November 21st, 2022 | 14:22 CET
BYD, dynaCERT, Plug Power - Sustainable shares for the portfolio
Table of contents:
"[...] Why should a modular electrolyzer cost more than a motorcycle? [...]" Sebastian-Justus Schmidt, CEO and Founder, Enapter AG
BYD - Growing steadily
BYD is the leading manufacturer of electric vehicles in China, with a market share of over 50%. The Company has seen strong sales growth in recent years and is expanding its sales and production activities worldwide. Most recently, negotiations to purchase a Ford plant in Brazil were reported. In China, BYD already has a strong presence in the electric vehicle market with a wide range of models, including sedans, SUVs and buses. Its success is based on the Company's unique battery technology, which gives its vehicles a longer range and higher performance than many other electric vehicles.
The Company again reported record sales results in October. A total of 217,816 vehicles were sold, up about 168% YOY. Compared to September, 8% more vehicles were sold. Passenger cars still account for the lion's share. Only 298 commercial vehicles were sold. The figures for the 3rd quarter are impressive. Net profit was around USD 768 million, an increase of 350% compared to the previous year. Sales only reached an increase of 115%. Growth is to be maintained through expansion. In 2023, the Company aims to sell 3.2 million vehicles. In order to put this into perspective, the three millionth electric vehicle rolled off the production line just a few days ago.
Operationally, things are going well. Nevertheless, the Company's best-known investor Warren Buffet continues to sell shares. Reuters reported on November 11 that the Oracle of Omaha again dumped 5.78 million shares. Nevertheless, Berkshire Hathaway still holds 16.6% in BYD. Regardless, the sales are putting pressure on the share price. After the steep rise from March to July, the consolidation began. It has pushed the stock back to the area of the starting point of the increase. Currently, one pays EUR 22.94 for a share certificate.
dynaCERT - Sales deliver results
dynaCERT can already reduce emissions from diesel engines, and in some cases, significantly. Large diesel engines, such as trucks, are responsible for much of today's pollution. Electric and hydrogen vehicles still need more infrastructure to retire diesel engines. This will continue to be the case in the coming years. Therefore, dynaCERT's HydraGEN technology offers an alternative to save fuel, extend engine life, and significantly reduce CO2 emissions. All these values are tracked and visualized by the Company's HydraLytica software. In the future, the Company plans to obtain CO2 certificates. To this end, the Company is working with the certifier VERRA.
After the IAA Transportation show in Hanover, dynaCERT was able to generate three orders at once. At the beginning of November, Alectra Utilities ordered a further 73 HydraGEN systems after the test on 15 vehicles had been positive. On November 9, Fiorentino Bros. Contracting was won as a customer. The customer, which operates in the forestry sector, owns more than 100 heavy equipment and 70 vehicles powered by diesel. For the launch, dynaCERT technology will be used in a low-loader and the customer's bulldozers. There are also more and more orders from the mining industry. The sales partner H2 Tek was able to sell 29 HydraGEN systems to 6 customers in South America. Among them were mainly customers from the mining sector, which will have to do a lot to reduce its emissions in the future.
A comprehensive study on the Company can be found at researchanalyst.com. Those who would like even more information can already register free of charge for the 5th International Investment Forum on December 7. There, the Company will present itself at 5 pm, and interested investors will have the opportunity to ask questions. The share went into rally mode in August after a prolonged downward phase and gained over 220% at its peak. This was followed by a consolidation. Currently, one share can be bought for CAD 0.21. The knot should burst at dynaCERT with the receipt of the CO2 certificates at the latest. The technology can reduce emissions and save fuel, which is a good selling point given the increased prices.
Plug Power - Weak third quarter
In addition to electromobility, hydrogen provides the option to use zero-emission powertrains. Plug Power is one of the world's largest suppliers of hydrogen solutions. The Company develops and produces fuel cell systems and aims to cover the entire value chain. The main advantage of hydrogen propulsion over electric propulsion is the significantly shorter refueling time. Currently, the cost of green hydrogen is still too high, but with the expansion of renewable energies, prices will fall. The US even wants to subsidize the prices from its approximately USD 370 billion climate package.
In mid-October, Plug Power announced that its annual forecast had to be cut. On November 8, the Company then delivered figures for the third quarter. Analyst expectations were clearly missed in terms of both sales and profits. Sales were around USD 188 million, while experts had expected USD 246 million. In a year-on-year comparison, this still represents an increase of 31%. Earnings per share were expected to be minus USD 0.07 per share. In the end, it was minus USD 0.30. The fourth quarter is expected to be much better, and the reduced forecast is to be achieved. The only positive was the order backlog, which increased significantly compared to Q2.
The Company has also set high targets for 2023. Sales are expected to reach USD 1.4 billion and a break-even operating margin. It also aims to be the world's largest producer of liquid hydrogen from 2023. The stock remains highly volatile and currently stands at USD 15.84. In mid-September, it peaked at USD 28.86. The majority of analysts are still optimistic about the share. The average target price is USD 29.72. Plug Power must deliver in the fourth quarter to maintain confidence in the Company.
It will be years before we have only zero-emission powertrains. In order to achieve the climate targets, it is important to rely on interim solutions such as those offered by dynaCERT. Developing the infrastructure for electricity and hydrogen will take much more time than anticipated today.
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.