100% opportunities with Nel, Plug Power, Royal Helium - Hydrogen is turning now!

Nel ASA - Can the demerger improve the scenario?

The downward trend has been halted for the time being after the electrolyser pioneer from Norway reported its annual figures for 2023. The Company increased its revenues by 29% to NOK 534 million in the final quarter, while experts had only expected just under NOK 442 million. However, earnings before interest, taxes, depreciation and amortization (EBITDA) remained in the red at NOK 106 million, although the losses were halved compared to the previous year. At minus 81%, order intake remained in sharp decline. Despite this, Nel was still able to exceed expectations slightly, calming the sharp sell-off scenario of recent weeks.

With a cash position of a good NOK 3.6 billion (around EUR 300 million), the period until the next capital increase, which will likely have to be carried out at the beginning of 2025 due to ongoing negative operating margins, has been extended. Another positive aspect is that the Fueling division is to be separated from the Company and placed on the stock exchange as a separate entity. A corresponding process, with the aim of creating two independent pure-play companies, has already been initiated but has not yet been fully decided. This would create two potential market leaders in their core area, and a corresponding Group split usually has a positive effect on shareholder assets.

"We have seen limited synergies between the service station and electrolyser businesses and believe each company will be better positioned to become the market leader in its respective areas by operating independently," says CEO Håkon Volldal. With a 16% rise in just three trading days, an anchor of hope for the upswing has already been set.

Plug Power - Even hardened traders were surprised

What a turnaround at the end of last week. While there were still significant concerns in the market in the run-up to the 2023 annual figures, investors were finally able to breathe a sigh of relief on Friday after publication. It wasn't as bad as it seemed! Hydrogen specialist Plug Power still has enough cash and liquidity reserves to finance ongoing operations in the coming months. So, were investors' fears unfounded then? Despite this good news, the Company's shares initially slipped by around 7% on Friday after the annual results fell well short of expectations. Annual sales fell by 27% to USD 891.3 million, significantly below experts' estimates, resulting in a full-year net loss of USD 1.37 billion or USD 2.30 per share, compared to USD 724 million or minus USD 1.25 in 2022.

The flamboyant CEO Andy Marsh commented on the Company's finances in a press release and emphasized: "Given the cash management challenges we have faced in the past, we will strengthen our financial profile in 2024." Despite negative margins, Plug demonstrates a sufficient financial base and an evident commitment to a sustainable course and further growth. Plug Power is currently implementing an "At-the-Market" (ATM) capital increase, allowing the Company to sell shares directly on the market at the current price. According to Truist Securities, USD 300 million of the planned billion was raised in February. The pressure on the share is likely to continue for some time. After a 73% loss in the last 12 months, we believe that at least a technical recovery should set in once the placement is completed.

Royal Helium - The development plan for 2024 is in place

We move away from hydrogen and towards helium. Both elements rank at the top of the periodic table; hydrogen primarily exists in bound form, and helium is a rare noble gas. It is colourless, odourless, tasteless and non-toxic. It is in high demand as a technical gas in the fibre optics, computer and aerospace industries. It is also used as a coolant in the nuclear power industry. Customers such as Linde, Airbus, NASA and SpaceX are on the customer list, but there are only a few suppliers worldwide.

Canada's Royal Helium Ltd. is focusing on the exploration and development of a major helium production project. The Company controls over 400,000 hectares of promising land concessions and leases in southern Saskatchewan and southeastern Alberta. Given the current undersupply of this critical and non-renewable product, Royal is very well positioned in the market. Royal's helium reservoirs are primarily produced using nitrogen. Nitrogen is not considered a greenhouse gas (GHG) and, therefore, has a low environmental footprint compared to other countries that rely on large-scale natural gas extraction for production. Canada has the fifth largest helium reserves in the world and is increasingly coming under the spotlight of international technology producers.

Now Royal Helium Ltd. has released its initial development plans for 2024. They will focus on completing and testing existing wells at the Val Marie, Ogema and Steveville properties, as well as the new 40 Mile project in Alberta, with a focus on the high quality of existing well fields in Saskatchewan. CEO Andrew Davidson states: "With the Steveville helium processing plant up and running and reaching capacity on a daily basis, we are pleased that we can now focus on determining the location for the next processing facilities." In 2023, Royal acquired its newest project area, 40 Mile, in southern Alberta. It features a historical well that has been drilled, flow-tested and thoroughly explored. This well showed exceptionally high flow rates in initial testing and returned helium concentrations that exceeded anything Royal has measured before. Drilling is expected to commence on the 40 Mile project in the second half of 2024. Royal Helium shares have recently consolidated somewhat, and one can now re-enter at CAD 0.19. Due to the helium shortage, the share price has increased tenfold since May 2020 at its peak. A similar movement could be imminent again when the next development results are available.

The reporting season is bumpy. If the reports are in line with analysts' expectations, the outlook could still disappoint. However, those who can exceed estimates are usually on the winners' list with their share price movement. The hydrogen sector has experienced three years of sell-offs and could now be poised for a technical turnaround. Royal Helium is making convincing progress in its projects and should be well-positioned to benefit strongly in the medium term.