facility on Neptune Energy’s Q13a-A oil and gas platform yet in 2024.
Fig. 5: 5-year share price development of Nel ASA
https://www.comdirect.de/inf/aktien/detail/chart.html?timeSpan=5Y&ID_NOTATION=204941498
Source: www.comdirect.de
In 2023, Nel’s turnover rose by 84 percent to over 1.68 billion NOK. The loss was able to be reduced from 1.17 billion NOK to under 0.86 billion NOK. The equity ratio fell from over 78 percent (2022) to 72 percent. At a price of around 0.62 EUR (end of May 2024), this results in a market value of around 1.0 billion EUR, which still represents a multiple of the annual turnover.
Nel CEO Håkon Volldal noted in early 2024 that there were only “limited synergies between the fueling and electrolyzer businesses” and believes that “both divisions are better positioned to become market leaders in their respective areas by operating independently of each other.” The refueling division is therefore to be spun off under the name Cavendish Hydrogen – named after the British scientist Henry Cavendish (1731 – 1810), who discovered the element hydrogen as “combustible air” in 1766. NEL shareholders will then receive Cavendish Hydrogen shares in the IPO planned in Oslo.
Everfuel A/S
The Danish Nel spin-off (www.everfuel.com) has been listed on the stock exchange since October 2020 and, for example, has signed a contract with the offshore wind farm operator Orsted. Its planned 2 MW plant is expected to deliver up to 1,000 kg of hydrogen per day, where Everfuel is also to be responsible for the operation of the compression and filling system. In May 2024, CEO Jacob Krogsgaard announced a declaration of intent from a German industrial company, which, if a hydrogen pipeline is realized between Denmark and Germany, starting 2028 wants to annually purchase around 10,000 tonnes of “green hydrogen” (RFNBO, renewable fuels of non-biological origin) from Everfuel (which would require an electrolyzer capacity of at least 100 MW).
In 2023, Everfuel, with around 75 employees, was able to increase sales by 128 percent to around 5.7 million EUR; however, the loss also increased from almost 16 million EUR to around 28 million EUR, so the equity ratio fell from 57.7 to below 51.5 percent. The price on the home exchange in Oslo fell by 94 percent from over 183 NOK (beginning of 2021) to below 11 NOK (May 2024), which still corresponds to a market value of almost 80 million EUR – so around 14 times annual turnover.
McPhy Energy SA
The company (www.mcphy.com) with headquarters in Grenoble and several subsidiaries, like McPhy Energy Deutschland GmbH, sees itself as a “developer and manufacturer of systems for the production and distribution of carbon-free hydrogen.” The five competence centers in France, Germany and Italy, in addition to electrolyzers, offer storage tanks and systems for the energy and transport sectors, among others. Under the (English) motto “Driving clean energy forward,” CEO Jean-Baptiste Lucas wants to with McPhy Energy “develop carbon-free hydrogen applications and contribute to the fight against climate change.”
Fig. 6: 5-year share price development of McPhy Energy ASA
https://www.comdirect.de/inf/aktien/detail/chart.html?timeSpan=5Y&ID_NOTATION=278390182
Source: www.comdirect.de
In 2023, with over 260 employees, sales were able to be increased by 17 percent to around 18.8 million EUR; however, the loss grew by 24 percent to 47.4 million EUR, or 1.70 EUR per share. The equity ratio fell from 64.6 to 53.7 percent. At a price of around 3.10 EUR (end of May 2024), the market value of around 92 million EUR corresponds to almost five times the annual turnover.
PowerCell Sweden AB
The company founded in 2008 (www.powercellgroup.com) produces fuel cell systems that can convert fossil as well as renewable energy sources into hydrogen. It has consistently produced losses so far, with one exception in 2019, when for the sale of an exclusive production and distribution license for the “PowerCell S3 fuel cell stack” to Robert Bosch GmbH a revenue of around 50 million EUR was recorded.
In 2023, with around 150 employees, sales were able to be increased by 27 percent to over 310 million SEK; however, the loss also increased by eight percent to around 63 million SEK, so the equity ratio fell from over 70 to under 65 percent. The price fell by over 90 percent from over 400 SEK (beginning of 2021) to around 36 SEK (May 2024), which still corresponds to a market value of around 1.9 billion SEK – around six times the annual turnover.
ITM Power plc
The British company (www.itm-power.com) founded in 2001 and led by CEO Dennis Schulz is one of the most established companies in the electrolysis industry in Europe, even though the turnover here is still very low compared to the market value. ITM Power, whose three major shareholders include Linde, has among other things founded a joint venture (50/50) with Linde: ITM Linde Electrolysis GmbH (ILE GmbH) wants to realize the world’s largest electrolyzer plant in Leuna, Germany – with the support of the German government, which aims to help build up a production capacity of 5,000 MW by 2030 as part of its hydrogen strategy and has planned several billion euros in funding for this. ITM Power offers several electrolyzer models, from Trident (2 MW) and Neptune to Poseidon (20 MW) for large projects.
Fig. 7: 5-year share price development of ITM Power PLC
https://www.comdirect.de/inf/aktien/detail/chart.html?timeSpan=5Y&ID_NOTATION=24456315
Source: www.comdirect.de
In fiscal year 2022/23 (status April 30, 2023), turnover fell by seven percent to 5.2 million GBP; the loss more than doubled to over 101 million GBP. The equity ratio fell from over 86 percent to under 74 percent. The price fell by 92 percent from 7.17 GBP (beginning of 2021) to below 0.58 (May 2024), which corresponds to a market value of over 350 million GBP– so around 30 times the sales of the last four quarters.
Weichai Power
This automotive technology group founded in 1953 (www.weichaipower.com) built one of the first diesel engine factories in China and was still called Weichai Diesel Engine Factory until 1992. The company is anything but a “pure player;” however, with some business units and shareholdings such as Ballard Power and Ceres Power, the company is also involved in the manufacture of fuel cell products and hydrogen applications. Minority interests were also acquired in Linde Hydraulics and the German forklift Group Kion. In 2020, Weichai Power moved up into the global top 10 list of automotive suppliers; when it comes to truck diesel engines, they hold the top spot in terms of efficiency.
Fig. 8: 5-year share price development of Weichai-Power-H-Aktie
https://www.comdirect.de/inf/aktien/detail/chart.html?timeSpan=5Y&ID_NOTATION=207870485
Source: www.comdirect.de
In 2023, with over 47,600 employees, sales were able to be increased by 16 percent to over 214 billion CNY (about 27 billion EUR) – and profits, which fell 49 percent in 2022, rose by almost 75 percent to over 9.0 billion CNY. The equity ratio fell slightly from 24.9 percent to 23.7 percent.
The prices of Weichai-Power-H-Aktien, which is also listed on the German stock exchange, have fluctuated between 0.93 and 2.78 EUR in the last years. At a price of around 1.70 euros (end of May 2024), the market value corresponds to around 0.6 times the annual turnover of Weichai Power. The dividend yield was recently just under 4.4 percent.
Proton Motor Power Systems plc
The British FC company (www.proton-motor.com) with the German subsidiary Proton Motor Fuel Cell GmbH, which also develops products in the area of hydrogen, rarely saw in the last seven years annual turnovers over 2 million GBP; in 2018 and 2019, it was only around 0.8 million GBP each – with usually much higher losses, often in the two-digit millions. The equity ratio has been negative for many years.
The price fell by over 95 percent from over 50 pence (beginning of 2021) to around 2 pence (end of May 2024), so that the market value of around 33 million pounds corresponds to approximately 17 times last year’s turnover.
Verbund AG
Since the partial privatization in 1989, the hydropower company’s shares – the issue price, adjusted for splits, was around 2.65 EUR – have been listed on the stock exchange (the Republic of Austria still holds 51 percent). Around 98 percent of its own electricity generation comes from renewable energies, besides hydroelectric power plants increasingly from wind and solar parks, including abroad. The wholly owned subsidiary founded in 2001 Austrian Power Grid AG holds interests in, among others, OeMAG Abwicklungsstelle für Ökostrom.
Fig. 9: 5-year share price development of Verbund AG
https://www.comdirect.de/inf/aktien/detail/chart.html?timeSpan=5Y&ID_NOTATION=38113422
Source: www.comdirect.de
With Verbund Green Hydrogen GmbH they’re also active in hydrogen production, among other things in industrial projects together with Austrian corporations – or as a supplier to the fuel retailer Westfalen AG from Münster, who starting 2026 wants to purchase green hydrogen from this Verbund company. At the end of May 2024, Tunisia and TE H2 – an 80/20 joint venture between TotalEnergies and the EREN Groupe, along with Verbund AG signed a letter of intent “to examine the implementation of a major green hydrogen project called H2 Notos for export via pipelines to Central Europe.” Electrolyzers are to initially produce around 200,000, and later up to 1 million tonnes of green hydrogen per year using electricity from Tunisian wind and solar parks as well as desalinated water.
Via the hydrogen pipeline “SoutH2 Corridor” planned for by 2030, North Africa will then be connected to Italy, Austria and Germany, and Verbund AG is to coordinate H2 transport to Central Europe. According to TE H2 CEO David Corchia, H2 Notos has “the potential to become a significant supplier of green hydrogen to Europe while supporting large-scale job creation in Tunisia.” And Verbund CEO Michael Strugl is “delighted to work with a strong consortium capable of implementing projects in the GW range.”
In 2022, the electricity supplier’s sales (with around 3,800 employees) rose by almost 117 percent to 10.35 billion EUR; 2023 further to 10.45 billion EUR. Profit rose by 32 percent in 2023 to 2,266 million EUR or 6.52 EUR per share. The equity ratio rose from 37 percent (2022) to over 50 percent (2023).
At around 347 million shares and a price of around 75 EUR, Verbund AG has a market value of over 25 billion EUR, which corresponds to 2.5 times annual turnover and a dividend yield of around 5.6 percent. The share is one of the 25 in the the sustainable stock index Natur-Aktien-Index NX-25 (this index has increased by around 2,273 percent in the first 27 years since it was launched in 1997, far more than the MSCI World benchmark index with +322 percent) and has also been included (at a price of 10 EUR) in the model portfolio of the stock exchange letter Öko-Invest.
Disclaimer
When investing in stocks, every investor should always be aware of their own risk assessment and also think about sensible risk diversification. The FC companies and stocks mentioned here are small and mid-cap, which means they are not standard stocks and the volatility is also significantly higher. This analysis does not constitute a purchase recommendation. All information is based on publicly available sources and represents solely the author’s personal opinion regarding the evaluation, with the focus being on medium to long-term valuation rather than short-term profits. The shares presented here may be owned by the author. This is not an investment or purchase recommendation, but simply a non-binding personal assessment – no guarantees.
The author, Max Deml (born 1957), has been editor-in-chief of the stock exchange letter Öko-Invest (www.oeko-invest.net) since 1991 and author of the handbook Grünes Geld (“green money,” 8th edition since 1990). In 1997, he developed the international stock index Natur-Aktienindex NX-25 (with 25 members) and in 2001 the solar stock index PPVX, which contains the world’s 30 largest listed PV production companies, suppliers and operators.
Author: Max Deml
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