August 4th, 2022 | 14:31 CEST
BYD chases Tesla, First Hydrogen is undervalued, and ITM Power with a buy signal
Table of contents:
"[...] Why should a modular electrolyzer cost more than a motorcycle? [...]" Sebastian-Justus Schmidt, CEO and Founder, Enapter AG
First Hydrogen on the way to the top and undervalued?
The experts at researchanalyst.com have taken a closer look at First Hydrogen and come to a positive conclusion. The hydrogen newcomer is on its way to the top of its sector. The Canadian company with offices in Vancouver and London specializes in zero-emission vehicles and the production and distribution of green hydrogen. Through its unique "best-of strategy", the experienced management has been able to set clear scent marks in the recent past, according to the experts. A milestone could now be reached with the admission to a leading consortium in the United Kingdom, which, however, has not yet received much attention from the broad market.
In the next few days, the two demonstration vehicles from First Hydrogen will be tested in the UK and then ready for road use in the 4th quarter of 2022. At the same time, according to the Company, there is already keen interest from ten fleet operators to participate in the test of the two demonstration vehicles. Interested parties include telecommunications companies, express services, national utilities, a UK national supermarket chain and an ambulance fleet. That brings First Hydrogen closer to its vision of becoming the leading developer and manufacturer of zero-emission, long-range hydrogen-powered utility vehicles in the UK, EU and North America. CEO Balraj Mann estimates that between 10,000 and 20,000 units of the First Hydrogen Utility Van could be delivered per year from 2026. If we only calculate the lower limit of just 10,000 vehicles and a unit price of around EUR 50,000, sales would be EUR 500 million. The current stock market value is a modest EUR 110 million. Peer group company McPhy Energy is already valued at EUR 424 million. Although McPhy Energy is already somewhat further along in its corporate development, the four-fold valuation is nevertheless high.
BYD in Germany from October
The expansion of BYD to Europe was known. But the fact that it is going so quickly after Norway is surprising. The first showrooms will be opened in Sweden and Germany as early as October of this year. With Hedin Mobility, the Company has brought a European partner on board. Hedin Mobility is largely unknown in this country, but the Swedes are one of the largest car dealers in Europe. As such, Hedin will handle local vehicle sales and services. "Partnerships, such as the agreement with Hedin Mobility Group, are the foundation for providing comprehensive services and local support to BYD customers as the brand continues to expand its new energy passenger car business in Europe," the Chinese automaker said in a statement. It is not yet known which models will be offered in this country. However, the first vehicles are expected to be delivered to customers in the fourth quarter. With this step, some analysts' expectations that BYD could replace Tesla as the world's leading e-car maker as early as next year are likely to gain momentum. BYD is also stepping on the gas in its home market of China. For example, Denza, a joint venture between BYD and Mercedes, has started selling a new model. The Denza MPV D9 will be offered in a hybrid and electric version, costing between USD 50,000 and USD 100,000. There are already 30,000 pre-orders, it said.
Investment bank Peel Hunt lifts ITM Power out of the shadow of Nel and Plug Power
Hydrogen shares are currently in strong demand again. The reason: In the USA, Congress has finally passed the approximately USD 370 billion package for energy security and climate change. In addition to wind and solar power, this will also provide massive support for green hydrogen. Therefore, the industry giants such as Nel and Plug Power could make significant gains in the coming days. But also, British ITM Power should get a piece of the pie. The shares of the electrolysis specialist are currently trading at GBp 208, not far from the low for the year of GBp 171. According to investment bank Peel Hunt, there is plenty of room for upside. The analysts recommend ITM Power shares as a buy with a target price of GBp 500. They say the Company has the opportunity to position itself as a leading green hydrogen electrolyzer company. The customer list is already respectable with clients such as Linde, Shell and Yara. Operationally, the Company has not yet been able to convince in the current year. Revenue in fiscal 2022 of GBP 5.5 million was well below market expectations of around GBP 16 million. On the positive side, there is an order backlog of 755 MW.
Hydrogen and electric mobility are markets with huge potential. In the e-car market, BYD is stepping on the gas and could even knock Tesla off its throne as the largest manufacturer. The expansion into Germany is, in any case, a warning signal for competitors. In the hydrogen sector, it doesn't always have to be Nel and Plug Power. Second- and third-tier companies like ITM Power and First Hydrogen also offer opportunities. However, both - and all other hydrogen companies - will have to significantly increase their sales in the coming years.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
For this reason, there is a concrete conflict of interest.
The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.
Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.
The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.