The shares of Weichai Power could not escape the negative trend in the fuel cell sector. They suffered from the lockdown in China, but now we can see a strong upward trend again.
The stocks in this compression market leader have performed extremely well since they were first mentioned here in our H2-international magazine, improving from about CHF 300 to more than CHF 400. Burckhardt Compression benefited from a boom in orders for compressors, but also from its service solutions. In the first half of 2021, Burckhardt achieved significantly greater incoming orders of about 80 percent, taking it to CHF 450 million. A “strong increase in hydrogen mobility and energy activities” is expected for the second half of the current year.
Conclusion: The company has a bright future ahead of it and will benefit from the worldwide ramp-up of the hydrogen economy by being active in China too – an acquisition was already made here some time ago. I imagine the company could be a target for a takeover by a large corporation which, as a global player, could seamlessly incorporate Burckhardt Compression’s expertise into its own hydrogen product range. Continues to be suitable as a small admix.
Although the price of Weichai Power fell away steadily in recent months, it has bounced back very strongly in recent weeks by more than 35 percent. Weichai, as a leading producer of diesel engines in China, is the perfect counterpart to the American corporation Cummins, which is very aggressively expanding its hydrogen and fuel cell activities, and as such is hedging Weichai’s future strategy. For Cummins, the acquisition of Canadian firm Hydrogenics was its ticket into the world of hydrogen. For Weichai, it was its stake in Ballard Power (probably currently standing at about 15 percent) and the joint production of commercial vehicle stacks in a joint venture (51:49).
Like all hydrogen and fuel cell stocks, Weichai Power’s has come under pressure since February. That doesn’t change the business’s bright prospects. Weichai [2338:HK] is turning a profit and is expanding its operations through joint ventures and strategic acquisitions. One example of this is Weichai’s recent purchase of a 45-percent ownership stake in Kion, the world’s second-largest forklift truck manufacturer. The deal, valued at EUR 3.5 billion, might even lead to the deployment of hydrogen and fuel cell systems in Kion’s next-generation forklift trucks. Like Bosch, Weichai owns part of CERUS. It also has an around 15-percent stake in Ballard Power, with which it runs a stack factory in China (a 51/49 partnership).
E4tech Fuel Cell Industry Review
In March 2021, the new Fuel Cell Industry Review 2020 was published, complete with market data and detailed analysis. Since 2014, the team led by E4tech has been contacting fuel cell companies from across the globe, aggregating their shipment figures and producing an independent report each year on the current state of the fuel cell sector. Several extracts are provided here.
2020 was not the year many of us expected. But despite the very difficult situation brought about by COVID-19, fuel cell shipments continued to rise. The increase was much less than we anticipated at the end of 2019, both because of supply chain disruption and local economic slowdown, but is a very encouraging sign.
The company Weichai Power, which I’ve so far only mentioned in this column as partnering Ballard, has a revenue around the EUR 20 billion mark and a stock market valuation of the same order. In 2020, a good EUR 1 billion was marked up as profit, with dividends also paid out. Weichai Power has several bus brands to its name and is the nation’s largest diesel engine manufacturer; it has clearly recognized the potential offered by fuel cells in the commercial vehicle sector and, in its own words, is intent on becoming the market leader.
Recent high volumes of trading saw Ballard Power stock shoot past USD 21 at one point. Subsequent profit-taking then caused the price to fall again. I would say this kind of correction is not unusual during an upward trend and gives investors another opportunity to (re)purchase shares.
Ballard [Nasdaq: BLDP] and Weichai, Ballard partner and major shareholder, announced they are building an LCS factory in China. Past tense, it has probably already been built. Production should begin this year.
The reports are overwhelming as far as the areas of application and potential of the fuel cell are concerned, and politicians in Germany have also finally woken up. The stock exchanges have led many FC companies into a real course euphoria. But also, contradictions find their way into the media, according to which China allegedly plans to reduce or even completely discontinue the promotion of battery-powered, but also fuel cell-powered electro-mobility. On the other hand, from a very well-informed source one hears exactly the opposite, namely that precisely the promotion of the fuel cell and the associated infrastructure in China is being set up anew, that only the battery promotion is being limited.
Forget the quarterly figures for Ballard Power this year. They are only important to analysts. The CEO already said at the beginning of the year and recently underlined in a Bloomberg interview that this calendar year will be used to build capacity in China (production of the LCS stacks together with Weichai), among other things, to position themselves, to strengthen the central production and R&D location in Vancouver, to expand the workforce and to tackle pilot projects as a basis for orders.