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.
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.
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.
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.
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.
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.”
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.
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.
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.
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.
The Plug share price fell quickly to under 3 USD (2.50 USD at low) and then rose again to over 4 USD. At a price of less than 3 USD, it was possible to build up excellent trading positions (see H2-international Feb. 2024). Is there now a turnaround in the price trend or was this just a brief flare-up before the downward trend continues? Or will there even be an upward trend reversal?
There is a great opportunity for Plug Power to receive a credit (loan) totaling 1.6 billion USD from the US Department of Energy (DOE) as part of the Inflation Reduction Act. This is to come in the third quarter, although there are also rumors that it could be approved much earlier, but I won’t take part in this speculation. In this ideal scenario Plug will then have sufficient capital to establish and expand several production facilities, for example in Tennessee and New York, and start production there. The stock market will value this – if it happens – very positively: with higher share prices.
But a loan is borrowed capital that has to be repaid. What are the conditions? How high is the interest or coupon? What are the repayment arrangements? Will the loan be paid out immediately in full or in installments and with target definitions (milestones)? What is Plug doing with the money? If there is no clarity about this or the loan is not approved in the first place, then the stock market will be miffed or react in disappointment, with the consequence of falling share prices.
Parallel to this is running a share placement program (at-the-market) worth 1 billion USD. Of this, already over 305 million USD, through the placement of 77.4 million shares, have flowed into Plug’s account. This will also correlate positively with the DOE credit: If this is granted, Plug’s share price will – even if possibly only for a short time – climb, and this then enables the perfect placement of shares via ATM in the ramp-up. This money from the ATM program can be used to solve the short-term liquidity problem, since the cash on hand lay at just 135 million USD December 31, 2023.
There are also other possible difficulties, because the US Treasury Department is defining how hydrogen must be produced in order to receive the subsidy of up to 3 USD per kg. Plug is relying very heavily on this funding, but there are still questions: From which location must the regenerative energy come from, in what amount and at what point in time? And at which location must the electrolysis take place? With this are, like in the EU, a series of bureaucratic hurdles – unfortunately.
Disappointing figures
What are these figures: The turnover in fiscal year 2023 amounted to, instead of the expected 1.2 billion USD, only 891 million USD. The loss even amounted to 1.4 billion USD, which corresponds to a minus of 2.30 USD per share. The press conference on the results in March raised more questions than it answered.
For example, the material inventory is to be reduced by a value of 700 million USD via the delivery of finished products to customers. Whereas in 2023 only 400 million USD was invested in this area, no more capital is to flow into here in 2024.
The production at locations such as Georgia, Tennessee and Louisiana is to be ramped up and contribute to an increase in the profit margin. These sites are already capable of producing liquid hydrogen for the company itself and supplying it to customers. The Texas and New York sites will only be continued once the DOE loan has been approved, as otherwise they tie up too much liquidity.
In addition, there is to be price raisings (among others for H2, stacks and electrolyzers) and a cost-cutting program of 75 million USD. Liquid hydrogen is currently still being purchased, which entails losses, but is to be replaced by self-produced hydrogen.
After Plug Power – I reported in detail – established production facilities in the USA and internationally in a variety of ways and thus severely strained liquidity, the planned cost-cutting program amounting to 75 million USD is now to take effect. Whether this amount will be sufficient may be doubted, however, because it seems downright ridiculous in view of the Plug’s liquidity problems and comes much too late. That the company has started to produce liquid hydrogen at several locations and has delivered to customers like Amazon and Walmart is good news for now, but will at first have little influence on the company figures.
With orders for electrolyzers too has Plug scored, but it will be some time before significant sales and thus profits are visible here. That the Saudi sovereign wealth fund Public Investment Fund (PIF) at the end of 2023, with the selling of 5.67 million shares, has completely withdrawn from Plug is not a good sign.
Summary
Words must now be followed by deeds, because all too often very full-bodied forecasts have been made. That Plug will bring partners on board for some projects seems very likely. And also the spin-off (partial sale) of some units is conceivable, if liquidity cannot be adequately presented soon. However, there is currently no need for action. Plug is clearly on my watch list, though, as the company is active in the right markets at the right time. Once the financial problems have been solved, there will possibly also be changes in management, which has lost trust, and Plug will continue on its way.
Over 170 million shares sold short (short interest, status mid-February) are dubious, however, as there is massive speculation against the company or – keywords Amazon and Walmart (warrants) – a form of hedging is being used – no guarantees. All the same, already 10 million shares were short covered in January/February. On the other hand, it is this short interest that can sometimes have a price-driving effect via the covering (short squeeze) when good news is reported. Everything has two sides.
There is still no need for action, however, since the publication of the figures for the first quarter is pending. That various business media in Germany count Plug Power among their top investments in hydrogen befuddles me, though. There are more convincing H2 investments.fa
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.
Siemens Energy is on the right track, as the latest figures show. Although the wind subsidiary Gamesa, like before, is registering losses, all other divisions are doing well and are profitable – trend rising. That the stock market also sees it that way is shown by the share price being at times over 14 EUR. You must simply give the integration of Siemens Gamesa time. That won’t happen in weeks, but rather in one to two years. Starting 2026, this unit should be profitable again and by then enable a cost reduction potential of 400 million EUR.
At the same time, the market for offshore wind is growing enormously, and there will be more and more synergies, such as with electrolyzers for offshore hydrogen production, visible. Here, things will grow together that belong together, because renewable wind power should be converted into molecules on site, which are then transported by ship and pipeline to consumers. Whether the onshore wind division – and this is where the problems lie at Gamesa – can and should be maintained as an activity is questionable, if the technical problems cannot be solved sustainably.
Siemens is divided into many divisions, all of which are growing at different rates and contribute to the success of the conglomerate. The division Gas Services reported a turnover of 10.9 billion EUR at an operating profit of 1.033 billion EUR. The division Grid Technologies has made 7.2 billion EUR turnover at 0.54 billion EUR profit, and Transformation of Industry had 4.4 billion EUR turnover at 0.228 billion EUR profit. Let me make a simple thought experiment here:
What would happen if Siemens Energy would take one of these divisions public as a spin-off (as a company share), like what parent company Siemens did with Siemens Energy? Could perhaps 30 to 40 percent of Gas Services proportionately be worth 2, 3 or 4 billion EUR on the stock market and Siemens Energy allow this equivalent value via an initial public offering (IPO) as an inflow of capital? With this capital, Siemens Energy could then finance strategic acquisitions from its own resources. New business models could be developed in order to bring together the offshore wind division of Siemens Gamesa with the electrolyzer division, with the aim of producing offshore hydrogen. Wouldn’t it even be interesting, to enter into hydrogen production itself with partners and customers and to bring in hardware from Siemens Energy to projects as assets or contributions in kind? All this would open up new and sustainable sales areas for Siemens Energy, is my purely theoretical consideration.
New on the supervisory board: Prof. Veronika Grimm
The appointment of Prof. Veronika Grimm to the supervisory board of Siemens Energy – criticism came from the ranks of the economic experts due to possible conflicts of interest – I think it is expedient, because this is where expertise from the theoretical field flows into the practical work of a company. Grimm with her expertise in the energy sector has a special position in the council of wise men, because she thinks pragmatically and is open to technology, and also esteems hydrogen with the importance that the supermolecule has. From this Siemens Energy can profit. On topics that directly affect Siemens Energy she will not issue an opinion. In advisory bodies like the economic council sit theorists.
Record order intake
The power plant strategy finally adopted by the German government (see p. 26) leaves rooms for a lot of imagination for Siemens Energy, because many a major order for gas turbines could and should land here, as there are only few capable providers like Siemens Energy anyway. It is a good sign that the first quarter of fiscal year 2024 was able to be concluded with a profit before special effects of 208 million EUR. The impressive 24 percent increase in order intake to 15.4 billion EUR in the quarter catapulted this to a record level of over 118 billion EUR and, if it continues like this, is also expected to reach 140 to 150 billion EUR on an annualized basis (estimate).
Summary: Buy and leave alone. As a full-service provider, the conglomerate is in the right and, above all, high-growth markets of energy production, especially in the area of hydrogen, perfectly positioned.
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.
The press conference in February 2024 on the fourth quarter results and the entire year 2023 and, above all, the outlook for the current fiscal year support my very optimistic assessment of this start-up. Of the 42 built Tre FCEVs, 35 were delivered in the fourth quarter. Seven are currently being tested by fleet operators. The battery-electric trucks, Tre EVs, after the problems with the batteries and their replacement in the course of the year, will return to their buyers by the end of the second quarter.
Nikola can immediately sell every built Tre FCEV, because the demand is there, but there are now not yet enough parts from suppliers. In 2024, 300 to 350 are to be sold. Strong is the position with the coupons called (California) HVIP vouchers, from which Nikola can sell almost all (99 percent, 355 out of 360) for hydrogen-powered vehicles. We’re talking about up to 408,000 USD subsidization per FC truck. With the BEVs, there were 95 vouchers by the end of January 2024.
Focusing on California and Canada in the initial phase is smart in view of the support programs there. In parallel, Nikola is working via its subsidiary HYLA on important locations (including port facilities in California such as LA or in Orlando, Florida) to initially supply the necessary hydrogen with the help of mobile H2 refueling stations (significantly less regulatory work than with fixed locations), to then set up fixed H2 refueling stations depending on experience and demand.
On top of that is the partnership with FirstElement Fuel, a company that already operates locations at important hubs (ports such as Orlando) and supplies 100 to 200 trucks per day with the necessary hydrogen there. Sufficient hydrogen is available in any case, according to a take from the press conference. That already includes the Tre FCEVs to be delivered and their H2 requirements. Currently in development are nine locations of their own HYLA program in addition to those of FirstElement Fuel. Altogether, over 60 H2 refueling stations will emerge there in the future.
All important positions filled – with top talent
The CFO position has now also been filled: Thomas B. Okray is the new chief financial officer. He can boast an impressive CV: Okray was CFO at companies like Eaton, but also in a leading position in the logistics division (fulfillment) at Amazon and 14 years in top positions at GM – also as CFO.
With Jonathan Pertchik, Nikola is bringing in a managing director that already been successful as CEO at TravelCenters of America. The company was acquired by BP and is one of the largest truck stop operators in the USA. Here someday, hydrogen refueling stations from Nikola could be positioned – comparable to Pilot Flying J – if it came to a cooperation (an idea).
Ole Höfelmann will be, via the subsidiary HYLA, president of Nikola Energy. Before, he was responsible for the company’s global infrastructure activities. In his career, he has held numerous management positions for 30 years at Air Liquide, among other things as CEO of Air Liquide Spain with 3,000 employees. In addition, he worked at Plug Power as head of the electrolysis division. Furthermore, he is a board member of various associations such as the California Fuel Cell Partnership.
Carla Tully completes the executive board. She has held leadership positions in Fortune 150 companies, among other things as co-founder of Earthrise Energy (over 1.5 GW of renewable energy), was on the board of the Citizens for Responsible Energy Solutions Forum and in management positions at MAP Energy (2.4 billion USD market cap) and AES Corp. Nikola can thus draw on extensive expertise in the areas of M&A, private equity and CSR. Therefore, Nikola is optimally equipped for the future in all leadership positions.
Truck in use – Customers very satisfied
Several customer reports on long-distance journeys with hydrogen-powered trucks are very positive: Coyote Container drove from the Port of Oakland to Long Beach, then to Iowa and Ontario and back to the Port of Portland – 866 miles (1,393 km) on just one tank of H2. MTA Trucks drove 519 km (322 mi) from Edmonton to Calgary and back. The tank was still 40 percent full at the end of the route – at minus ten degrees Celsius. Other examples refer to trips of over 1,000 miles in one day with a full load.
Special potential with the Badger?
Yes, you read correctly: In 2023, Ember acquired the market rights (IP, design) and prototype for this strong-looking SUV named Badger from Nikola. Nikola sold these items as part of an equity swap (exchange via contribution in kind) to Ember and received 30 percent of the company in return. No capital will flow from Nikola, as it is concentrating on the e-truck. Certain is that the Badger, as an FC/battery SUV, could give serious competition to the Cybertruck of Tesla, should it come onto the market in time. Whether Ember and other OEMs and partners will actually implement this project is, however, still unclear.
Psychologically, however, it is a strong sign that Nikola is indirectly in the boat here. It will be interesting to see. Because the Badger once served as the basis for a cooperation with GM and resulted in a two-digit billion valuation of Nikola Motors at the stock exchange. There were 6,000 pre-orders at the time. Just think of it as a nice side topic, but it could be very exciting when things get concrete here and well-known names such as Magna, Dana, GM and many others pick up the ball. Consider this: The design of such a car too, which you already have, also costs a lot of capital – not to mention that the start of production requires a lot of capital, even if there are companies (OEMs) that could ramp up existing production capacities very quickly. Then, the Badger would be on the market in just a few years. Anything is conceivable.
Summary
With over 460 million USD in free capital (unrestricted cash), the company is initially well positioned. Cost-cutting measures, optimization and normal scaling effects in production (the more trucks are built and sold, the lower the unit price and the closer the break-even point becomes) will characterize the year as a whole, where the capital use on a quarterly basis is to noticeably sink. And 400 to 450 trucks of both types are the initial sales target for 2024, with expected turnover at 150 to 170 million USD. It should be noted, however, that order intake could end up significantly higher, even if it doesn’t affect turnover until 2025.
Nikola is still in the start-up phase. Theoretically, 2,400 trucks per year could already be produced if all supplier parts were available. As far as the share price is concerned, CEO Stephen Girsky repeated himself, Solomon-like, when he said – to the effect – that the stock market itself will be the best judge if the forecasts made come true. Bound to that is my expectation that we will soon see prices of over 1 USD (or significantly more) again when what is forecasted happens. A reverse split (share consolidation) as a measure to raise the share price over 1 USD is then naturally superfluous. (With a price of under 1 USD, it can theoretically come to a delisting of the NASDAQ on July 7 after a 180-day period that however can be extended.)
The price behavior of the share at this time will still be dominated by short sellers and naked short sellers that massively bet against the company and the share price. Mid-February, 217.6 million shares were sold short. This short interest could with good news lead to short covering (in the extreme case to a squeeze) – is my personal view, and only that.
On the other side, institutional investors like Norges Bank (who holds 10.25 percent in Nikola), Blackrock, Vanguard and others are buying, which can be seen as a good sign and should. Against the company founder Trevor Milton Nikola has already won in court, and it is now working on an enforcement title. After all, it entails 165 million USD. Milton still holds over 51 million shares, which could possibly be collected as a partial payment – no guarantees.
The share price is now being driven primarily by incoming orders for e-trucks. Out of the current test series with fleet operators could result – is my expectation – also many a large order.
Nikola is to be seen as a start-up. This is a new, disruptive market at the beginning of a long-term trend. Until the transition to the profit zone (2025/26), a lot of capital still needs to be invested (logical losses), but the stock exchange will gladly make it available if the forecasts come true and anticipate it in the share price development. The investment bank Baird recently announced a target price of 2 USD. Other investment banks may follow. The volatility of the share will remain very high. Daily fluctuations of five or even more than ten percent are normal. Not for investors with weak nerves.
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.
Hyzon Motors will start production of 200‑kW modules for commercial vehicles in the USA in the second half of 2024. This should then lead to a recovery of the strongly depressed share price via incoming orders. Parallel to this are running product presentations such as the recent one in Melbourne (Australia) with the 200‑kW Hyzon Prime Mover at the Kangan Institute Automotive Centre of Excellence. Deliveries in New Zealand, Australia, Europe and the USA are planned for later in the year. This fuel cell system can be used in many other applications and markets at the same time: rail vehicles, maritime transport, stationary energy, mining vehicles, etc. It will be interesting to see which customers this 200‑kW single stack will find and the order potential that will result, especially as it offers a cost reduction potential of over 25 percent and conserves 30 percent of the space and weight – compared with a 110‑kW system. A first major market for Hyzon will be the employment in commercial vehicles in Australia, where the company has an important location with around 50 employees.
Patent registrations – Competition with Toyota and Bosch
Hyzon Motors has applied for a number of patents in the USA, Europe and Asia and many have already been granted. The main focus here is on reducing emissions when using fuel cells, but also on battery systems. What this means in detail is not clear to me, but shows that Hyzon is very active in securing patents and sees in it an important basis for its FC products and utilizations as well as markets. This would put them in direct competition with companies such as Toyota and Bosch. This could – purely theoretically – eventually lead to license revenue.
Hyzon still has with over 100 million USD sufficient capital, but will not be able to avoid taking measures (issue of new shares or participation of a strategic investor) to finance the company’s growth and expansion. The production facility in Illinois is self-financed. Production ramp-up is beginning in the second half of the year. Incoming orders for the FC modules as well as speculation by a strategic partner or investor make the share of Hyzon Motors a very interesting speculation, although the investment is to be classified as highly speculative as you’re dealing with a start-up.
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.
FuelCell Energy has with SOFC fuel cell power plants built its own capacities for clean energy totaling 62.8 MW (previous year: 43.7 MW). The company’s own high-temperature fuel cell serves as the basis for use in electrolysis, where the company has recognized great potential for itself. Along with that are various research projects, among others in Canada, and the company relies on specially developed carbon capture technology that is designed to avoid emissions and generate emissions-free energy at the same time. So far, so good. But you can’t avoid thinking of competitors such as Bloom Energy, Sunfire and Ceres Power (indirectly also Weichai Power and Bosch), which pursue similar visions and technological approaches to FuelCell Energy.
What all this means in terms of order and implementation potential is unfortunately not yet clear to me. The figures so far are sobering: The first quarter (fiscal year 31.01.24) brought a loss of 44.4 million USD. Turnover fell in the quarter to 16.7 million USD. Of liquidity, the company has no lack: 348.4 million USD was in the bank January 31, 2024. However, there has been a constant outflow of capital for years, aided by constant share placements on the stock exchange via an ATM program. Projects such as that with Exxon in Holland sound promising, but say very little about the potential. In South Korea, former partner Posco, via its subsidiary Korea Fuel Cells, forfeited the option of further orders in supplement to a previous project. Not a good sign.
Joint venture with ExxonMobil
At first glance, it sounds promising: FuelCell Energy and ExxonMobil have agreed to build a production plant for carbon capture in Rotterdam. It entails the avoidance of CO2 emissions or the storage and making usable, without generating a carbon footprint. CCS stands for carbon capture and storage. After successful deployment directly in the neighborhood of important industries, the project that is based on the technology of FuelCell Energy could be deployed at all production sites of ExxonMobil where CO2 emissions are generated. The process is to generate heat as a by-product and enable the production of green hydrogen.
Unfortunately, there is no indication of the exact investment volume (invest on the part of FuelCell Energy) and the order volume that can be derived from this. In any case, the project is financially supported by the EU via the Emissions Trading System Innovation Fund. ExxonMobil and FuelCell Energy have already been working on the associated technologies for some time, so this specific project represents another important milestone.
The cash cushion is safeguarding the share price well. The stock exchange will rediscover FuelCell Energy when it can be shown how technologies such as carbon capture and SOEC can generate orders and earn money. That will take some time. The share is always suitable for trading, as good news quickly leads to major price swings.
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.
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