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.
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.
Short sellers are working massively against the company at the stock exchange. There were shortly even nearly 200 million shares sold short (on Nov. 16 still 193 million). But now, a price change upwards seems very likely. The reason could lie in the comments made at the press conference on the third quarter results, which Nikola – in my words – sees as being on the right track. The company amassed about 250 million USD in liquidity in the third quarter, and now has available 705 million USD in capital access.
The damage due to recalled battery-electric trucks was reported as 61.8 million USD (warranty reserve), where Nikola not only resolved this problem, but employed batteries from a still unnamed supplier that possessed advantages over the previous model, was the comment from the company. Additionally, the truck will be equipped with more features that will give the driver more options during use, for example from a distance using a smartphone app, the truck could be already prepared with heating in the winter and air conditioning in the summer, before the driver gets in. The battery-electric truck will, after the retrofitting in the first quarter, again find its way to customers.
Now orders can come
There are 277 letters of intent for the purchase of the hydrogen-powered truck. In the fourth quarter, 30 to 50 of them are to be delivered and between 11 and 19 million USD turnover generated. With the battery-electric truck, meanwhile – despite the recall – an individual order of 47 units will be gained. In the next two years, Nikola is determined to deliver on average 250 to 300 trucks of both types per quarter.
The cash burn is at 100 million USD in the quarter, where for the current quarter, the financial effects of the recall on the battery-electric truck are still to be felt (61.8 million USD, of which about 38 million USD is capital that will be used). And the better the scaling of the truck production goes, the more cost-effective they can be manufactured, in order to at the end of the day come out with a good profit margin. Consider this: Money is the future will be earned especially with electricity and hydrogen and not with e-trucks per se. Nikola is at the start of its (success) story.
California setting the pace
Nikola is concentrating, for good reason, on the US state California. Firstly, the best subsidies (up to around 408,000 USD per truck) are there; secondly, the time pressure for shippers to replace diesel-powered by CO2-free trucks is very high. Already starting 2024, in California only the last-mentioned will be allowed at port facilities, so there will be new registrations only for battery-electric or hydrogen trucks. We’re talking about over 30,000 trucks alone in this market segment – a winning pass for Nikola Motors, since in the Inflation Reduction Act are provided also 2.6 billion USD in subsidies specially for port facilities and also drayage trucks as well as for the H2 infrastructure.
Additionally, the competition for Nikola in this truck segment will be sparse for years to come. The look at the already approved vouchers for e-trucks is cause to celebrate: 96 percent of the vouchers of the California’s HVIP program for hydrogen-powered trucks and 50 percent of the vouchers for battery-electric trucks are attributable to Nikola. After all, Nikola is to have received approval of already over 400 vouchers for the two truck variants. A respectable success.
Lawsuit against Milton won
The lengthy legal dispute with company founder Trevor Milton was won. On October 20 came the decision. Milton must now pay 165 million USD to Nikola, which includes procedural costs Nikola first had to pay and now receives back. It should be noted here that there is still no indication of when the money will flow. Nikola still has to pay a portion to the SEC itself, as they reached a settlement of 125 million USD and must itself fulfill it. If 165 million USD flows from Milton soon, Nikola’s liquidity will rise, as the SEC payments will be divided over the next years.
Goals ambitious but realistic
Currently, Nikola can produce 2,400 trucks of either variant per year. In order to be profitable, sales of 1,000 trucks in 2024 and 1,500 in 2025 are needed. These targets are considered realistic from the company’s perspective, if Nikola delivers 250 to 300 truck per quarter. In my view, there will also be some large orders. Beyond this, declarations like the letter of intent (LoI) with Anheuser-Busch (800 trucks) will also flow into the orders on hand, is my expectation.
Nikola Motors – The Tesla of trucks?
For this hypothesis, I earned a lot of criticism. One cannot compare a startup like Nikola, though, with the success story of Tesla. One can say: Tesla started small, then came Elon Musk. The company reported heavy losses for many years and was even on the verge of bankruptcy before the breakthrough came. In the first three years, Tesla earned money, but not with the e-cars but with emission rights that could be sold to other car manufacturers. Tesla solved the chicken-and-egg problem by providing the electricity for the battery-electric vehicles itself by establishing a charging network made of its own Supercharger stations. Who would have bought a car from Tesla if there had been no charging option – as a package, even free of charge for years?
Nikola is doing the same – only for trucks with the help of electric charging stations and H2 refueling stations. Nikola wants to earn money with electricity and the self-produced or purchased hydrogen. In the USA are waving high subsidies of three USD per kg. Tesla continues to address the market for e-cars, but Nikola the segment for trucks. Both companies can be considered disruptive – they change markets and business models. Both are first movers.
Tesla and its CEO was met with much skepticism, but they proved that change is possible. Nikola is doing the same – only for commercial vehicles. Whether both can be compared with regard to the development of their valuation or share prices time will tell. For Nikola I am extremely optimistic.
Chief financial officer leaves the company
Stasy Pasterick was just six months in office as CFO. She is going over to Universal Hydrogen in the same capacity. It will be interesting to see who her successor will be.
Capital increase secures the company
On December 6, 2023, Nikola’s plan to raise fresh capital on the stock market became known. It entails a convertible bond of a nominal 175 million USD with 8.25-percent coupon (green bonds) with maturity December 2026 (0.90 USD conversion price per share) and 100 million USD in new shares at 0.75 USD per share. The share price fell from around 1 USD probably because – no guarantee – a hedging took place, so the price was depressed, as one can retain and stock up on the share after the capital raise. The share also fell because short sellers wanted to use the capital increase as a negative for themselves.
In accordance with experience, this measure will have already been successfully implemented by the time you read these lines. With it, Nikola is then thoroughly financed and will ultimately have 500 million USD in the bank. That the share price is rising above 1 USD again is also in the nature of things, because the financiers (investment banks such as Nomura) will most likely not accept a delisting of the share (it will come to this if the price sinks below 1 USD for a longer time).
Summary: Nikola is well on the way to positioning itself as a first mover in CO2-free trucks in the USA – first in California, later across the whole country and in parallel in Canada, where likewise large subsidy sums up to 380,000 CAD per truck are waving. Comprehensive funding programs are acting as a turbo, as the buyers of the trucks can comply with the regulatory pressure and are financially incentivized as well. The H2 infrastructure is being established by the company itself, but will be financially accompanied by business partners such as Voltera (EQT) and is receiving a boost by a 7-billion-USD program of the Biden administration, in which seven hydrogen hubs are to be established in the USA. The stock market will not be able to avoid newly valuing Nikola as a startup: In the right market at the right time. Maybe Nikola will even be the H2 share that develops the most price potential. What’s the phrase? No risk, no fun.
Nikola’s management team is considered excellent. CEO Stephen Girsky pointed out that this includes top managers who no longer actually have to work in a start-up, but who are happy to contribute their expertise to make the company’s vision a reality. This is the right approach – out of conviction and with experience.
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.
Setting up various production lines for stacks is at the focus for Ballard Power. With these, the company can act and deliver during the ramp-up in the next years. With still nearly 800 million USD in the bank, Ballard is in a comfortable situation and is able to finance all investments from its own resources. That the company is valued at the stock exchange with only about one billion USD seems incomprehensible in view of the prospects.
Strategically interested companies could and should seize the opportunity and get on board with Ballard stock as long as the stock market valuation is so low. What if a Mr. Adani were to come knocking again? Or automotive suppliers such as Dana, Tyco or Magna? Anything is possible. The only protection against this: significantly higher share prices, so a stock market valuation that matches the future prospects.
Figures have little informative value
Current sales will be dramatically exceeded in the coming years, when the ramp-up of the FC markets for commercial vehicles of all kinds, ships and rail vehicles begins. In this respect, the quarterly losses in 2023 and 2024 are due to high R&D expenses and the expansion of capacity and have little to no meaning. What if in a few years’ time instead of the still scant individual orders of 50, 100, 200 FC modules per year, 1,000, 5,000, 10,000 and more FC modules were to be delivered – and for each individual market? Then Ballard would have the necessary capacities and could deliver.
Opening of the Still’s FC production site in location Hamburg
The forklift truck manufacturer Still (subsidiary of Kion, majority-held and part of the Chinese Weichai Group – which in turn holds about 15 percent in Ballard Power) is relying on the FC stacks from Ballard Power. On November 10, 2023 in Hamburg, the ceremonial opening of the first production line for 24-volt fuel cell systems took place. In the future, 4,000 FC forklifts will roll off the production line there every year.
7-billion-dollar hydrogen hub plan
Ballard benefits indirectly from the planned establishment of a US-wide network of seven hydrogen production centers (hydrogen hubs). This is because the widespread production of green hydrogen is a great opportunity for many – and even more so in the future – Ballard customers to invest in products that can use hydrogen: shipping companies, trucks, buses, ships, rail vehicles and many more. In six of the seven hubs, Ballard sees the perfect positioning for itself and its customers in hydrogen and fuel cells.
Forsee Power proves to be a stroke of luck
If you look at the current figures of the French battery manufacturer Forsee Power, you have to give Ballard credit for a good hand with the investment – Ballard is one of the largest single shareholders. A massive 83 percent increase in turnover in the third quarter to 47.9 million EUR. In the first nine months, that amounts to a plus of 67.6 percent to 126.6 million EUR. For the whole year, it is to be 160 million EUR, then 235 million EUR in 2024, and 850 million EUR turnover in 2028 is the goal.
The two companies work perfectly together, as the batteries from Forsee are put to use in, among other things, the FC systems of buses and Ballard customers. Forsee at around 2.50 EUR per share seems to me to be a good buy if you want to have batteries in your portfolio and see it as a complement to the fuel cell.
Solaris is the perfect forerunner
The Polish bus manufacturer Solaris is continuously ordering more FC modules from Ballard, 350 in total this year alone – another 62 were recently added. Since Ballard supplies various bus manufacturers as a partner for the fuel cell, Solaris is a very good example. This market is only at its start, and Ballard as number one and frontrunner already has experience of over 100 million kilometers traveled. The newsletter Information Trends see the market for FC long-haul buses in general as one of the fastest growing hydrogen markets.
In the next 15 years, globally over 73.4 billion USD are to be invested in new FC buses. The forerunner is China. FC buses are becoming increasingly cheaper, even if they’re still more expensive than pure battery-electric buses. Convincing here are the arguments of range and time or type of refueling. Parallel to this, the H2 infrastructure is being established. Consider this: Ballard has more than ten big bus manufacturers that exclusively rely on fuel cells from Ballard. In China, Ballard via a joint venture with Weichai Power is also the supplier for various bus manufacturers there – that is only one of the over 30 platform partnerships. Currently, there are tenders for over 17,000 buses worldwide.
Individual orders increasingly larger
Randy MacEwen as CEO has said: from small series occurs the ramp-up to large series. From batch sizes of 10 to 100, there are now massive numbers. The same goes for many other markets: The rail vehicle manufacturer Stadler reports that they are waiting for the acceptance for 25 hydrogen-powered trains, after having already received a firm order for four such trains in California.
In trucks, OEM partners such as the German company Quantron rely on Ballard: Among other things, they deliver hydrogen-powered small trucks Ikea. The platform partnership with Ford for the F-Max raises great expectations: What would it mean if Ballard were to supply FC modules for over 10,000 trucks per year? It is important to be, like Ballard, a technology leader and also have the ability to deliver (capacities).
My only concern: What happens when a big player in the market takes advantage of the situation and makes Ballard a takeover offer – like Cummins has done with Hydrogenics? A participation in a strategic partnership would be a share price turbo, though.
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 15th, 2023
A market report recently published by news agency Bloomberg concludes we’re well on our way to a hydrogen revolution. I’d call it a megatrend. The report’s authors expect USD 2.5 trillion, that is, USD 2,500 billion, will pour into the hydrogen and fuel cell sector by 2050. The International Energy Agency agrees. Between 2018 and 2020, an estimated USD 1.5 billion per year went into developing the market, a figure said to climb to USD 38 billion by 2040. By 2050, investments will reportedly grow to USD 181 billion – again, per year. All these forecasts are based on targets already set by countries, global organizations and companies themselves.
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
Cookie
Duration
Description
cookielawinfo-checbox-analytics
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional
11 months
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy
11 months
The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
